Money on your mind

With more and more employees suffering from financial stress, one of the big issues for 2019 is the need to support your people with their financial wellbeing. 

There was a time, not so long ago, when an employer’s concerns for the financial wellbeing of their people started and ended with the payment of their regular wage and, possibly, a meaningful contribution to a pension.

Beyond that, an employee’s financial concerns were nothing more: something for the employee to worry about.

Today, the question for employers is no longer whether they should be concerned with employee financial wellbeing but, with 40% of employees saying they have money worries, how far they should go.

Money on my mind

So why is there such an interest now? At first glance, traditional employee-employer relationships are changing and more companies are using a gig-economy approach. This suggests the efforts to support employee financial wellbeing might be unnecessary – until you look at other financial workplace trends.

It is no coincidence that the rise of financial wellbeing coincides with the sustained fall in value of take-home pay. This year will mark eleven years since the financial crisis and yet the latest government figures for average UK earnings show that in real-terms, wages are still below the level they were in 2008.

Less money in the pocket doesn’t just mean it’s harder to enjoy the reasonable lifestyle which employees rated as the most important measure of financial wellbeing in the CIPD’s 2017 research into the issue. It means less money to save, the inability to pay rising rent, make mortgage payments or save for a property purchase.

Thinking ahead

Making day-to-day ends meet isn’t the only financial pressure employees face.

Specialist pensions consultancy Barnett Waddingham is one of many who have been flagging the gap between the aspiration to retire at 65. Nearly half of us say we still hope to do this despite a near uniform – 97% of employees – lack of awareness of their current financial health.

And despite the number of households with two wage earners, there is very little readiness for major life events – whether they are ones you can anticipate like education or nasty surprises like critical illness. Just 58% of employees have enough savings to sustain them for more than three months if they lost their main source of income. 

The challenge for all employers 

One of the biggest challenges for employers is understanding the extent to which money worries are a live issue for their people and their organisation.

Most of us would be able to guess that the group with the highest rate of financial stress were those with the lowest pay. According to research from Salary Finance, people believe that earners with a salary of six figures or more, have fewer financial worries. However, it’s not the amount of money people earn, but what they do with it (or fail to do with it) that causes the worry. 

According to employees surveyed by Neyber in 2018, employers also appear to place an emphasis on the wrong areas of corporate wellbeing. While employers think the top workplace worry is work-life balance, the reality is that finances top the list. 

Numerous studies over the recent years now show not only the extent to which employees are bringing their money worries to work but also how this is taking its toll on their performance. 

A question of support 

Dealing with the consequences of underperformance isn’t the only reason that employers are concerned with financial wellbeing. 

Many workers – particularly younger employees entering the workforce – now expect the organisations they work for to be more supportive and ethical in their dealings and that starts with the support they get in the workplace. 

Meanwhile, juggling the need to save for pensions with the reality of debt from a mortgage or student loan, is simply the reality for more and more people. 

Employers looking to put support in place will now find no shortage of companies ready to work with them in the financial wellbeing space. At one end are the companies which specialise in the basics of financial education so businesses that employees can help themselves or those that give formal financial advice. At the other are the self-styled HR-tech companies who have developed tools which allow employees to save, borrow and manage their monthly salary in a range of different ways.

Whichever way you look at it, if your organisation hasn’t already factored financial wellbeing into it’s plans for 2019, now is the time to start working out what you could be doing – it’s not just what your employees want but what they expect.

The author is Andy Philpott, sales and marketing director at Edenred UK.

Author: Andy Philpott | Category: Blog | 13/03/2019 | 0

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