An employee wellbeing strategy rightly focuses on better mental health, reducing levels of stress and anxiety. And yet a contributor towards all of these is often missing from the support on offer – how to manage our finances.
Despite the challenging cost of living for many, financial wellbeing is still the least common area in an employee wellbeing strategy. That’s why this article is all about helping employers understand why they need to act, the benefits better financial health brings – and how to put a strategy in place.
The perfect storm impacting employee finances
The past 2-3 years have seen a ‘perfect storm’ of the effects of a global pandemic and a cost-of-living crisis made worse by rising energy, food and mortgage rates. While Government support has been available to subsidise energy bills, and other financial support exists, living costs are still increasing. The bottom line is that we are all paying more for many of the essentials we need.
The CIPD estimate that one in eight workers are now facing financial hardship. What’s more, the CIPD also quote data from the MaPS Adult Financial Wellbeing Survey that almost 9 million people in the UK are in serious debt.
The impact on mental health and productivity
It stands to reason that the financial challenges affecting employees outside of work will impact on them, and their performance, in the workplace. Stress, anxiety, and sometimes severe depression can all develop from financial insecurity. The same applies when diet suffers due to financial pressures. Poor diet impacts on the nutrition needed to give our bodies the fuel needed to make decisions, solve problems and build levels of mental and physical resilience.
Money concerns can also lead to further problems such as sleep issues or effect our social lives and relationships. It’s not difficult to see how this can manifest itself at work. In fact, it would be surprising if it didn’t. For example, research by Champion Health found that 50% of people with debt have mental health problems.
Why do employers need to act on financial wellbeing?
Because financial, physical and mental health issues are related, for all the above reasons and more. Financial problems also cause increased rates of absenteeism – whereas financially secure employees are less likely to miss work due to financial stress-related issues. And poor financial wellbeing can affect people at all levels. CIPD research finds that over a quarter (28%) of employees say money worries have impacted their work performance, most commonly through lost sleep, health problems such as stress or anxiety which affects their ability to concentrate at work.
Finally, the demand is there from employees themselves. To quote another CIPD statistic, 33% of employers report that there has been a rise in demand from employees for financial wellbeing support. This comes from their 2022 Reward Survey.
The moral and the business case
The moral case is simple. Supporting employees through difficult situations is simply the right thing to do for any responsible employer. The business case is, apart from the benefit to productivity, that employees are far more likely to feel that their employer is having a positive impact on their wellbeing when they have a financial wellbeing strategy in place. Companies that prioritise financial wellbeing often have higher employee retention rates, saving on recruitment and training costs. Such a strategy also plays a part in creating an attractive culture and reflects well on the overall employer brand.
Building your financial wellbeing strategy
The success of any financial wellbeing strategy depends on more than the strategy itself. It won’t succeed without a culture of understanding, with compassionate leaders and line managers able to initiate and have sensitive conversations. Employees need to know that there is no shame in asking for help, or finding out what support may be on offer to them.
It’s also important to recognise that there is no one size fits all financial wellbeing strategy suited to every organisation. Just as our own personal finances are different, your organisation will have its own needs – as will your people. This blog isn’t long enough to describe how you would build the specifics of your own strategy, but we do suggest you consider at least some of the following factors.
What do you do now? Are your employees aware of any support you currently offer within your existing employee benefits package? And how clear and easy to understand are the comms around this? It’s worth reminding them how to access it.
Engage with what your employees need: Do you understand what matters most to your employees? Conversations about finances, particularly through your leaders and line managers can normalise the issue. Listen to any feedback and act on it.
Delivery and design: When you are aware of your employee’s needs, you will be able to identify the interventions you can offer. Some of these may come from within your organisation – such as financial benefits that make their pay go further or crisis loans from you as an employer. You could also help employees determine if they are eligible for any additional government support.
Communication: Share the good work you are doing on financial wellbeing. Ensure it reaches the widest audience via your newsletters, intranet but most of all, your line managers who should be briefed on what you are doing and how it can be delivered. The same goes for your leaders. How can they also help to communicate the financial wellbeing offer?
Measure and refine: How is all of this being received? Who is engaging with the support you are offering? You can assess participation levels in any financial wellbeing programmes, the take up of benefits and ask your line managers to assess employee engagement levels. It’s important to encourage and act on any feedback so as to refine your financial wellbeing offer.
Useful additional CIPD guidance on establishing an employee financial wellbeing strategy can be found here: https://www.cipd.org/uk/knowledge/guides/employee-financial-well-being/
Sources of support and help
We’ve written a guide to financial wellbeing, available from the Cordell Health subscription site. While this article has looked at the contributory factors to poor financial wellbeing, the guide contains tips on areas such as protecting your mental health and goes into greater detail on the support available, with many links to advice covering financial aid, legal rights and what to do if you are struggling.
If you are not signed up to this service and would like to find out more, please contact us on wellbeing@cordel.247developments.com.
In conclusion
Given the widespread impact of the ongoing cost of living crisis, implementing a financial wellbeing strategy is fast becoming a necessity to help employees overcome their financial worries. For organisations who step up the financial training and wellness on offer, the benefits come in the form of increased employee loyalty, engagement, and overall productivity. It can also help reduce turnover and absenteeism, ultimately contributing to a healthier, more stable work environment.
Photo by micheile henderson on Unsplash
