Need to know:
- Employees will have varying financial concerns depending on their life stage and personal circumstances.
- Financial pressures could lead to an increase in presenteeism; staff may feel unable to take time off, yet financial worries can prevent them from concentrating while at work.
- Creating a supportive workplace environment is vital for encouraging employees to engage with available support mechanisms at work.
The case for employers to take an interest in their employees financial wellbeing is a strong one. BHSF’s Breaking the cycle report, published in November 2016, for example, found that 31% of employees are most stressed by their finances. This is supported by findings from Capita Employee Benefits in its Educate and engage: employee insight series 2017 report, published in April 2017, which found that 34% of employees have lost sleep because of financial worries, and a further 34% are feeling stressed because of their current financial situation.
The financial pressures affecting today’s workforce
A multi-generational workforce, as is commonplace in many organisations, widens the scope of financial pressures that could impact staff because different generations tend to have different financial concerns. This might range from worrying about student loan repayments or budgeting, to managing childcare costs alongside a mortgage, supporting elderly parents financially, to concerns over retirement plans.
The Chartered Institute of Personnel and Development (CIPD) and Close Brothers Asset Management's Financial wellbeing: the employee view report, published in January 2017, found that earning a wage sufficient to enjoy a reasonable lifestyle was the most important aspect of financial wellbeing for employees (75%), followed by being able to save for the future (55%), being rewarded in a fair and consistent manner (54%), and being able to comfortably pay off existing debt (45%).
Technological advancements can exacerbate financial stress; the rise of tools such as contactless cards, smart watches, and smartphone payments may make it difficult for some employees to track and manage their spending habits. Heidi Allan, head of insights and engagement at Neyber, says: “The onset of technology brings some massive benefits, but it also brings some quite difficult habits with it. It’s all too easy to go into a shop, see something and either swipe [a] watch or [a] phone, or swipe with a contactless card, so [employees] don’t actually see how much is mounting up in terms of their spending habits.”
Another key financial concern for employees is how they might support themselves and their family if they had to take time off sick from work; 51% of respondents to BHSF’s aforementioned research stated that they could only cover their outgoings for six months if they found themselves out of work due to ill health. Brian Hall, managing director at BHSF, says: “[Employees’] finances can take literally years to recover because they may have £2,000 a month outgoing, they've used their savings and they've run up £3,000-£4,000 worth of debt paying their bills while they’ve been off sick.”
The domino effect on physical and mental wellbeing
An employee’s financial strains are likely to have an effect on their physical and mental health. Presenteeism, where employees attend work when unwell or in the wrong frame of mind, could hamper productivity and result in mistakes being made. If employees work in a manual role, this lack of concentration could lead to more serious accidents or injuries.
Employees who are not sleeping due to financial worries may find that their ability to concentrate and perform at work is affected. Furthermore, financial strain may manifest itself in an employee feeling alone, which could lead to depression or anxiety. Social interactions and relationships, both inside and outside of work, can also be affected. “It’s mental health. It’s currently the biggest issue facing business," says Hall. "I would go as far as to say that debt and financial insecurity is the single biggest contributor to that.”
Mental ill-health conditions can also contribute to longer-term physical health problems, for example irritable bowel syndrome, ulcers, and heart problems. Even an ongoing, low-level release of the stress hormone cortisol can have a negative impact on physical health, says Jeanette Makings, head of financial education at Close Brothers Asset Management. “It’s the recognition that [financial, physical and mental wellbeing] impact one another and to have full health, [employers] have to address all three elements,” she explains.
Support mechanisms
Because employees spend a large majority of their time at work, employers are well placed to support staff with financial problems. For example, organisations that have a supportive and trusting workplace environment that encourages staff to confidentially share their worries, and works to remove stigma around financial issues, can help to change negative perceptions. This can make staff feel more at ease to access information and support around financial wellbeing, such as counselling, or employee assistance programmes (EAPs). Christine Husbands, managing director at RedArc, says: “It’s an environment around sharing and openness, a culture of trust, so those employees can go and talk to HR or line managers and say ‘I’m having these issues, can you help me?’”
Employers can also promote other benefits that could help employees financially, for example reloadable food shopping cards available through a voluntary benefits programme. “It’s around small, little things that raise awareness that can have a massive impact on somebody’s habits or somebody’s behaviour,” says Neyber’s Allan.
Although employees’ financial worries might relate to issues outside of the workplace, knowing that they have access to support mechanisms that can help with these decisions available through the workplace is beneficial for all aspects of health, says Close Brothers’ Makings.
Charities can be a useful resource for additional support and advice, while benefits such as debt management services or debt advice lines, interest-free loans, sick pay insurance schemes, and financial education programmes can also prove beneficial.
Supporting employees’ financial wellbeing is no easy feat, especially when problems can be a sensitive and private subject. However, there is still plenty that employers can do to provide their staff with tools to help them to feel financially secure. As Allan says: “Financial wellbeing doesn’t necessarily come from spending more or less than you currently do; it actually comes from having control and knowledge over what you spend.”
London City Airport offers benefits to increase employees’ financial confidence
London City Airport implemented a suite of financial wellbeing benefits to broaden its approach to employee health and wellbeing, and support staff who are struggling with their finances.
An internal research project, delivered in conjunction with Barclays in 2014, used focus group interviews and an engagement survey to find that 22% of the international airport’s workforce were living pay check to pay check. Furthermore, the organisation’s 2016 annual staff survey, completed in January, also found that 21% of its 620 employees answered negatively to the question ‘how confident are you managing your financial affairs?’.
London City Airport responded to this by creating a three-sided financial wellbeing strategy to help staff manage their money better, and improve confidence in their financial choices. The organisation also wanted to see how the strategy could impact on accident rates; 70% of the workforce have operational roles.
Michael Spiers, chief people officer at London City Airport, says: “There have been accidents where we’ve undergone an investigation, and the individual [has said they were] just absent minded or thinking about something else. It’s those kinds of things where we see financial worries possibly play a part.”
The organisation introduced a savings tool, provided by Squirrel, in January 2016. This uses a gamification-style app to allow staff to create different pots in to which to save, for example a holiday pot.
The tool also includes a delayed pay feature, which enables staff to split their salary to be paid on a weekly rather than monthly basis to help with budgeting. Since its introduction, there has been a 4% take-up.
It followed this with the introduction of a debt consolidation service, provided by Neyber, in November 2016, to provide all staff with access to loans. To date, 25 employees have taken up this benefit.
The organisation is also finalising a financial education programme, which will be provided in conjunction with HSBC. This will see financial experts coming on-site to deliver seminars to small groups of employees on subjects such as planning for their first home or preparing for retirement.
Although London City Airport will wait a year before collecting data around accident rates, its 2017 annual staff survey has seen improvements in financial confidence. For example, in 2017, 92% of staff responded positively to the question ‘how confident are you managing financial affairs?’, which represents a 13% increase on the 2016 figure. There was also an 18% increase in the proportion of employees providing a positive response to the statement: ‘London City Airport cares about my health and wellbeing’.
Michelle Truss, HR business partner at London City Airport, says: “Our overall aim was to come up with a benefits strategy that covers all areas of wellbeing: physical, financial and mental health. Our overall aim is to embed financial wellbeing into people’s living so that they feel comfortable being able to talk about it and know where to go to seek help if there are problems.”
Viewpoint: How can employers support financially stressed employees?
A culture of ‘spend today, rather than save for tomorrow’ is affecting many employees’ wellbeing and productivity. Institute for Employment Studies (IES) and Chartered Institute of Personnel and Development (CIPD) research, the Employee financial wellbeing report, published in January 2017, confirmed this by showing that one in four employees report that money worries have affected their ability to do their job. But how can employers spot the signs of financial stress among their employees?
A financial wellbeing employee survey is a great starting point for identifying the types of support that employees need. The aim is not to appear intrusive but to show that the employer cares about their wellbeing. Considering the demographics of a workforce may also help identify particular support needs and financial priorities within different employee groups.
Exit interviews or employee attitude and engagement surveys can also point to areas of reward, wellbeing provision, and communications that could be improved. Analysis of benefits take-up could also help to spot any groups that are not making the most of what is on offer.
Many larger organisations typically view supporting employee financial wellbeing as an ethical responsibility, with Willis Towers Watson's Global benefits attitudes survey 2015/16 report, published in February 2016, suggesting that more employees than ever before are interested in obtaining support and guidance from their employers about financial issues. There is also a lot employers can offer without crossing the line into regulated advice, by offering staff access to, and signposting them to, sources of advice to make good financial choices.
In order to communicate effectively with employees on their financial wellbeing it is important to pick the right moments. By targeting financial information to different employee segments or at a significant life event, for example marriage or the birth of a child, employees can be encouraged to examine their changing needs or priorities. Alternatively, identifying workplace champions for financial wellbeing, who can signpost colleagues to sources of advice, can help increase employee engagement with their financial wellbeing.
Catherine Rickard is senior research fellow at the Institute for Employment Studies (IES)
