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27th June 2019

Employee financial wellbeing - why it matters and what can Employers do

Since the 2008 recession, businesses have made great strides in addressing the mental health and wellbeing of their employees, introducing Employee Assistance and Wellbeing Programmes offering a range of support including...

Since the 2008 recession, businesses have made great strides in addressing the mental health and wellbeing of their employees, introducing Employee Assistance and Wellbeing Programmes offering a range of support including counselling services, resilience training, tailored NLP courses and physical fitness initiatives. Some companies even provide neck and foot massages at the employees desk. All of these initiatives are targeted at reducing employee stress levels and to support them to improve their health and, of course, businesses benefit from improved productivity and performance.

Value

While the Assistance and Wellbeing Programmes have demonstrated their value, recent research by a number of companies reveals worries about finances are one of the biggest drivers of employee stress levels, impacting both their mental wellness and physical fitness. The top 5 business challenges associated with poor employee financial wellbeing are; reduced productivity, loss of talent, reduced employee engagement, higher absences and demands for wage rises*. These issues go largely unaddressed by the existing programmes targeting mental health and wellbeing.

Research, published earlier this year, shows that businesses are consistently underestimating the impact of financial concerns on their employees during the working day and the consequent impact that this has on individual employee and overall business performance. In contrast to mental wellness and physical health, employee financial wellbeing has had much less focus, with only 18%* of companies having a comprehensive employee financial wellbeing strategy in place. This means that many businesses are missing out on addressing or failing to tackle one of the critical factors impacting performance and their bottom line.

Financial Storms

Only 30% of employers think that financial wellbeing is a concern while in actuality it affects 77% of employees.* The research also shows that businesses consistently overestimate their employees budgeting abilities and their financial resilience in the event of unexpected financial storms resulting from unexpected expenses or a sudden reduction in income. If we look at London specifically, almost 33% of Londoners confirm that money worries have impacted them at work versus the national figure of 25%.** Overall 10%** of employees state that they have had difficulty with concentration and decision making at work due to worries over money, with 19%** stating they have lost sleep as a result of these worries, all of which impact performance. The statistics become even more powerful in the research where 94%* of employees admitted worrying about money and 39%* stated they worry about their finances always or often.

Biggest Barriers

Everyday money worries represent the biggest barrier to financial wellbeing with 69%* of employees, citing paying off debt, coping with a potential reduction of household income or how to make their money last until pay day as their top financial concerns. Interestingly, for very different reasons, two disparate groups emerged as feeling that there are major barriers to being able to take action to improve their financial wellbeing and reduce the stress experienced from everyday money issues. These were a) employees aged 18 - 24 and earning less than £24,000 and b) those employees earning more than £60,000 working within senior management. For the former group, it came down to earning just enough money to get by each month, and for the latter, lack of time to focus on saving money for example; organising switching energy providers.

Employee focus

So, what can employers do to help their employees and at the same time benefit from the resulting reduction in stress and improvement in employee focus, performance and productivity? If you have the budget, there are a variety of companies providing financial wellbeing employee programmes offering retirement planning advice, employee counselling, workplace loans and even income replacement insurance but none of them provide a comprehensive spread of benefits that specifically address everyday money worries. There are programmes that allow employers to provide discount vouchers for lifestyle expenditure - but the employee still has to spend to save.

Bespoke

A great alternative for SMEs, businesses with lower budgets or larger companies feeling the squeeze, is to independently research products and services that provide tools that are able to help employees reduce or solve their worries. For example; new style bank accounts that help their customers budget and save, budgeting apps, and innovative lending and savings products. You may even find that you'll be able to negotiate discounts for your employees. You may be surprised to find that there are many innovative, low cost ways of supporting your employees. With a little research and imagination you can create your own bespoke financial wellbeing programme tailored to the needs of your valuable people assets.

If you would like to find out how Creditspring can help you, help your employees, just click here or email us at employer@creditspring.co.uk

Source: *Close Brothers - Financial Wellbeing Index 2019 ** CIPD Survey report 2017 - Financial Wellbeing: the employee view

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