You’ve begun diagnosing your employees’ needs, rolling out solutions to meet those needs, and designing your program to maximize engagement. Now how do you know if it’s working? A robust approach to measuring impact of your programs is a critical component of an effective employee financial health strategy.
What changes do you hope to see in your employees’ financial health as a result of this new policy or benefit? This could include changes to objective measures like increasing savings balances or fewer debt-related wage garnishments, as well as more subjective outcomes like lower self-reported financial stress or greater financial confidence.
How will improved employee financial health help you promote positive business outcomes and minimize negative ones? For many companies, metrics like turnover, absenteeism, and productivity are important barometers for the success of employee-focused initiatives. Depending on your industry, you might look for changes in other business-critical outcomes like improved client care, less frequent stock-outs, or fewer on-the-job accidents.
Imagine that your analysis of 401(k) plan data and subsequent employee survey revealed that many of your frontline employees are withdrawing funds from their 401(k)s and paying a penalty because they don’t have enough in emergency savings to cover unexpected expenses like medical bills.
Armed with this knowledge, you decide to offer your employees the ability to put money in an emergency savings account via a payroll deduction. As an incentive to encourage employees to use the new benefit and to build a savings cushion, you offer employees the chance to win prizes based on how much they save.
What outcomes might you hope for as a result of this change? You’d likely hope to see frontline employees using the automatic savings feature, their savings balances increasing, and fewer of them withdrawing money from their 401(k)s to cover day-to-day expenses. You might also expect employees to report lower levels of financial stress and greater satisfaction with their jobs and with you as an employer.
Which employees are taking advantage of the new policy or benefit? Consider demographics (e.g. age, gender, income, race and ethnicity) as well as job characteristics (e.g. tenure, employment type).
How are employees using the new policy or benefit? Do usage patterns vary for different employee segments? What reasons do employees give for using it?
How does use of the new policy or benefit impact employees’ financial health outcomes? Do you see greater impacts for some employee segments than others? What are the impacts on key business metrics?
Many of the same data points useful for diagnosing your employees’ needs can be used to assess the impact of your programs on employees’ financial health over time (see the Diagnose Needs section of this Toolkit for suggestions for specific metrics). For business metrics, the Good Jobs Institute has created a helpful calculator to help employers quantify the financial benefits for companies that come from investing in their people.
As always, it’s important to look beyond the averages at how how takeup, usage, and outcomes vary by employee segment. This will tell you a lot about whether your new financial health policy or benefit is having the intended effect, especially for your employees who are more financially vulnerable (be sure to also keep an eye out for any unintended consequences). What you learn might suggest opportunities to tweak the program’s design to better meet your objectives.
Be sure to talk to your benefits vendors about how they measure the impact of their solutions and data they can provide. Depending on the nature of the product or service, this could include demographic data, usage metrics, or outcomes-related data, like savings balances or loan repayment activity. While you likely already have some data that can help you understand the impact of your financial health program, your efforts will yield much richer insights if you can combine your data with your vendors’.
The most common type of impact evaluation compares a specific group of employees (e.g. users of the new policy or benefit) before and after a certain amount of time. But while this approach can yield interesting insights, it can’t tell you for sure if the new program is actually causing the changes in employee and business outcomes that you are seeing. There could be other factors, such as ways in which the employees who choose to use the program are different from those who do not, that could actually be driving those changes. This approach can also make it difficult to tease out the specific impact your program has had on your employees’ financial health from the effect of changes in the broader environment, such as an economic recession or an influx of tax refunds that temporarily boost households’ balance sheets.
To really know if your program is having its intended impact, having a control group is important. While many employers are wary of offering benefits to only some employees and not others, there are ways to create a control group that don’t require preventing access for some employees.
One way to do this is to leverage existing operational plans for rolling out new policies or benefits. For example, if you plan to roll out a new benefit in stages, consider randomly assigning locations within a given region to be part of the first wave of marketing and training. You can compare outcomes for the groups who receive the benefit earlier with those who receive access later. Similarly, if you are planning a pilot phase to gauge employees’ reactions to a new offering before rolling it out broadly, you can randomly assign individuals or locations to the pilot group and compare them with similarly situated employees who are not selected to participate in the pilot. However, it’s important to make sure that the employees in each group are as similar as possible in terms of key demographics and job characteristics.
You don’t need a PhD-level research design to begin assessing the impact of your financial health program. If all you currently have is takeup and usage data for users of your policies and benefits, start there. You can still gain useful insights, especially if you can disaggregate the data to look for differences by employee segments. Over time, you can add more data, such as from an employee survey or by creating a control group, to understand the impact of your policies and benefits on employee and business outcomes. Partnering with a third party such as the Financial Health Network or an academic institution can help you make the most of your data to understand impact.
Just like diagnosing financial health needs should be a regular exercise, so should measuring the impact of your existing policies and programs. This will help to create a virtuous circle of learning and growth within your organization, as you add to and refine your employee financial health strategy based on new insights about your employees’ needs and the impacts of the solutions you are offering on those needs.
It can sometimes take time to see the results of changes to your policies and benefits on employees’ financial health and key business metrics. For many solutions, three or six months might be too short a time to see meaningful impact on employees’ savings balances or stress levels, for example, or on important business metrics like retention. Often, observing changes over a year or more can provide a more useful measure of the success of your program. Make sure to set appropriate expectations at the outset so that you don’t lose support for the program if positive outcomes don’t materialize right away.
Measuring impact is a critical component of an effective employee financial health strategy, and begins even before you roll out new programs to your employees. Before you move on, make sure you’ve taken the time to…
Step 1: Clarify Goals
Determine which outcomes for your employees and for your business are most important to you.
Step 2: Consider Available Data
You don’t have to have rigorous research capabilities to begin assessing impact. You can begin with the data you currently have, and add to it over time to gain richer insights.
Step 3: Compare When Possible
Use a control group to measure the impact of your programs on employee financial health.
If you haven’t yet reviewed the full Employer FinHealth Toolkit, check out all the steps in the process using the navigation above or explore Resources for additional guides and case studies.
If you’ve been working through this Toolkit sequentially, congratulations – you’ve reached a significant milestone in advancing the financial health of your employees. However, your financial health journey doesn’t end here, as your employees’ needs will persist and evolve over time.
This Toolkit is designed to be an all-in-one guide for HR leaders. Yet we recognize that not all companies have the resources or expertise to independently execute all of the strategies outlined in the Toolkit. That’s why the Financial Health Network offers expert advice and peer support to help companies design and implement best-in-class employee financial health strategies. Please reach out to us and let us know how we can help.