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Why Customer Experience Is Key

Disruption is inevitable, and no organization is immune. Findings from McKinsey suggest that the current pace of disruption is happening 10 times faster than the Industrial Revolution, at 300 times the scale, and with 3,000 times the impact. This is an unprecedented opportunity for businesses to thrive, but at the same time an unprecedented threat to slower-moving organizations, which may end up allowing themselves – or their industry – to be disrupted.

“We are at the precipice of unbelievably powerful advancements driven by technology. We no longer have to ask if we can do it, but if we should do it, and, if we do, how do we do it responsibly,” says Eric Boyum, managing director, technology and communications industry, at Aon.

Embracing disruption – both managing it and anticipating it – is crucial for businesses to thrive during this change. But what constitutes disruption, and how does it differ from innovation? Putting the customer experience first and truly understanding audience needs is critical. From agility to forward-thinking industry trends, established organizations can learn from newcomers and help their teams innovate on behalf of customers – key to thriving amid change.

In Depth

Today, innovation and disruption confront many industries, driven by a host of entrepreneurial firms looking for opportunities to beat incumbents at their own game. The situation becomes even more interesting, however, when entrepreneurs are a leading force in creating a new game.

Boyum, who works with some of the world’s leading technology companies, offers a key distinction between innovation and disruption: “All those that participate in disruptive movements can be considered innovators – however, not all those that innovate are necessarily disruptors.”

Randy Nornes, executive vice president, Aon Risk Solutions, elaborates: “Disruption does not come from typical competitors,” where most companies traditionally focus their defensive efforts. Instead, disruptors often originate from outside the industry being disrupted – which means established players don’t recognize what’s happening until too late. The disruptor then captures and develops a market, eventually unseating incumbents.

See also: Key to Digitizing Customer Experience  

When Apple released its first smartphone in 2007, it probably wasn’t looking to transform the transportation industry. But it turned out that putting a GPS unit in the pockets of billions of people across the world would crack open a whole universe of commercial applications inconceivable to the original inventors. Uber, the paradigmatic “disruptor,” was quick to see the opportunity.

Smartphone technology was available to everyone. Uber’s ability to capitalize on Apple’s innovation and aggressively outpace incumbents in the taxi industry through offering cheaper, more flexible rides, marked it out as a true disruptor. It is now the most valuable private company in the world.

Apple itself was, of course, also a disruptor. It jumped on the then-new technology of file-sharing with iTunes and disrupted (many would say fatally) the physical music retail industry. Spotify, in turn, disrupted iTunes by putting subscription streaming ahead of paid downloads.

It’s not just about innovating and making products better – it’s about anticipating consumer needs. This type of disruption often comes from new players, as opposed to traditional competitors. “The company that provides the most taxi rides does not own any taxis; the company that rents the most rooms does not own any rooms, and the company that distributes the most media does not generate any content,” Boyum says. “These companies are, of course, Uber, Airbnb and Facebook.” They got there not by being the best in their field at providing a certain product but by providing a completely new one.

Data for the People

“We’ve seen entire industries emerge because they promise something to the end-user: a better customer experience,” Nornes says. Uber could have made bigger, plusher taxis. Instead, it correctly saw that what travelers wanted out of their experience wasn’t necessarily luxury but affordability and convenience of a kind that traditional taxis had yet to provide.

Through a data-driven understanding of audience or a market, disruptors seek to prioritize customer experience and work to improve the status quo – often creating a new one. “A lot of sharing economy companies focused on technology and new ways of capturing data,” Nornes says. “In the transportation world, disruptors leveraged the GPS technology that’s inside a smartphone to create a superior service.” In turn, this data has been used in other ways to improve the ridesharing services. An Uber passenger can feed back data via ratings, which the company can then leverage to further optimize user experiences and create a model that is, to an extent, self-regulating.

This data-led process of transformation is set to intensify. By 2020, there could be 20 billion internet-of-things devices worldwide. Understanding the emergent narratives of consumer behavior that this enormous mine of data produces will be the first order of business for tomorrow’s would-be disruptors.

The Ripple Effects of Disruptive Innovation

“The most important lesson to learn is that disruption can happen to everyone – no one is immune,” Boyum says. This disruption can come in many forms, other than direct competition.

Nornes asks: “How do you deal with independent contractors? How will regulations evolve? What are the talent implications – do companies have the necessary disruptive talent to keep ahead of competitors?” Some of the more wide-reaching implications of disruption could include:

Insurance & Regulations: Businesses don’t operate in a vacuum – from insurance to regulations, they are governed by a complex network of secondary services, which will also have to adapt to disruption. Current insurance policies are built on certain assumptions about how customers engage with products or services. Initially, Uber struggled with getting its drivers insurance coverage, as providers had no products that accommodated the unique risks of non-employee drivers – of course, disruption here also means an opening of markets for new products.

There must also be responses to the shifting nature of work in the gig economy. Is an Uber driver a freelancer using an app, or should he be treated – and compensated – as a full employee?

Employment & Talent: Headlines proclaiming an unemployment doomsday at the hands of automation are abundant. Don MacPherson, partner, Global Engagement Practice at Aon Hewitt, frames this as a hiring and retention issue: “Are we still going to be able to bring people into this organization as we’re seen to be shedding jobs that are now obsolete?”

But, he explains, organizations should relish the opportunity to transform their talent and training strategies. Incumbents should look at what innovators are doing: What types of talent are they bringing on? How flexible is that talent? And, perhaps most importantly, are they fostering functions like R&D, which will allow them to leverage their disruptive capabilities in a competitive environment?

Societal Impact: Models that disrupt multiple industries, like the sharing economy, also have widespread societal implications. A firm like Airbnb disrupts far more than just hospitality incumbents. Homesharing can create incentives for more buy-to-rent activity, which causes distortions in rental markets as prices rise. This, in turn, can provoke regulatory responses from local governments – which affect the whole housing landscape, rather than just the operations of one company. And so they have, in Paris, San Francisco and New York.

The onus is on the disruptors to communicate the benefits they bring for all stakeholders. For instance, customers enjoy ridesharing because it’s more affordable and convenient, but reducing the number of cars on the road also helps fight pollution. Similarly, flat-sharing could emphasize the tourism revenue it generates.

See also: Smart Things and the Customer Experience  

Disrupting for Tomorrow

If companies can perform this balancing act – from embracing new technologies, models and services around consumer needs, to preparing for the unknowns that disruption can bring – then they can find huge success in the coming years.

“Disruption is the result of dramatic innovation. And whether business models rise and fall on this is not the point,” Nornes says. Disruption is a bigger trend than the fortunes of an individual company – it’s the rise of new ways, perhaps better ways – of doing things. By recognizing evolving customer needs and forcing new ways of thinking within an organization, companies and their leaders can make sure they are on the right side of history.


The Stubborn Myths About Older Workers

When it comes to retirement, a significant cultural and demographic trend is taking place. Twenty-five years ago, only about one worker in 10 planned to stay in the workforce beyond age 65. Today, that number has risen to more than 50%. In fact, according to the 16th annual Transamerica retirement survey, 82% of 60-somethings expect to work or are already working past age 65.

Today’s boomers are not ready to stop working. They are better-educated, more physically fit than their parents and perhaps not as financially comfortable as they’d like to be. In short, they are defying stereotypes about an aging workforce and redefining retirement.

It’s not strictly a financial matter. “Money and access to healthcare are of considerable importance,” reports the AARP Public Policy Institute, “but so are the desires to remain active, make a contribution and maintain social relationships at work. Furthermore, these workers often enjoy what they are doing.”

Boomers are still working today at ages when their parents and grandparents had retired. This is particularly true in a service industry like insurance where physical strength is not an issue. Think of today’s 65-year-old worker as yesterday’s 50-year-old worker.

What is surprising is that few insurance firms have adapted to this new trend or have put policies and practices in place to accommodate today’s retirement reality.

Yet, when asked to name their greatest challenges, many insurance firms concede that finding and keeping qualified staff is at the top of their list and state that the loss of talented and experienced older workers is a key concern. This issue is further confirmed by the accounting firm PwC’s report that concludes the industry faces “a potentially massive loss of skilled, knowledgeable workers” as large numbers of older insurance workers approach their traditional retirement dates. The report notes that hiring millennials is only part of the solution and does not adequately address the transfer-of-knowledge issue.

See also: Why Are We Still Just Talking Diversity?  

Perhaps it isn’t so surprising after all. There remains a litany of stereotypes and negative perceptions to explain why firms tend to reject older workers, including:

  • Hiring managers tend to see older workers as more likely to be burned out, slow to accept or adapt to new technologies, more likely to miss work due to illness and poor at working with younger workers, especially younger supervisors; and
  • Many assume older workers are less creative, less productive, slower mentally and more expensive to employ than their millennial counterparts.

But current research negates these stereotypes:

  • According to a study this spring prepared by Aon Hewitt for AARP, “workers aged 50-plus can help employers address current and future talent shortages.” AARP and others have long argued that older workers are reliable, flexible and experienced and possess valuable institutional knowledge.
  • Writing in the AARP Bulletin on “The Value of Older Workers,” T.R. Reid reminds us that hiring skilled, vintage workers can be “a boon to employers, a boost for the U.S. economy and a bonus for the workers. For employers, the ‘unretired’ provide a pool of experienced labor that has proved to be productive, dedicated and loyal.”
  • One of last year’s blockbuster movies, The Intern, took notice of boomers reentering the workforce. Robert DeNiro played a septuagenarian whose experience and life skills help turn around the business run by the wonder-kid played by Anne Hathaway. His character pinpoints the reasons employers should want an older worker: “I’ve always been a company man,” he declares. “I’m loyal, I’m trustworthy and I’m calm in a crisis.”

Researchers at the University of Kentucky surveyed large and small companies to assess how employers evaluate their older workers. They uncovered seven perceived benefits of hiring older workers:

  1. Dedication to the organization
  2. Customer-service orientation
  3. Dependability
  4. High productivity
  5. Life experiences
  6. Strong work ethic
  7. Institutional knowledge

When it comes to actual job performance, Peter Cappelli, a management professor at the Wharton School of Business, is quoted in the AARP article, “The Surprising Truth about Older Workers,” as observing that older workers outperform their younger peers. “Every aspect of job performance gets better as we age,” he says. “I thought the picture might be more mixed, but it isn’t. The juxtaposition between the superior performance of older workers and the discrimination against them in the workplace just really makes no sense.”

Nathaniel Reade summarized Cappelli’s findings: “Older workers tend to be motivated by causes like community, mission and a chance to make the world a better place; younger workers are more driven by factors that directly benefit themselves, such as money and promotions. But perhaps the greatest asset older workers bring is experience — their workplace wisdom. They’ve learned how to get along with people, solve problems without drama and call for help when necessary.”

In a Sept. 18, 2015, U.S. News and World Report article, “5 Reasons Employers Should Hire More Workers Over Age 50,” Maryalene LaPonise suggests we “forget the myth that older workers are outdated and expensive. The best are loyal and competent and may even help a business’s bottom line.” She sees their experience, confidence, “relatability,” loyalty and ability to save companies money as the key reasons to hire older workers.

In a Brookings blog, World Bank economists Wolfgang Fengler and Johannes Koettl write, “A binary system of working 100% until retirement and then suddenly moving to 0% at an arbitrary age of around 65 is one of the great anachronisms of today’s labor market.” They argue the whole idea of a “retirement age” should be retired.

See also: How Should Workers’ Compensation Evolve?  

At WAHVE, we agree in the power and performance of experienced workers. It is clear that the attitudes of insurance firms toward older workers need to be reset. For our part, WAHVE is helping reimagine both staffing and retirement in the insurance industry and bridges the gap between insurance firms’ staffing needs and seasoned professionals’ “work-life” balance preferences as they phase into retirement.

How Technology Breaks Down Silos


New digital technologies and the data they are producing have forced collaboration among senior business leaders across all levels of all organizations. To obtain insights from data to drive decision-making and embed a data-driven approach within a company’s culture, it is critical for the C-suite to lead the way.

It’s easy to talk about collaboration, but much harder to act. Analyzing information, deriving insights and responding with effective strategies requires an understanding of the analytical tools themselves, as well as collaboration. As technologies get smarter and various functional groups collaborate, simply moving to single systems can give broader teams greater visibility to inefficiencies and broken processes.

But how does a business get to such a place? What tools and strategies bring about successful coordination of activities in such dynamic situations? And what are the challenges of working together that C-Suite executives should anticipate?

In Depth

Just about every functional group within an organization can now collect, connect and analyze data. But big data – from keyword searches, social sites, wearables, mobile devices, customer feedback and so on – presents challenges as well as opportunities for business leaders. One of the biggest is how to maximize the potential of this data by transcending organizational silos to unlock its true potential.

Technology is also transforming how businesses develop and deliver goods and services and is placing enormous new demands on those responsible for strategies to navigate the challenges. These are the people who need to apply institutional knowledge, implement changes and allocate resources toward new ways of working on a day-to-day basis.

Paul Mang, Global CEO of Analytics and leader of the Aon Center for Innovation and Analytics in Singapore, says there are two types of data analysis that can be leveraged to accomplish this: business analytics and enterprise analytics. Business analytics focus on the use of established tools and capabilities, while enterprise analytics “create new product or value propositions for existing clients or new client segments altogether.”  Short-term, enterprise analytics can lead to disruptive innovation while quickly contributing to improved long-term performance.

“Business and enterprise analytics should work side-by-side and complement each other” to support decision making, Mang says.

The Changing Role of the CIO

The need to become an effective data-driven organization has dramatically increased the importance of the chief information officer (CIO), a role that John Bruno, chief information officer at Aon, says is that of “an integrator – someone who works across the entire organization to embed data within the business.”  He sees the value that information technology (IT) brings, and notes that “IT is less about bits and bytes of data, but more about bringing them together to extract specific insights.”

The need to centralize and mine big data for market opportunities and to parse out weaknesses is also prompting some firms to create a C-suite level position of chief data officer (CDO). This role would be responsible for working with business managers to identify both internal and external data sets that they may not even realize exist, as well as continually looking for new ways to experiment and apply that data.

Equally critical to communicating changes in customer preferences and behaviors, and for their ability to leverage insights from customer purchase patterns into developing new products and services, is the chief marketing officer (CMO). Like the CMO, the effective CIO needs an intimate understanding of how current technology can increase the company’s sales.

However, Bruno says, “in any large organization, there are multiple leaders in different parts of the organization who address different elements of the same challenges. It’s the CEO who can see the whole view and works to have teams bring forward integrated solutions to distributed problems.” He sees the role of the CEO as one who looks beyond short-term disruptions and organizational adjustments to seize opportunities that ensure long-term growth.

This is why, increasingly, the role of the CIO/CDO is about balancing business needs against an incoming stream of opportunities – and risks. This broad cross-business knowledge can only come from constant and deliberate collaboration with the rest of the C-level executive suite. Above all, the CIO has to be able to effectively show how technology and the subsequent data it brings are assets rather than cost centers. For CIOs to really succeed, this means informing C-level colleagues about technology and the opportunities it can create.

Making Collaboration Count: Finance and HR

The role of the CFO is increasingly about analyzing data to give it meaning and partnering across the organization to make the information actionable. One area that is seeing CFOs use data to drive real results is in collaboration with the chief human resources officer (CHRO).

Eddie Short, Aon Hewitt’s managing director, Global Data & Analytics, says that in most organizations the C-Suite has not been getting sufficient insight into people-related business issues, typically owned by human resources (HR) teams. Today, with the CIO’s help, digital tools are increasingly being used by leading organizations to measure employee performance, reduce attrition and cultivate talent through a better understanding of the data about their workforce that they can gather and analyze.

“People analytics,” as this emerging field is known, attempts to bridge the gap between HR and the rest of the organization by providing specific insights into an organization’s talent. “People analytics is all about connecting the value of your people to the strategic goals and objectives of the business,” Short says. “This approach represents a major opportunity for HR and finance leaders to take a road centered on the greatest asset that organizations have – their people – and start to shape the value-add they will create for the business over the next five to 10 years using predictive analytics.”

With skills shortages an increasingly pressing issue for many organizations around the world, gaining this kind of insight can help a business to identify and meet its future talent needs.

Aligning for Agility

As technology continues to disrupt, CEOs and the C-Suite in general must accept that there may not be a set playbook to follow to adapt and evolve. Flexibility is paramount, and often organizations must invent and reinvent as they move forward. Intelligently applying analytics tools to derive value from big data can help them navigate this new terrain.

“Today, CXOs want predictive insights,” Short says. “They want answers to the predictive ‘what could I do?’ questions as well as prescriptive – ‘what should I do?’ — questions.” Yet most tools and programs currently available are merely descriptive – to derive true insight needs additional interpretations from people who really understand the business.

This is where C-Suite collaboration becomes so vital. Organizations thrive when there are diverse and complementary personnel and systems working together. Sharing insights from the analysis of big data across the C-suite and across functions can position businesses to draw valuable insights from this data, harmonize planning around it, align their actions and understand the full value this brings both to their own divisions and the organization as a whole. And the more that data is shared, the more leading businesses discover that they can find answers to today’s – and tomorrow’s – questions.

With the measurable business benefits this data sharing can bring, the business case for breaking down silos within organizations is stronger than ever. Where this may have once been a C-Suite aspiration, the make-or-break implications of insights drawn from this data has made it a business imperative.

Talking Points

“In every industry, our analysis and our work with clients would suggest technology at a minimum is going to be a tremendous accelerant. So if you have a a business model, the opportunity to scale it more effectively, grow it more effectively gets… amplified.” – Greg Case, CEO, Aon

“The way that big data pervades most organizations today creates a dynamic environment for C-level executives to explore how it can and should be used strategically to add business value.” –  Economist Intelligence Unit

Further Reading

How Diversity Can Stoke Innovation

In an age of increasing technological disruption to business around the world, almost every organization is looking for ways to keep on top of innovation. A classic Forbes study found workforce diversity and inclusion to be a key driver of internal innovation, as alternative perspectives challenge assumptions and lead to new approaches. Numerous other studies have had similar findings. Diversity has also been proven to be good for business, with a recent McKinsey study finding that gender-diverse companies are 15% more likely to outperform their competitors, with ethnically diverse companies 35% more likely to do better.

However, simply hiring people from different backgrounds — or setting quotas for the number of women or people of different ethnic backgrounds — is not enough to benefit the company. If your company culture ends up treating all employees the same way, they will soon become assimilated into your existing working patterns, and the benefits of their diverse perspectives can be lost.

How do you encourage the continuance of the alternative approaches that diverse teams bring while sustaining the advantages of diversity for the long term? Getting the balance right is increasingly a challenge — efforts to support diversity, if implemented poorly, can seem at best patronizing, and at worst insulting and discriminatory.

In Depth

The work world is changing fast. The concept of a job for life has disappeared, with employees more likely to switch jobs than ever before. Generations are shifting as baby boomers retire and millennials seek rewarding work. The rise of the internet has made the world — and our workforce — more globalized than ever. New technologies continue to disrupt and threaten further disruption to a broad range of industries. Emerging markets are growing fast, and their rising businesses could overtake previous industry-leaders in the developed world.

As the business world has become more global, so too has the value of workforce diversity increasingly been recognized; a broader mixture of employees has demonstrated to have multiple benefits in terms of productivity, innovation and adaptability in an ever-shifting economy. But how can we maximize the advantages of a diverse workforce?

The different types of diversity

The Society for Human Resource Management, a global professional organization operating in 140 countries, notes that while most people will think of gender and ethnicity when they think of diversity, there are plenty of other traits that should be factored in. They can be split into two types: visible diversity traits and invisible diversity traits, with some falling into either category depending on the individual.

  • Visible: Skin colour, gender, age, body size/type, physical abilities, physical traits
  • Possibly invisible: ethnicity, religion, socio-economic status, marital status
  • Invisible: Sexual orientation, native-born or non-native, nationality, parental status, level in organization, education, work background, culture, functional specialty, beliefs, values, habits, personality, military experience, geographic location

Each of these diversity traits can give their owners alternative perspectives that can be valuable for business — but some approaches to diversity and inclusiveness have sought to downplay rather than acknowledge differences.

The importance of differences

As the concept of diversity has gained traction over the last couple of decades, many companies around the world have made concerted efforts to avoid discrimination and embrace the hiring and promotion of people from less traditional backgrounds. Much of the language has been around emphasizing similarities, rather than differences — trying to create harmony by encouraging employees to see what they have in common.

However, the benefits of diversity come from the very differences this approach can seek to downplay. “As hard as getting the mix in the workforce is, most companies have gotten used to the idea that we need the mix,” says Andrés Tapia, author of The Inclusion Paradox: The Obama Era and the Transformation of Global Diversity (and the former chief diversity officer at Aon Hewitt), “but they have not been ready for making the mix work, or how difficult it is. Because the more diverse a workforce is, the more difficult it is to manage … It’s not just about people looking differently, but thinking and behaving differently.”

Diversity of thought

This is why we are increasingly seeing an emphasis on encouraging and accepting diversity of thought as the most important aspect of diversity initiatives, rather than the traditional focus on simply opening up the workplace to people from different genders, ethnicities and disabilities.

“Diversity is the mix, and inclusion is making the mix work,” Tapia says. By adopting an inclusive approach to diversity, where cross-cultural differences as well as similarities are celebrated, the advantages of a diverse team can be sustained over the long haul.

Building trust

Of course, encouraging employees to express their different opinions presents another challenge: building the trust needed for them to feel comfortable to speak up. The key is to encourage acceptance of and respect for differences in approach, which can be incredibly complex and nuanced depending on the mix of visible and invisible diversity traits that make up your team’s background.

Rewarding ideas, praising suggestions and cross-cultural team-building exercises can all play a part, and there are too many approaches to fostering inclusiveness and acceptance of diversity to list here (see further reading, below, for a few overviews).

However, absolutely vital to success is ensuring there are clear feedback channels to help shift approaches to encouraging inclusiveness of diversity if any employees feel them to be inappropriate. Because, while it’s unlikely you’ll ever be as excruciatingly bad as Michael Scott of The Office in his attempts to celebrate diversity, the delight of appreciating and encouraging diversity of thought is that you can be sure that you won’t be able to please everyone all the time. The key is to ensure that you acknowledge and learn from this and use any inadvertent missteps to progress. The biggest benefit of workplace diversity, after all, is in learning from and adapting to alternative viewpoints.

Talking Points

“Employing people from different backgrounds and who have various skills, viewpoints and personalities will help you to spot opportunities, anticipate problems and come up with original solutions before your competitors do.” – Richard Branson, founder, Virgin Group

“Ideas from women, people of color, LGBTs and Generation Ys are less likely to win the endorsement they need to go forward, because 56% of leaders don’t value ideas they don’t personally see a need for… the data strongly suggest that homogeneity stifles innovation.” – Center for Talent and Innovation

“Multi-cultural teams produce different results depending on the level of inclusiveness. When a company has diverse talents but leaders ignore or suppress cultural difference, the cultural differences become obstacles to performance… When a company has diverse talents and leaders acknowledge and support cultural difference, the cultural difference becomes an asset” – Park Gyone-me, CEO, Aon Hewitt Korea

“The world is evolving at an unparalleled pace… The most successful leaders will be those who possess cross-cultural competence, a deep understanding of various peoples and a sincere appreciation for diversity.” – Donna Shalala, President, University of Miami

This article originally appeared on TheOneBrief.com, Aon’s weekly guide to the most important issues affecting business, the economy and people’s lives in the world today.”

Further Reading

New Wellness Plans: for Employee Finances

Employee wellness programs no longer just mean healthy office potlucks, pedometers and stress balls. These days, more companies are rolling out wellness programs focusing on the financial health of their employees. The change in tack comes as American workers are struggling to keep their financial houses in order. Companies are acting because financially stressed workers can mean lower productivity and greater absenteeism, among other problems. But, to be effective, a financial wellness program must address the individual needs of workers and their different learning abilities. It also must actually boost workers’ financial management skills, and keep them engaged over the long term.

The Opportunity

In January, benefits consultant Aon Hewitt released a survey of 400 national employers representing nearly 10 million workers. Three-quarters of respondents said they are “somewhat to very likely” to implement a program this year targeting their workers’ financial health and educational needs. Previously, the survey found, companies were most concerned about whether workers were participating in 401k plans. Today, however, employers are expanding their focus  to help workers improve their overall financial health.

“A growing number of companies are offering tools and services to help employees make smarter financial decisions, which can help improve employee engagement and productivity as workers focus less on financial stressors,” Aon Hewitt noted. The survey also found that “employers understand that workers can’t adequately save for retirement if they don’t have their financial house in order.”

These findings come after other surveys have highlighted how financially stressed workers can zap a company’s bottom line: lower productivity, unscheduled absenteeism, turnover and rising health care costs from stress tied to basic money management. It isn’t known if employers are just  becoming aware of these facts — or if it’s the growing fallout that is spurring employers to seek financial wellness programs. Regardless, it’s clear employers want a solution.

The History

Why did financial wellbeing become such a hot workplace issue? The answer is simple. Unless you were raised in a home that practiced and taught sound financial management skills, it’s unlikely you possessed these skills by the time you entered the workforce. Think of your own primary educational experience. Was it void of education in personal financial management? Most would answer, “Yes.”

Consider “the Greatest Generation,” who fought in World War II and kept the home front intact. These men and women worked for companies that provided pensions ensuring a comfortable retirement. They lived in a time when a successful and peaceful life wasn’t dependent on acquiring more things. This generation lived through the Great Depression, resulting in a lasting emphasis on frugal living. For most, this experience was their financial education; but they were unprepared for teaching the next generation about managing financial complexities.

Baby Boomers raised by this generation entered the workforce when the economy was growing. Jobs were plentiful, and so were mortgages, auto loans and credit cards. For many, living with debt became the new norm; however, understanding how to manage that debt was largely dependent on the family environment in which a person grew up.

Generation X saw even greater access to debt. In fact, as if the allure of accumulating more than their parents wasn’t enough, the cultural message suggested that people should spend their way to happiness. Lacking financial management education, many Gen Xers found themselves leaning on employers to solve their personal financial challenges. They requested 401k loans and hardship withdrawals, payroll advances, etc. Most of America’s working class were living beyond their  means and using the equity in their homes to bankroll their lifestyles.

But then the stock market crashed in 2008, resulting in massive losses in retirement and other types of investment accounts. Millions of workers lost their jobs, and many more suffered losses in income. And, in the blink of an eye, the equity in their homes was gone. In fact, a big percentage of these workers suddenly found they owed more on their mortgages than their homes were worth. For most among the working class, the new reality meant living with more debt, less income and fewer assets.

Even now, the Millennials approach the workforce with similar cultural conditions as Gen Xers. But there are two added wrinkles. First, Millennials are entering a more competitive job market. Second, they do so with much higher expectations of what employers will do for them.

Economists agree that navigating our financial system is becoming more complex. In each of the last three years, the American Psychological Association has found personal finances to be the leading cause of stress in this country. And medical research continues to point to stress as a leading cause of disease. We aren’t suggesting that financial wellness programs are the only answer to these problems. But  the facts suggest such an approach is very important to dealing with them.

The Solution

Employers have made it clear they plan to help employees manage their finances. In fact, 70% of employees have indicated they prefer to get such assistance through their employer.

What does the right solution look like? For starters, companies must actively promote their financial wellness programs and ensure they’re readily available to all employees. There’s a misperception that wealthier workers have less need for such assistance. Unfortunately, very few people are immune to economic hurdles: The problem transcends income, job classification and educational background.

The right solution will offer a multidimensional learning format, given that people have different learning styles and preferences. The solution also needs to be communicated in a way that appeals to most people.

In addition, the right solution will seek to keep workers engaged over the long term. Establishing and increasing basic knowledge of personal financial management is mandatory. However, given the ebb and flow of life and its changing circumstances, workers will continue to encounter new financial conditions. As they do, having an objective financial voice available to them will ensure that past mistakes aren’t repeated.

How to gauge success?

Workers will no longer get distracted by their financial challenges, thereby increasing their productivity and decreasing unscheduled absences. Workers who get spending and debt under control are saving enough for retirement — rather than extending their employment years and expanding employers’ costs. Helping workers make better healthcare choices in terms of benefits selections as well as lifestyle decisions also will help with costs.

Overall, financial wellness programs will have a positive impact on workers’ quality of life — as well as companies’ bottom lines.