More people than ever are facing financial stress with many employees struggling with the uncertainty of long-term reduced household income.
A study1 of more than 2,000 UK adults by Opinium Research found that 54% of employees believe that Covid-19 will have a negative impact on their personal finances and 35% are worried that they will lose their job as a result of the pandemic.
Further research2 found that regardless of gender and age, money worries are the single biggest cause of stress for UK employees, above career, health and relationships.
We hear a lot about “financial wellbeing”, but what does it mean? There are multiple definitions, but they all have a common theme:
· Confidence – to make informed decisions about money
· Control – of everyday budgeting and spend, debt, short-and long-term savings
· Capacity – to absorb a financial shock such as an emergency cost or redundancy.
Employees who are confident, in control and have capacity have lower money stress. A lack of confidence, control and capacity leads to higher stress and the associated mental health challenges.
The current economic environment is putting all of these factors under pressure for many employees.
Poor financial wellbeing has a negative impact on employee mental health, absenteeism, productivity, engagement and overall organisational wellbeing.
Employers that provide tools and solutions that help to improve their employees’ financial wellbeing will reap the benefits of increased employee engagement and wellbeing.
Furthermore, employees who understand and appreciate the employee benefits on offer to them that improve their financial wellbeing (such as discounted vouchers, tax efficient benefits and Employee Assistance Programmes) will be more committed to the organisation.
This provides a great opportunity to strengthen the relationship between employers and employees by helping them in all aspects of their lives.
Many employers provide benefits to help their employees with money but without good communication these benefits can be under-utilised. Many employees don’t fully appreciate or understand the money saving benefits on offer to them.
So, what can employers do?
1. Understand your peoples’ financial wellbeing
Measure current levels of financial wellbeing by focusing on what your employees know, feel and do about their money. We need a focus on the short, mid and long-term financial wellbeing of all employees.
2. Help employees to act
It’s crucial that employees take the steps needed to improve their financial wellbeing. As with physical wellbeing, action leads to improvement, so ensure that employees are equipped with the tools and support to take action.
3. Signpost to practical tools
Provide useful tools to help employees maximise their benefits. There are many free resources available such as the Money Advice Service website. Ensure that employees are directed to the tools available to them.
4. Communicate your employee benefits
Employee benefits such as debt support via an Employee Assistance Programme, discounted voucher schemes and money saving tax efficient benefits can all contribute towards financial wellbeing. Ensure that your employees understand what is available to them through engaging communications.
5. Provide ongoing support
Money webinars, online financial education, debt support, budgeting tools and retirement planning tools can all contribute towards employees’ financial wellbeing. Provide continuous support for your people by developing a long-term financial wellbeing strategy.
Despite the current challenges, the good news is that employers can take positive steps to improve their employees’ financial wellbeing. This in turn delivers long term improvements to organisational wellbeing, benefiting both employers and employees.
Let’s use our changed world as an opportunity to reflect, reset and make a positive difference to employees’ financial wellbeing which, in turn, will have a positive impact on their general wellbeing.
1 Study of over 2,005 UK citizens focusing on the impact of Covid-19 by Opinium Research 2020
2Salary Finance Research 2019
Francis Goss, Director, Organisational Wellbeing Consulting
Gallagher Benefit Services, UK
