Post on 27-Dec-2015
The case for workplace financial education
Charles Cotton, CIPD Performance and Reward Adviser
Central London Reward SIG
15 October 2012
© CIPD
The plan
• Talk about the business case from an employer perspective
• Hand over to Jeremy Mindell from Henderson Group
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Outline
Definition
1. Employee value and appreciation
2. Talent
3. Wellbeing
4. Communicating change
5. Business environment
6. Managing risk
7. Making the world better
© CIPD 4
Definition
OECD definition as the:
‘process by which financial consumers/investors improve their understanding of financial products, concepts and risks, through information, instruction and/or objective advice, develop skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being’.
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1. Employee perceptions and value
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Employer expenditure on reward is significant….
John Lewis Partnership , 2011
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..and set to rise through AE
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Employee appreciation
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Sophistication
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The power of communication: bonuses
Net satisfaction scores
Employees who got a bonus and reported that they were given an explanation
+74
Employees who got bonus and reported that they were not given an explanation
+21
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The power of communication: pay increases
Net satisfaction scores
Employees who got a pay rise and reported that they were given an explanation
+71
Employees who got a pay rise and reported that they were not given an explanation
+33
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The power of communication: freezes
Net satisfaction scores
Employees who got a pay freeze and reported that they were given an explanation
-15
Employees who got a pay freeze and reported that they were not given an explanation
-65
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Employee understanding
Impacting on:
• Appreciation
• Engagement
• lower employee turnover,• lower absence• high performance
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2. Talent
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Current and future talent
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3. Wellbeing
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4. Communicating change
Changes:• Automatic enrolment,
from October 2012• Real time information,
from April 2013• Universal Credit, from
October 2013
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5. Business environment
• help employees appreciate the economic environment
• and business contexts.
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6. Managing risk
tPR expects• employers to take
more responsibility for DC
• offer education and assistance to employees
Employee insolvency
Fraud
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7. Making the world better
• OECD, poor financial literacy associated with:• A lack of trust in financial
institutions • Mis-selling of complex
products• Undercoverage of risks• High levels of indebtness• Low levels of retirement
saving• Higher costs for
disadvantaged groups
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