Charles Cotton – How employers can boost financial wellbeing

A CIPD survey of British workers found that one in four employees report that money worries have impacted on their performance at work, such as physical fatigue through lost sleep or taking time off work.

Impact on performance and health

These findings are supported by IES research conducted on our behalf. Reviewing research findings from various financial well-being studies, they have found clear evidence that poor financial well-being affects employee performance and health. Low financial well-being is associated with higher staff absence and stress, and poorer worker mental-health, performance, decision-making and focus.

The report also highlights that the situation could become worse overtime due to a number of headwinds. For instance, young workers need to save more money to enjoy a decent retirement while at the same time dealing with increasing house prices, commuting costs and student debt.

While there are benefits from having a financial wellbeing programme in terms of risks dodged or opportunities won, what can reward and people managers do to boost the financial well-being of employees?

Liveable pay

Our research shows that earning a decent wage is vitally important to a sense of financial wellbeing. While needs-based rewards may be an impossibility, we should be offering a level of pay that meets people’s basic needs. Paying a liveable wage or more is an important component in employee financial well-being.

Fair pay

However, while the absolute amount of pay is important to employee financial well-being, so too is the relative amount. Those who perceive pay decisions aren’t made in a fair and consistent manner are more at risk of poor financial wellbeing.

Employers should review their existing reward practices to see that they support employer and staff needs in a just and consistent manner, as well as look at how these decisions are communicated throughout the organisation.

Information, education and advice

Workers also need appropriate information, education and advice in order to help them achieve good outcomes from their decisions to save, spend and borrow. We can help staff through signposting them to relevant guidance, information and support, as well as providing this ourselves, either directly and/or through a trusted partner.

However, it’s also important to give employees enough time to be able to make informed decisions. For instance, many senior staff complain that they often don’t get the opportunity to sort out their financial situation due to the competing demands on their time.

Employees are more likely to discuss money issues with people they like or who are close to them. They are also more likely to seek guidance at the workplace when they feel they can trust their organisation to help, rather than judge. Employers should offer financial education as part of their well-being programmes, and tailor it according to the different demographics and stages of life of their employees, as well as look to build trust with their workforce.

The benefit of doing something

There are many components to a successful financial well-being programme and more information can be found at www.cipd.co.uk/financialwellbeing . Because employee financial well-being is simply the thing to do, there shouldn’t have to be a business case. However, for those who remain convincing, our research reveals the business benefits of doing something.

This article was written by Charles Cotton, performance and reward adviser, CIPD