We’ve talked a lot about retirement and its challenges over the years. With 60% of retirement fund members retiring and receiving less than 20% of their pre-retirement income, it seems clear that talking is not translating into getting it right. We need to address some of the basic needs across organisations – primarily short-term needs which assert themselves in people’s lives as stressors when they are not met. Addressing some of these without fully understanding the entire problem can be seen as ‘agile’ rather than impulsive. Being agile means we will have to accept that this model will be constantly evolving. Offering employees meaningful solutions to their problems needs to be seen as empowering rather than paternalistic. Then we need to shift our focus from evaluating success based on activity to impact. This can be done effectively by asking employees the right questions. Hearing employees might bear additional fruits in that they may well be more engaged.
Everybody’s doing it. Financial well-being, or some variation of this, is the new paradigm for financial services. Looking around, it seems like we’ve done quite a good job of changing the conversation in the market to one that’s focused on financial well-being.
The question is: Just where has this brought us? At a high level, the answer really must be ‘not very far’. If you doubt this, turn to the data section of previous editions of Benefits Barometer and try to discern a trend that heads in the right direction. Focus on whether retirement outcomes have improved or absenteeism has come down; look at the numbers for employee turnover. Nothing seems to show we’re making progress.
Where are we getting stuck? And how can we change this? These are two compelling questions. To answer them, we first need to look at what has been done as part of this evolution towards a financial well-being narrative.
Financial services companies are reorganising themselves around a story that goes beyond traditional employee benefits. The insights in previous editions of Benefits Barometer have provided ready content for this story, which is perceived as a defence against the inevitable: becoming a commodity provider. Early attempts to stave off this inevitability have centred on offering value-added services and forging and nurturing relationships that have at least something to do with looking after the interests of decision-making individuals.
The financial well-being message takes financial services providers to the next level of relevance by enabling a conversation with employers about things that matter to them and their employees. What’s clear is that, as compelling as this story is, we have not managed to go beyond conversation to meaningful actions. Or we have, and they’ve been the wrong actions: the typical employee benefit offering tends to look more like not taking meaningful actions than taking the wrong ones.
So, what are the stumbling blocks?
Employers haven’t thought enough about the existing system and how it came into being. Why do we do what we do? Because we always have. In the case of South African employers, we adopted somebody else’s system from a very different set of circumstances in a (thankfully) now-defunct political system. That context has changed, but we haven’t changed enough of the subsystems we adopted in that context.
Some of the feedback we’ve had is that employers are reluctant to appear paternalistic and therefore approach holistic well-being with caution and, perhaps, scepticism. Let’s start our reflection with a definition of paternalism: ‘The policy or practice on the part of people in authority of restricting the freedom and responsibilities of those subordinate to or otherwise dependent on them in their supposed interest’.1 Or, an ‘action limiting a person’s or group’s liberty or autonomy which is intended to promote their own good’.2
We could argue that elements of the existing employee benefit regime mimic elements of these definitions, principally the lack of choice that employees have in determining the content of these programmes. However, it’s more of a stretch to match the phrase ‘well-being corporation’ with either of these definitions. What do we mean by ‘well-being’ in this context? Turning again to a dictionary definition, it’s defined as ‘the state of being comfortable, healthy, or happy’.3 This certainly doesn’t sound paternalistic, and elements of the definitions of paternalism imply the opposite of well-being.
It’s worth exploring where this perceived link between well-being and paternalism may come from. One possibility is that it stems from some of the actions that are being proposed. For example, over-indebtedness is the main reason many employees don’t experience financial well-being. Offering debt management solutions to employees could assist here. Since debt management increases financial well-being and financial well-being is believed to be linked to productivity through reducing stress and distraction, it increases their productivity and it’s also in the best interest of the employer. However, people’s financial circumstances are viewed as private matters best dealt with outside the office. ‘Meddling’ in these affairs is where elements of paternalism are seen to come in.
But people do not leave their financial problems at home, as we know. We know over-indebtedness is a huge problem and people bring this problem with them to work. We also know it’s a systemic problem, since most over-indebtedness emerges from reckless lending. The reason we say this is that the law requires, among other things, that an affordability assessment is carried out and that the provision of a loan must not cause a person to become over-indebted. Therefore, if these things are done, over-indebtedness is not likely to result.4 Conversely, over-indebtedness can often be caused by reckless lending. Employers are paying for this systemic problem, so why not address it? Why not see this as ‘empowerment’ rather than ‘paternalism’? Empowerment is defined as ‘the process of becoming stronger and more confident, especially in controlling one’s life and claiming one’s rights’.5 This sounds like the very essence of what could result from successful debt management solutions.
Our inaction as a financial services industry that touches employers daily has, in part, led us to this point. We haven’t been quick enough to understand the impact of the system on employees and employers, and we haven’t packaged our story in sufficiently compelling terms.
Let’s not forget that we have an existing set of solutions on offer to employees over which they have very little say. Many employee problems that are the antithesis of well-being, such as not having savings for emergencies and having excessively high debt-to-income ratios, also adversely affect the outcomes of the benefit programmes employers have in place. Employers need to ask themselves whether they want these outcomes to improve and whether they want productivity to increase. If the answer to either or both is ‘yes’, we must do things differently.
It’s difficult to change. Usually a situation has to be so uncomfortable that change is the only option. Are we there yet? Perhaps we need to feel the systemic impact of the proposed National Credit Amendment Bill before we can say ‘yes’. But that may be too late.
Our inaction as a financial services industry that touches employers daily has, in part, led us to this point. We haven’t been quick enough to understand the impact of the system on employees and employers, and we haven’t packaged our story in sufficiently compelling terms. When parts of the financial system start to reel and we feel the knock-on effects of that, we’ll realise there was a time when reckless lenders could have been responsibly challenged and those needing relief would have received it, protecting deserving lenders and borrowers by using effective debt management solutions without having to resort to being told what to do, as will be the case if the bill becomes law.
Over-indebtedness is not the only example with a similar trajectory. Others include health and National Health Insurance, and wages and legislated minimum wages, leading us to the same tentative conclusion: what we don’t manage will be managed for us.
We’ve spoken about a system that was adopted from other systems designed for people and organisations in other circumstances. Organisations have used the benefits offered by other companies in their industry as a benchmark for measuring the competitiveness of their own. And benefit offerings are viewed as necessary in competing for scarce skills and the best ‘human resources’. ‘Skills’ and ‘resources’ are both depersonalised terms; this is how we’re articulating our understanding of ‘human capital’ and what it needs.
The reality is quite different. Research reveals that, while the circumstances and events that people experience may be similar for groups of individuals, we resist having our needs served according to the group average. The Value Theory of Job Satisfaction tells us that people experience higher levels of job satisfaction when they receive more of what they value from their jobs.6 What people value is unique to them, as it arises from the interplay of personal factors, experiences and circumstances. Knowing what people value and having a relevant offering in the workplace requires engagement and responsiveness – themes we return to later on. Job satisfaction influences life satisfaction. Through this relationship, the work environment also impacts on well-being.
We can see from this discussion how interconnected everything is. If we start with the individual and recognise that employees and their families have problems that affect their work, we can introduce relevant solutions in the workplace that benefit employees and have a broader impact on the systems they’re a part of, eventually having a positive impact on society. Or we can have changes imposed on the financial and corporate system that attempt to address these same problems, with the tool that government has at its disposal: regulation. This, too, will impact on the individual and the corporate, but the impact is less well understood and therefore certainly riskier, if not almost certainly worse. Also, complying with legislation consumes valuable resources that could be spent anticipating and inventing new solutions.
As an industry of actuaries and experts in advice, we love to diagnose. We need to fully understand a problem before we propose how to solve it. And while it’s right to have due regard for the complexities inherent in pricing risk (managing moral hazard risk, for example) and paying claims, what’s needed to move us forward is an outcome or impact mindset rather than a diagnostic one.
We know enough about the problems. Let’s implement solutions so that we can produce a different answer next year to the question of what has changed and, more specifically, what has improved.
Almost two years ago, a client of my previous employer told me he thought that the financial services industry was doing a disservice to South Africans by competing in the well-being domain. He felt that each provider had so much to offer but none had the full set of tools to realise the best impact. As the head of benefits for a major South African company, he’s heard all the stories and this was his take.
Given that the current system is a legacy of the past, should we not collaborate to leave a legacy for the future? Might we rethink South African employee benefits for the well-being corporation?
Have we set too much store by the competitive edge? And who really has that now? Are we perhaps all lagging while others, including new innovative entrants, decide how things will be, so that we can then prepare our businesses to respond?
What we need to do is act on the information we have. Then we need to measure the impact of those actions and reflect on the results. If they are not what we expected, we need to change the actions and measure the impact again. Not all actions need to succeed. If we are to make a difference, we need to start small and fail early. We’re all adopting an agile way of work in certain areas but not in employee benefits. Here, the wheels turn slowly. This is not surprising, given that aspects of people’s well-being are at stake, but it is not getting us anywhere. There are some things we know are essential, and we should do them to start reaping the rewards as an industry and as corporate South Africa.
Well-being shields are the fundamental things we need to get right to have any sort of foundation on which to build.
The first is emergency savings. Everybody needs emergency savings. Period. No matter how many things you do right, if you cannot weather an adverse financial event or unexpected expense, you cannot secure your financial well-being.
The second is access to day-to-day healthcare. If you want your employees to come to work ill (meaning they won’t be productive and may make others ill), then you can ignore this advice. People need to be healthy to be able to work, and they need the same for their families, so that they don’t worry while they’re at work.
The third well-being shield is for the organisation. Understand your absenteeism. Who is misusing their sick leave and family responsibility leave, and why? Understand this and you will find out what other interventions are needed. For example, an employee with financial problems could periodically be absent for a day at a time. Repeated absences of several days at a time could indicate an unmanaged chronic condition or depression. In each case, proactively engaging with the employee and referring them to someone who can help could mitigate further bouts of absenteeism as well as the presenteeism (being at work but not being productive) that invariably accompanies it. Absenteeism analytics and management are beneficial for healthy employees because nobody wants to do more than their share of work. They also benefit employees who are in trouble by giving them access to the right help at the right time.
The fourth shield is to be proactive. Don’t wait until people have used up all their sick leave before addressing problems. Give your employees tools to engage with their mental, social and workplace well-being, and use these and your absenteeism management programmes to provide the right assistance at the right time. This borrows from what some healthcare providers are getting right by using the links between physical activity and mental and physical health.
The final shield is also about being proactive and relates to the management of chronic conditions. According to a recent article, tuberculosis, diabetes, cerebrovascular diseases, heart disease and high blood pressure are now the biggest killers in South Africa.7 A quick look at this list tells us that these conditions quite likely qualify for classification as ‘unmanaged chronic conditions’. Presumably these conditions have a significant day-to-day impact before taking their full toll on people. If you can help people manage their chronic conditions, you will save much in terms of lost days, disability case management and the effects of high medical expenses on employee well-being.
Giving the right advice at the right time
Let’s consider an example of the impact of some of these measures on an employee’s ability to meet more of their needs. We’ve discussed that unmet high-priority, short-term needs result in low financial well-being and poor health, which in turn lower employee productivity. Employees have these unmet needs because they are constrained by their budgets, make poor financial decisions, don’t keep records of their expenses, don’t have insurance or emergency savings and so forth.
Each person has a range of specific needs and goals that relate to their financial well-being and health. The typical employee needs expert help to identify and prioritise their needs. This means that access to advice is a key component of arriving at an ordered picture of each person’s circumstances, needs and aspirations.
Human resources (HR) functions are not well placed to provide this insight to employees, although it is often demanded that they do so. However, as we see on page 228, the HR function can play an important facilitating role here.
Employers can make a significant difference by facilitating access to advisers at the right time. This is a crucial point: timing is important. The same intervention can have a positive effect or no effect, depending on when it is presented. If a solution is presented at the right time (when it meets a specific need), there is a better chance of it being taken up and meeting the need it has been designed to meet. This highlights the importance of identifying work-life and home-life events that present an opportunity to engage with employees on financial and other needs, and to meet these with the right solutions.
HR has a critical role to play in making the right interventions available at the right time. Employees need access to relevant information and advice before joining an organisation so that they can make good decisions about preserving their retirement funds from their previous company. HR can make a difference to the financial well-being of employees by making advice and information available at this critical event.
Figure 3.2.2 shows an example employee scenario, with the employee’s set of needs prioritised clockwise from most urgent to least urgent.
The current state for the employee in our example (not an unusual case) is that their employer is helping them meet a small subset of their longerterm needs (the green blocks). This is a typical employee benefit offering at an employer that doesn’t offer healthcare cover to all employees. Most employed South Africans do not have medical aid. What is noteworthy (and again typical) is that the employer is not helping the employee to meet their most urgent needs. This puts the effectiveness of what the employer is doing at risk. For example, if the employee is under financial stress, they may resign and cash in their retirement savings since these may be their only savings. In this example, the employee is under financial stress and can’t afford to spend money on meeting urgent needs (shown in the grey blocks).
People often have needs that are more urgent and important to them than the ones their employers help them meet with the employee benefits they provide. This insight helps employers to consider how they could provide valuable benefits to most employees and improve the impact of the benefit offering. The well-being shields proposed earlier are a good starting point.
Figure 3.2.4 shows what a more productive future state could look like for the employee in our example if the employer decides to implement a debt management intervention and a low-cost health (primary healthcare) solution for employees.
The employee benefits because more of their urgent needs are immediately met. In addition, within three months the debt solution helps the employee save 11% a month on their income. With the right advice, the employee can take responsible steps to build a savings shield, take out short-term insurance for vital possessions (an additional shield) and get income protection should they become disabled.
Effective debt management solutions can significantly increase an employee’s ability to meet more financial needs more effectively within their budget. In April 2017 one debt-solution provider shared that their clients experienced an average saving of 33% of instalments through loan consolidation and effective, responsible negotiation with providers.8 Another leading provider makes use of various debt relief solutions, including the challenging of irregularities such as prescription, reckless lending and high collection fees. Such debt relief solutions result in consumers saving an average of 11% of their income (used in the example above) 12 months after the intervention. This is enabled by reducing debt instalments by 55% on average, creating much room to allow for savings. Furthermore, 85% of clients accessing debt relief remain free of unsecured debt 12 months after rehabilitation.9
We’ve heard it said that the longest journey starts with a single step. Here we’ve discussed a few steps that are likely to help navigate the longer journey more successfully – with the goal of being more financially well at each stage. Both emergency savings and short-term insurance solutions act as a shield for longer-term (retirement) savings. Once the emergency savings pot has an appropriate value for the employee (we address this in the 'Emergency Saving's' case study later on) and debt repayments are reduced, available funds could be channelled to meet other savings goals (such as children’s education) and provide protection against unplanned expenses, like funeral costs. The result is a level of future financial well-being that is far greater than the sum of the parts.
Using a ‘bottom-up’ approach to addressing well-being topics in the workplace that starts with solving known problems is not only more agile but also implies a new way of working. It suggests that the most important thing employers can be is responsive. We can achieve this new level of sensitivity to the workplace only through engagement. Our traditional measures of workplace well-being (absenteeism and employee turnover) are too aggregated and too reactive, too late. Used correctly, these analytics can be useful diagnostic tools but they are not useful for early intervention. What we need is to engage regularly with employees in the workplace to gain insight into their well-being at the right time. And the right time is when we can take preventative measures based on early warning signs.
There is an emerging type of employee assistance model that gives employers a platform for employees to regularly engage on most of the topics we’ve mentioned, with a view to early problem detection and intervention, and meaningful employer reporting. However, having a platform for engagement and getting engagement are not necessarily the same thing. The platform harnesses the idea that the workplace is essentially a social place where an employer exerts influence through management and HR structures and where peers influence each other. These behaviours can be used to encourage engagement. Employers want emotional commitment from employees because it’s good for business. One of the ways to get this is for employees to believe they work in a caring environment. An employer that is taking the time to understand employees’ problems and their impact in the workplace on an ongoing basis, then providing employees with tools to help solve their problems, is likely to be seen as going a long way towards demonstrating this care to employees.
How this kind of platform works is that it provides a place for employees to be asked about and responds to questions about their situations, circumstances and feelings, and creates a dashboard for each employee that shows how they’re doing. Supporting the platform and the findings, a team of experts engage with employees on the results. All of this is confidential. What a provider of this solution has told us is that 95% of cases are solved through proactive engagement with the employee as soon as early signs of problems are detected. Only 5% need additional (paid) interventions. The benefit to employers is that employees are swiftly and proactively restored to a state of productivity. The benefit to employees is that they can function more optimally in their work and personal lives than might otherwise be the case by addressing problems early on and preventing more challenging problems from emerging later (similar to the case for chronic disease management).
The barrier to optimal success for engagement platforms that support employee well-being in South Africa is twofold: first, there is currently no platform that integrates all the elements of employee well-being and productivity that employers need to address. Second, there is no platform that can reach all employees in a sustainable way. Most solutions tend to be especially good at physical health, emotional wellbeing or financial well-being only but not all three. Local solutions are web-based and work well in office environments where people have access to computers and the internet. Both these areas of weakness represent opportunities for somebody.
As discussed, there are also several providers of debt solutions in the market that are making a difference at an individual and company level. Some providers work with employers to holistically address workplace over-indebtedness; others help individuals improve their financial well-being situations. Both approaches have their merits and depend to some extent on the level of involvement an employer chooses to have. What is needed is for more employers to play an active role in helping employees solve this problem, as it affects their business outcomes.
Another example of ‘getting it right’ is the number of companies that make employee assistance programmes (EAPs) available to their employees. International research shows that these programmes are successful, based on their positive impact on productivity.10
An enhancement would be to add a more proactive engagement platform (as described above) to the traditional EAP. Another area that needs improvement is the way in which employee assistance is activated. Almost every EAP brochure highlights the importance of management involvement, yet one extensive study found that only 5% of referrals are made by supervisors.10 If a programme is integrated into management activities, managers can support employees by referring them to the programme. An EAP that is more broadly integrated into HR practices through a platform would enable the employer to identify initiatives that are aimed at addressing problematic trends that are identified from the data. For example, an office ergonomics issue could be identified in an area of the business and could be addressed before it has a significant impact on productivity. There are a range of opportunities presented by having access to good data that yields insights, as opposed to offering workplace programmes that are aimed at the average employee and address general issues instead of specific problems.
There are a variety of successful well-being solutions on offer. We’ve discussed some of the problems that imply there’s a need for employers to combine solutions to effectively address all employee well-being needs. However, this could bring a prolific range of service providers to manage. There’s a role here for service providers to bundle best-of-breed solutions, and monitor and manage performance.
Although many employers make use of well-being services, they usually don’t have a good idea of the impact of those services on productivity. EAP metrics, for example, usually focus on utilisation or clinical outcomes. If an attempt is made to track the impact on productivity, absenteeism is usually the metric used, yielding little insight into the underlying issues or how treating those issues affects productivity.
Although many employers make use of well-being services, they usually don’t have a good idea of their impact on productivity.
A company called Chestnut Global Partners, LLC issues annual reports on the effectiveness of EAPs in the US in terms of their impact on absenteeism, presenteeism and life satisfaction, to name a few. The long version of the questionnaire instrument used for measuring the impact contains 25 questions; the short version, only five.11 Their results show that EAPs are successful, especially in managing presenteeism that results from the types of personal problems which lead to employees contacting their EAP provider for assistance. This international approach provides us with a critical standard for understanding problems and interventions in the workplace. The implication is that with a proper impact measure we can calculate the return on investment of an intervention. Bringing this discipline into the sphere of HR provides a common language for talking about costs and employee benefits that can be understood across the business. If we really want to improve the well-being of employees and the organisations they work for, we need to be able to critically evaluate any steps we take to achieve this.
This approach is closely aligned with an agile approach to well-being (although this may not be apparent yet) because impact measurement is conducted on an intervention to address problems, rather than an overall worksite. The process is that the first measurement is taken before treatment and the second measurement is taken when some time has passed after treatment. The difference in the two measurements is the improvement. The time delay between the end of treatment and measurement ensures that a persistent rather than temporary impact is being measured. ‘Measuring’ in this case involves self-reporting of how the problem affects productivity and the situation after treatment. It has been shown that this methodology extracts valid results.12
This approach can be applied across well-being interventions, using the information to continue with things that are working well, to stop things that aren’t, and as an indicator to try something new. We will eventually see the impact on absenteeism, employee turnover and retirement fund outcomes; but we will know much sooner than that if we are on the right track.
Poor financial behaviour plays a significant role in poor financial outcomes. In addition to an employee benefit offering that meets the needs of employees, employers need to focus on promoting and encouraging behaviours that are aligned with well-being and the objectives of the organisation. The array of behaviours that support organisational objectives is vast. They range from complying with chronic medication to engaging with the employee benefit programmes, and enabling HR objectives. Being financially well is related to achieving a vast array of organisational objectives. Central to almost every other objective is being financially well. Being financially well requires a range of steps (described further below) to be taken by individuals that relate purely to behaviour elements rather than income levels or the financial obligations faced.
The good financial behaviour steps include having a budget, recording expenses against that budget, having a financial plan and sticking to it, and making good decisions. It’s also true that some knowledge, and access to good advice and sound products, is needed to fuel this behaviour.
A key to unlocking the problem of changing behaviour seems to lie in solutions that use the workplace as a community and use social forces to good effect. We know there are a number of programmes out there that have achieved a measure of success in some aspect of well-being, such as incentivising physical activity to promote health. Financial services providers need to crack the code of how to motivate employees to get better outcomes from financial products and deliver better workplace outcomes for the clients they serve. The first provider to market with a holistic behavioural-change engine will reap significant rewards in terms of happy and financially well clients, and a robust and sustainable future market for the range of products they offer to meet various needs.
One response is that the five shields of well-being are already being paid for in the form of productivity. The challenge of quantifying the impact of well-being initiatives on the workplace, especially in terms of profitability, means this response has not been particularly successful at spurring employers into action. Fortunately, we have some thoughts on some new funding options. In addition, by improving EAPs (expanding the scope, making them more proactive and engaging) and measuring their effect on productivity, additional spending may be able to be justified based on measurable productivity improvements. Changing the conversation here from one that’s about utilisation (and, sometimes, clinical outcomes) to one that’s about the impact of the programme helps HR and employee benefits practitioners to motivate for additional investment. Measuring the impact of this additional investment provides the opportunity to build a well-being organisation incrementally over time, in an agile and responsive way.
The status quo is just that. We can formulate a new status quo rather than continue with the one we’ve borrowed from a system within a different context aimed at meeting different needs from those we face in our workplaces.
We can act early (and, if necessary, fail) and measure the productivity impact of everything we do. By providing employees with tools that allow them to play an active role in their own well-being, we create a system that is empowering. Engagement and responsiveness are reciprocal elements that involve employees and employers, and form the cornerstone on which well-being can be built.
It’s about more than having a story of financial well-being, what it is and why it’s important. It’s about making changes and doing things differently, reflecting on the impact and adjusting our actions accordingly.
We can act early (and, if necessary, fail) and measure the productivity impact of everything we do. By providing employees with tools that allow them to play an active role in their own well-being, we create a system that is empowering.
Next to family bereavement, divorce and new home purchases, it’s ranked fourth or fifth – depending on your circumstances – among the most distressing experiences. Starting a new job can be taxing for the toughest of us. Yet, onboarding new employees is a ritually cold, impersonal transactional affair.
In theory, you’d think the onboarding process should:
But par for the course for a new employee onboarding process is that it is administratively biased rather than centred on well-being.
Those of us fortunate enough to have had a formal job are familiar with the recruitment process. You’re presented with an offer letter indicating the proposed total cost to company and a short description of other benefits. In many cases, details of the medical benefits and risk benefits are not included in the offer letter. In some cases, a sample payslip is included, which encourages the candidate to focus on immediate take-home pay. Most of the time, no mention is made of the benefits of preserving retirement savings from the previous employer.
Your eye flits across the text-laden clauses and fine print to the bottom line – your net income. You’re then typically put through an onboarding process during the first few days at the new employer. It’s a guided tour of the new work space.
Then long-winded presentations about various aspects of company policy. You’ve forgotten company policy – the do’s and don’ts – by the end of the speeches. A single presentation slot is dedicated to explaining employee benefits. They’re layered with corporate jargon and convoluted processes. They’re layered with mystifying corporate jargon and convoluted processes. As the messengers, HR practitioners are often reluctant or unable to answer the many questions asked. Most are also not allowed to give advice.
Just when you think the worst is over, you’re accosted by a mound of documents. It’s called ‘paperwork’ in HR speak, even though the documents are completed online these days. You’re asked to give the employer information such as:
By the end of it, you feel like you’ve given away the most personal details of your life to an anonymous party. Still, your consolation is you’re transacting your labour value for income security and, hopefully, financial well-being. Yet, the choices you’re making are with little or no understanding of their long-term consequences for your take-home pay. You rely on HR to help you to complete the paperwork. You’re none the wiser. You crave advice and validation of your decisions at this point. HR reluctantly proffers financial advice – a role they’re not equipped to play. They either recommend options based on rules of thumb that may not apply to you or decline to give you any advice. You’re confused and think that perhaps you should speak to your financial adviser before proceeding, but even if you had access to one, there isn’t time. You’re told the paperwork has to be completed and the information sent to payroll for processing. ‘Payroll’ sounds enticing. They’re the office that releases your monthly income, right? So you plod along, regardless of lingering doubts. After some hesitation, you consider opting for the same choices made by other new employees, regardless of their different individual situations. The wisdom of the crowd, in this case, is a lifeboat you cling to.
And so, at the click of a button or tick of a box, you sign off on your future well-being.
In completing the forms, employees can’t see how one decision may affect their other benefits or their holistic situation. For example, their net retirement contribution and long-term retirement outcome may be compromised if they increase their insurance benefits. The process is designed to make things easy for HR rather than enable employees to understand the trade-offs of whether paying off debt now with retirement savings is a better strategy than transferring those assets to the new job, for example – and make long-term decisions for their financial well-being.
By the end of the process, many employees do not know the full details of their benefits packages and make decisions based solely on maximising their monthly take-home pay. It’s no surprise, then, that when new employees are not properly inducted into a culture of financial well-being, interventions afterwards have limited success.
There is a great opportunity for employers to reimagine the employee onboarding experience as one that gives employees a positive perception of the employer and creates structures that will systematically improve their financial outcomes. The goal should not be to construct digitised versions of the old processes, but rather to push boundaries and deliver delightful experiences that could compete with the best of industry practice. A quick and seamless process of communicating an employee’s total package and full range of benefits will resolve the first trade-off – the employee’s labour value for the employer’s value proposition – and lay the foundation for well-being trade-offs along the journey.
Employers should also take on greater responsibility for helping new employees visualise and connect to their future selves as part of the onboarding process. More concrete actions should be taken to understand where employees are now, what path they are on and how that path can be improved by the decisions they make. These decisions relate to preserving savings, how they configure their package and what lifelong learning they enrol for.
By ensuring their employees start on the right path – rather than focusing on completing all administration in time – employers can help improve their employees’ financial well-being.
There is a great opportunity for employers to reimagine the employee onboarding experience as one that gives employees a positive perception of the employer and creates structures that will systematically improve their financial outcomes.
1 OED Online. 2018. ‘paternalism, n,1’, 19 June 2018, Oxford University Press (online).
2 Wikipedia. 2018. ‘paternalism’, 19 June 2018 (online).
3 OED Online. 2018. ‘well-being, n,1’, 19 June 2018, Oxford University Press (online).
4 South Africa. 2005. National Credit Act (No. 34 of 2005).
5 OED Online. 2018. ‘empowerment, n, 1.1’, 19 June 2018, Oxford University Press (online).
6 Greenberg, J. 2011. Behavior in Organizations, Pearson Education Limited, Harlow, Essex (book).
7 De Wet, P. 2018. These are now the top natural killers in South Africa, 20 June 2018, Business Insider SA (online).
8, 9: Gardner C. 2017. Summit Financial Partner (personal communication).
10, 11: Chestnut Global Partners, LLC. 2017. Workplace Outcome Suite (WOS) Annual Report 2017: Comparing Improvement After EAP Counseling for Different Outcomes and Clinical Context Factors in Over 16,000 EAP Cases Worldwide (online).
12 Chestnut Global Partners (2017).