The engagement gap: are money worries to blame?
Many existing employee engagement strategies are failing to get traction. Why? Money worries. Recently financial wellbeing has risen up the agenda as employers increasingly recognise that often financial concerns stand in the way of engagement at work with 1 in 2 employees reporting that they worry about their finances while they are at work.
It’s no wonder that many of the existing engagement strategies fail to get traction – after all, pensions and give-as-you-earn schemes are luxuries for staff who can be spending as much as 49% of their disposable income on repaying interest on their debt.
In fact 2 million lower income employees in the UK are excluded from mainstream finance altogether. These are people who struggle to balance their monthly finances, who have no savings and no buffer for emergencies. They are also often saddled with high cost debt, like payday loans.
These people very likely work for you. StepChange, the UK’s leading debt charity, reported in their 2015 Statistics Yearbook that the majority (57%) of those seeking their help are in employment, an increase on the previous year’s data.
Their report went on to say that the second highest reason for individuals being in dire straits was “having no alternative to high-cost credit”. That’s because once a person has taken a payday loan, mainstream lenders will not typically lend to them for up to five years
Research shows a negative link between employees who are worried about their personal finances, and their engagement, productivity and retention at work. So what can employers do?
There are three positive steps you can take:
1) Recognise the problem
Most staff aren’t going to tell you that they have money worries. But given the national picture, you should assume that there is a problem with your lowest paid staff. You may be able to detect the problem through analysis of calls to your employee assistance helpline, or through demand for emergency fund applications if you have such a scheme, or payroll may be processing increasing numbers of CCJ orders.
There may also be a tell-tale end of month pattern absence where staff run out of cash and simply can’t get to work. Surveys are a good way to validate the problem, and the results are often surprising; for example how many of your staff have taken a 1,000%+ payday loan in the past year?
2) Add financial wellbeing to your package
Promote financial wellbeing alongside physical and emotional wellbeing packages. This doesn’t have to be expensive. There is ready access to free tools which can help staff manage their money better. For example, there are a number of free-to-use online budgeting tools, and it is now possible for individuals to actively manage their credit scores for free.
3) Provide alternatives
Offer staff alternatives to high-cost debt that can be accessible in the workplace. This can be done at no cost or risk to employers. For example, adding a salary deduction loan scheme to your employee benefit package can help employees pay off their high-cost debt and start to save.
These concrete steps help your employees to improve their financial health which, in turn, help employee engagement programs gain traction.
Verity Buck is client director at SalaryFinance
This article was provided by SalaryFinance
