Need to know:
- Employers may offer more financial wellbeing support in their benefits provisions than they realise, such as through employee assistance programmes (EAPs).
- Flexibility is vital in supporting employees' financial health; for example, facilitating off-peak travel, or allowing staff to complete errands during the working day.
- Apps, such as those that allow employees to access wages before payday, can increasingly be used as financial wellbeing tools.
Research by the Institute for Employment Studies (IES) and the Chartered Institute of Personnel and Development (CIPD) in January 2017 found that financial problems impact employees’ mental wellbeing, resulting in increased stress and anxiety, as well as lower levels of good health.
The report, Employee financial wellbeing: behavioural insights, linked these effects to organisational productivity, through poorer job performance and short-term decision-making, a reduced ability to concentrate, lower productivity and absenteeism.
Neil Atkinson, head of proposition at Thomsons Online Benefits, says: "Removing financial strain from employees enables them to focus on their work."
There is little doubt, therefore, that an effort to address financial stress can reap significant rewards, but should this centre solely around financial benefits, or are there other lifestyle factors that employers might take into account?
Benefits in a new guise
Building the business case for employee financial wellbeing, published by the IES in August 2018, stated that reward and access to benefits form the most important foundation for employees to manage their financial situation.
The study further highlighted that, although HR departments saw the value in creating a comprehensive approach to employee wellbeing that comprised financial elements, employees instead preferred more focused financial initiatives.
Repackaging and communicating existing benefits under a financial wellbeing umbrella could help demonstrate to employees the support they already have access to, which they may not have previously associated with financial health. This might include, for example, an employee assistance programme (EAP) that offers debt counselling.
Flexibility
Further stepping away from traditional financial education, flexibility can also be an important tool, says Jeanette Makings, head of financial education at financial planning and investment organisation Close Brothers Asset Management.
“Flexibility can benefit employees hugely," she says. "It can help people to manage childcare or other care responsibilities by being able to work at home. Flexible working can also grant employees time away from work to make financial arrangements and sort out their finances. Another benefit of flexibility is that when employees do work from home, it cuts down on travel and subsistence costs.”
Nick Whiteley, managing director of flexible working solutions organisation HFX, agrees that flexitime can be extremely valuable to staff, depending on the individual’s circumstances. “An employee on, say, £10 per hour will earn about £19,500 per year gross and spends two hours a day commuting to work during rush hour," he explains. "By working flexibly, they could cut their journey time from two hours to one hour a day. That’s worth, deducting holiday time, £2,400 per year net. The equivalent in gross salary would result in an 18% increase."
Furthermore, Whiteley estimates that an employee commuting by train to work could save between £500 and £1,500 a year by travelling off-peak.
Taking the financial burden
Employers can also help to address financial stress by allowing staff to deal with personal tasks during hours usually monopolised by work, notes Kerry Matthewman, HR manager at digital marketing organisation Add People. She explains: “We’re in talks to bring a barber or hairdresser on-site so people can get their hair cut at work, or organisations to come and wash employees’ cars in the parking lot. It may only seem like an few pounds saved here and an hour saved there, but over time those can amount to days and triple figures that employees can instead spend with and on their family and friends.”
Other benefits, such as season ticket loans or personal life loans to help with moving house, for example, can help employees avoid high credit card charges, and even work towards growing their savings.
Helping employees with these necessary financial evils can significantly reduce stress levels, which is why retail organisation John Lewis Partnership, for example, introduced a property rental benefit for its 85,500 employees in May 2018. This allows employees to take out a low-cost insurance premium to cover the entirety of their tenancy, rather than having to find the money for a significant upfront security deposit.
Technology streamlining finances
Innovations in benefits technology are helping employees take more control of their finances, allowing them to access their money as they earn it or avoid personal outlay for work-related purchases.
The Wagestream app, for example, allows employees to track how much they have earned for each hour they work. They can transfer those earnings to their current account at any time, and the amount is then deducted from their monthly pay. There is a fixed fee, but the employee incurs no interest.
Peter Briffett, chief executive and co-founder at Wagestream, says: “For staff, it encourages taking a proactive approach to handling their finances and significantly reduces financial stress caused by the monthly pay cycle, which leads many to turn to predatory high-interest credit solutions, like payday loans. The upsides are clear when it comes to employee wellbeing and attracting and retaining talent in a competitive market.”
Other apps, such as Conferma, allow staff to pay for business expenses on their mobile. Paul Raymond, director of strategic relationships at Conferma, says: “Employers need to understand the pressures that employees experience in relation to management of finance. If an employee is concerned about how they are funding their business activities, it is going to detract from their focus and encourage them to look for alternative employers. Traditional expense management processes that rely on an employee submitting paper and waiting for reimbursement should be targeted for automation.”
Although financial education and monetary benefits continue to be cornerstones to any financial wellbeing strategy, employers that embrace creative thinking around the origins and management of financial stress could significantly increase the positive impact they have on employees.
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