Author : Tracey Ward, Head of Business Development and Marketing at Generali UK Employee Benefits
While governments around the world do what they can to tackle inflationary pressures, employers need support to: understand employee needs; help employees make smart financial decisions; and investigate how existing benefits and provider partnerships can help.
In this article, we take a look at these questions, with the help of Marcus Read, Director of Financial Education at Close Brothers, who recently presented at a financial wellbeing webinar hosted by Generali UK.*
Current cost-of-living state of play
The cost of living is increasing at its fastest rate in 40 years, affecting all the major economies of the world, pushing up energy and food prices alongside squeezing households’ real incomes.1
According to Generali’s 2022 Financial Wellbeing Analysis, 47% of employees say that managing bills and spending is now their top short term financial issue. 2
Marcus comments: “This is a really important statistic as it helps highlight step one of financial wellbeing, namely taking control of day-to-day finances.”
Close Brothers’ own research found that 2 in 5 UK employees (41%) said they’d experienced heightened anxiety about their finances compared to before the Covid-19 pandemic, rising to 51% now.3
“Traditionally, mental and physical health in the workplace were considered separate to financial health but thankfully this is slowly changing,” adds Marcus. “Current uncertainty about money not only impacts our financial wellbeing, but also our mental – and inevitably physical – wellbeing. Everything is intrinsically linked.
“More pressure on the purse equals more anxiety at home. And more anxiety at home equals more time off work, less productivity when in work, potentially less exercise, sleep and poor diet.”
Understanding employee needs and priorities
First things first, understand employee needs and priorities.
“Listen and ask,” says Marcus. “Diagnosis is really important. You might already have tools in the workplace to test the financial wellness of staff so make use of these.
“The top priority, as mentioned, is likely to be budgeting. For many, emergency funds are under pressure with people dipping into savings, where available, to help keep them going month by month. Where there’s no emergency fund, that’s where we’re seeing people taking on debt.
“Employees might also be taking mortgage or pension payment holidays. And might be looking to seek debt management help via Employee Assistance Programmes or debt charities.
“Something that’s often forgotten – or not communicated well – is salary protection. A lot of employees tell us they don’t know how they’re protected in their journey with their employer, or how they can protect themselves in the event of illness or injury.”
As well as directly listening to employee needs, employers should watch out for other, more indirect, signs, says Marcus. These might include: increasing absence, decreasing productivity, rising employee turnover. Research earlier this year by Ipsos found that employees are more likely to seek employment elsewhere, than ask for a pay rise.4
Creating a financial wellbeing initiative: helping employees make smart financial decisions
Prior to building any initiative, employers should ask themselves: what are they trying to achieve and why; is the timing right; what does ‘good’ look like; and how will success be measured over time.
Also, consider the organisation’s wellbeing brand: does it include financial wellbeing as an integrated pillar? And does it currently resonate with employees? How can the communication engage people not only at launch, but on an ongoing basis?
How existing benefits and provider partnerships can help
“Consider quick wins before big initiatives,” adds Marcus. “Speak to your existing providers – especially financial education providers; often access to such support is available via group risk providers too. Above all else, communication is key and providers can help here too, so always ask the question.”
Top tips to help drive financial wellbeing awareness
- Promote the Employee Assistance Programme (EAP). They’re underused but there’s some great support available so don’t be afraid to talk
- Communicate your workplace benefits. Some employees might stop pension contributions and opt out of other things, such as P11d benefits, because they think it’s saving them money in the short term. Help people understand how they can utilise those benefits to reduce outgoings. Help them understand the benefits of protections, like group income protection, pension savings etc.
- Encourage people not to panic. It’s easy to make a knee jerk reaction with our financial plans because of the pressure on families. Use things you normally have in the workplace like opinion surveys. Make best use of wellbeing champions (trained to signpost individuals to best support / have drop-in clinics etc).
- If all else fails, seek professional support. For example, financial education – things like guidance and/or advice and the diagnostic tools mentioned earlier.
*To receive a recording of the 30-minute webinar from Generali UK and Close Brothers, entitled ‘Making good financial decisions in challenging times’, including an employee-facing flyer with top tips on managing the cost-of-living increases, please email [email protected].
Sources
1 Financial Times, Global inflation tracker: see how your country compares on rising prices, 20 September 2022
https://www.ft.com/content/088d3368-bb8b-4ff3-9df7-a7680d4d81b2
2 GEB Network, Financial Wellbeing Report, September 2022
3 Close Brothers, Expecting the unexpected, 2021
4 Ipsos, Being a responsible employer in a Post-Covid world, presentation to Engage For Success audience, May 2022
Disclaimer:
All information contained herein represents the views and opinions of the author as at the date of writing and is provided for general information only. Nothing herein constitutes or is intended to constitute financial or other form of advice and no individual should rely upon the information provided in making a specific investment decision without first seeking independent professional advice.