Financial wellbeing: Five ways you can help your people in 2020
Forward-thinking employers are increasingly ensuring their benefits strategy helps employees with their financial affairs.
Housing, utility bills, travel and childcare are just some of the financial burdens currently facing employees. On top of these, workers also must contend with the significant challenge of saving for their future and then eventual retirement. Because of this, it should come as no surprise that some people are unable to leave their financial troubles behind when they go to work, affecting them both physically and mentally.
Over the years, this has led to an increasing recognition among employers of the importance of employee financial wellbeing. However, the latest Health and Wellbeing at Work survey from the CIPD and Simplyhealth found that despite this heightened awareness, many employers are still neglecting to act to address the issue.
The 2019 report revealed that organisations’ health and wellbeing activity is only designed to promote financial wellbeing to a large extent at 10% of companies, while 27% do so to a moderate extent. Worryingly, 53% do little or nothing at all. “There’s a link between employee wellness and employee performance, and if performance is less than what is should be it has an impact on organisational performance,” says Charles Cotton, Performance and Reward Adviser at the CIPD.
It is therefore in an employer’s best interest to consider what they can do in the year ahead. According to the experts, here are five ways every business can help its employees with financial wellbeing in 2020.
1. Find the root cause
As obvious as it may seem, some organisations make the mistake of implementing programmes to help with financial wellbeing without finding out what exactly needs to be addressed in the first instance.
Debi O’Donovan, Director of Reward & Employee Benefits Association (REBA), says: “Many employers help staff deal with financial challenges simply because it is the right thing to do. But we are seeing more employers finding that poor finances impact work, for example with employees not having enough money towards the end of the month to pay for petrol or transport to get to work, for nutrition and so on. The cost to employers adds up and so the causes need to be investigated so that the right solutions can be put in place.”
One of these causes could be mental health problems. New research from the Money and Mental Health Policy Institute, looked at how to prevent financial difficulties associated with this issue. The report, called ‘Information is Power’, revealed that nearly two-thirds of those questioned with experience of mental health problems think they would have recovered more quickly if they had been helped to manage money better.
“Different employers do different things, but to date most start with a tactical tool without getting to the root of the issue first, which is the wrong way around,” explains O’Donovan. “We’re starting to see some employers now go back to the drawing board and review their overall financial wellbeing strategy properly rather than trying to fix everything with a single product.”
2. Assess your provisions
It’s all very well finding out the cause and wanting to promote wellbeing in general, but an organisation’s financial wellbeing programme must be aligned to business objectives. Employers must look at how the organisation, work and job roles are designed – not just the level of pay but how fair their decisions are, advises Cotton.
“It’s about recognising that financial wellbeing is important then thinking about how to address it. Consider whether what is being offered helps or hinders it. It’s about assessing what you’re doing, seeing if it’s having an impact, identifying risks and opportunities, thinking about what that means in terms of what should be offered in a benefits package and helping employees own up to financial difficulties. Signposting where employees can go to for more help or give more support themselves is equally important,” he says.
3. Break the taboo
Unfortunately talking about finances is still very much a taboo subject in many workplaces. This means employees are highly unlikely to raise it with their employer and yet it may be the reason they leave and seek work and higher wages elsewhere.
“Employees’ main income will be from their employers and so naturally they will link the pay and support they get with their financial worries. Financial worries can affect all job titles and salary ranges too, it’s not just an issue for the lower paid,” explains Debbie Fennell, Senior Benefits Manager at DHL Supply Chain.
Seeking ways to break the taboo and get employees to talk about their needs and be able to assess the situation and tailor plans is undoubtedly very important, but of course not easy. “There is a long journey ahead to break down taboos and really get this onto the strategic agenda and embedded successfully into cultures” Fennell adds.
4. Tailor solutions
Remember, the ways that employers can help depends on what the cause of the problem is, and this will vary across workplaces.
Financial wellbeing is rather like physical wellbeing – you cannot offer a single remedy to everyone, we’re all unique,” says O’Donovan. “Solutions range from reviewing pay structures to allow people to earn enough to live on, developing skills so people can advance up pay levels through to education to manage budgets and money. Once these fundamentals are in place then tactical tools can be plugged in such as workplace savings (pensions, ISAs, share plans) or, if carefully managed, workplace loans.”
Fennell agrees that employers need to remember that a company is full of individuals, so a one-stop solution will not be the answer. “It isn’t always a loan or extra pensions savings that is required but perhaps allowing some flexibility in working hours or location could make a difference to someone, or finding ways to pay expenses quickly or ideally upfront – not everyone will have the spare cash to buy that train ticket and claim it back.”
5. Look at the bigger picture
Employers are well positioned to talk to employees about how they can be more financially savvy. They have the opportunity to help with financial numeracy and behavioural economics – influencing how people make financial decisions.
Tony Joannou, Founder of TJ Payroll Services Limited, says: “Financial wellbeing support at work should be higher up the agenda than it is and as the job market continues to reshape and redefine itself, then support services, including financial wellbeing, should be given greater focus.”
Indeed, REBA reports that leading employers are starting to join up their financial wellbeing support at work and it is now starting to see them properly analyse what the pressure points are for each demographic and what solutions they can offer to particular cohorts.
Fennell concludes: “Employers need their employees bringing their best selves to work and employees who feel supported and are given resources to confidentially assist them are more likely to stay and be able to give their best. It makes absolute sense to invest in helping employees improve their financial management and by doing so employers will benefit massively by increased productivity and morale in the workplace.”