With soaring energy bills, National Insurance contributions set to rise from April and inflation expected to reach a 30-year high, there has never been a more important time to look at the financial wellbeing of your employees.
What is employee financial wellbeing?
Employee financial wellbeing is defined as “a consequence of employees’ financial habits in relation to how they spend, save and borrow”.
With average UK pay rises forecast to be outstripped by inflation this year, The Institute for Fiscal Studies estimates that someone on an average £30,000 salary will see their pay cut by £1,600.
Here’s some statistics on employee financial wellbeing in the UK…
- 44% of women and 34% of men in the workforce have felt anxiety caused by financial stress.
- Employees are 2.2x more likely to leave when financially stressed.
- Financial concerns make employees 4x more likely to be clinically depressed.
- 60% of employees say financial matters are their number 1 source of stress.
- 8% of the UK workforce admit to taking time off due to financial stress.
Even small businesses with a limited budget can do their bit by implementing a financial wellbeing policy, improving communication of what benefits are already on offer to them and directions to external resources.
What impact can poor financial wellbeing have on your employees?
Those suffering from poor financial welbeing are more likely to experience the following:
- High Stress and Anxiety levels
- Poor Psychological wellbeing – mental health
- Sleepless nights
- Reduced cognitive function – decision making
- Poor job performance
- Absenteeism
- Troubled relationships with work colleagues
Those suffering from poor financial wellbeing are also more likely to look for a new job.
What are some of the barriers to financial wellbeing?
- Financial Jargon: People know of financial products and services but only a few understand what it all means.
- Hassle to save money: Switching energy supplier, bank account or telephone providers can be difficult and time consuming.
- Lack of time: People struggle to find time to manage their money due to various responsibilities and commitments.
- Not knowing where to go for help when they need it.
How can businesses improve their financial wellbeing policies?
Initally, businesses should start with a review of their current finanicial wellbeing policies and the current state the financial wellbeing of their employees. From here, businesses can identify the priority areas for improvement, gaps in their offering and any quick wins .
Action does not need to be costly, or involve pay increases.
Review pay and benefit policies
- Check fairness and consistency, ensure salaries are paid in line, annual leave is given appropriately, review compliance, review take up of existing benefits if you have this data, if not, try to get it.
- Where do you compare with other companies? Look at the living wage – if you are a living wage employer – claim the recognition.
Communication
- Send regular reminder emails and alerts to employees on company benefits
- Improve induction material on company benefits
- Showcase benefits on your website
- Introduce total reward statements
- Invite your pension provider to come on site and conduct financial wellness clinics / pension advice / pension statements
Additional benefit policies to consider
- Employee Assistance Programme (EAP) services with debt / financial support
- Train and support line managers in signposting to existing support and resources available
- Provide links to independent financial advice
- Offer discounted benefits packages, e.g. Paycare
- Look at salary sacrifice options
- Company Pensions – offer 1-1 Financial planning meetings for employees
What does ‘good’ look like?
- Offer a comprehensive package of pay and benefits offering high degree of flexibility and personal choice
- Communicate – organise webinars with external providers and run regular financial days
- Link financial wellbeing messaging to your HR systems
- Invest in an external provider to deliver a holistic financial education programme
There is a clear business rationale for supporting your employees with their financial wellbeing. It’s a crucial part of creating a healthy workplace where people can reach their true potential and make a contribution to the success of the organisation.
Additionally, research has shown that there is a clear link between financial wellbeing and employee wellbeing and performance.
My HR Hub has a range of employee benefits available at specially negotiated concessional rates for SME’s. We can also support you with developing a financial wellbeing strategy and your overall health and wellbeing policy.
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