Why firms should care about employees' financial wellbeing
The lack of financial wellbeing among employees is putting a strain on UK firms, but Close Brothers' Jeanette Makings argues that solutions must be tailored to the organisation and the individual
Doing nothing is no longer an option when it comes to financial wellbeing. It is the final piece in the puzzle to complete a holistic wellbeing strategy for UK workplaces. But delivering meaningful and lasting results for both individuals and businesses can only be achieved by addressing all seven areas of financial health: budgeting and planning, debt, protection, savings and investments, retirement planning, properties and mortgages, and tax.
Our research reveals that the majority of UK employees are suffering from money worries (94 percent), with more than three quarters (77 percent) of employees saying that they impact them at work. Based on ONS figures of the number of people in work, this means that around 25 million are affected by money worries while at work. But these worries don’t just affect financial health: they are one of the single biggest causes of stress and impact mental and physical health if left unchecked.
While organisations recognise that their employees worry about money, they significantly overestimate their financial wellbeing. But employers do understand that poor employee financial wellbeing is bad for business performance.
The findings reveal the extent to which the lack of financial wellbeing among employees is putting a notable strain on organisations. Around nine in ten (89 percent) larger UK firms admit that they are impacted – that’s around 2.4 million UK businesses.
And looking at the tangible consequences: reduced productivity (22 percent); loss of talent (22 percent); higher short-term and long-term absences (both 19 percent); reduction in retirees (17 percent); and higher healthcare costs (13 percent) are all cited by firms.
Some organisations are already taking steps to tackle the issue, with 45 percent of employers currently providing some workplace financial wellbeing strategies. In addition to reward and pensions, the top five financial wellbeing benefits that employees are offered are: discount vouchers for lifestyle expenditure (17 percent); financial advice (13 percent, although only 6 percent funded/part funded by the employer); retirement seminars (12 percent); employee assistance programmes (12 percent); and workplace loans (6 percent).
But one size doesn’t fit all, and one product, or a provider focusing on just one issue won’t fix the problem; not at the organisational level nor for individual employees.
The disconnect between provision and need is visible from this study. While 45 percent of employers currently provide some level of financial wellbeing programme, it’s clearly not reaching every employee or fixing their overall financial wellbeing issues. A third (30 percent) of all staff say their employer is not helpful when it comes to improving their financial wellbeing and a further 27 percent say what is provided is of little benefit.
To truly improve financial wellbeing the solution needs to be tailored to the organisation and the specific needs of their people across all seven areas of personal finance. The good news is that not only are these issues easy to identify and address, employers themselves are perfectly placed to play a role in making a difference.
That’s why we launched the inaugural Close Brothers’ Financial Wellbeing Index which assesses the wellbeing of UK employees across the seven key areas.
Employers across the UK have been crying out for a definitive measure of financial wellbeing and for some way to pinpoint key areas and employees who need help. By using the Financial Wellbeing Index inside an organisation, it is simple to see the employee groups that need most help and which of the seven areas of financial wellbeing to target. Companies can also benchmark against the UK, their sector and their own Index score each year.
To support the needs of all employees, a successful programme needs to include three things:
- Financial education to raise awareness and confidence, enabling employees to develop the tools they need to deal with the complexities of their financial lives
- Access to financial advice for those that need extra help
- And access to savings and investment solutions so people can implement their own plans alongside their workplace pension
The result is a more positive and healthy life for staff and a more engaged, productive workforce for businesses. It’s simple; when employees are happy, organisations thrive.
Next post: Brexit: the regional impact
Previous post: We need long-term answers to the future of audit
- Post tagged: