A survey by Barnett Waddingham in July revealed that some 88% of UK employers are concerned about the financial issues their employees are struggling with. This has since raised questions around whether businesses should focus on supporting the financial wellbeing of staff.
Talk Money Week, which starts today (Monday 12th November) and is part of the Financial Capability Strategy for the UK, says that money worries have a clear impact on how people feel and behave in their day-to-day lives and at work.
According to the Chartered Institute for Personnel and Development, adults in the UK believe their financial situation will only get worse in the future. This can be largely attributed to the impact of the 2008 financial crisis. In the years that followed, wages fell consistently in real terms, meaning that the money in our pay packets wasn’t in keeping with the price of the things we needed to buy.
From mid-2014, wages started to increase above the rate of inflation, but to nowhere near pre-crisis levels. During this time, house prices have remained high, affordability criteria has changed and there has been a rising trend to live on credit.
According to figures from Equifax, UK adults owe £3,320 in unsecured debt on average and a third of us don’t believe we’ll ever be debt free. In addition, a fifth of us have been made redundant over the past two years, so it’s no wonder that money worries are the biggest cause of stress for employees in the UK.
Why should employers care?
Financial concerns prevent 59% of employees from performing their best at work and a Global Benefits Attitudes Survey found that those employees who are troubled by their finances are twice as likely to be in poor health – resulting in increased absences.
All of this can clearly have a negative impact on the bottom line and a report from Barclays quantified this at 4%.
In addition to this, a pay increase is high on the list of reasons why people look for a new job but an increase in salary might not help employees overcome their financial issues. Instead, having options and access to education with their current employer could result in them staying put, reducing costly staff turnover rates.
Introducing benefits packages can go some way to alleviate money worries, especially those that are effective in helping employees to save money on living expenses, such as healthcare plans and discounted utility and insurance products. However, companies should review the paid benefits they are offering to see if they are effective, or even being used at all.
Employers should also consider salary sacrifice schemes, and even loan and savings schemes.
One of the more obvious but less widely adopted strategies for supporting staff with financial wellbeing is through education. All businesses have (or certainly should have) business plans, profit and loss spreadsheets and a way of tracking income and expenditure. Why not invest some time in sharing tips for budget management with your staff? It could benefit your business in the long run if employees become responsible for departmental budgeting.
Louise Woodward (Chartered MCIPD)
Louise is an experienced specialist accounting & finance recruitment professional with over 30 years’ experience specialising in the sector during which time she has gained an esteemed reputation as one of the region’s leading recruiters evidenced by her long list of loyal and happy clients. Louise is also Group Secretary …