4 reasons why financial resilience is a vital part of a mental wellbeing strategy

Financial wellbeing boosts employee happiness – and a business’ bottom line

The UK employee benefits industry has come a long way over the last couple of decades.

When flexible benefits and individualised employee benefit packages were introduced, initially employees were spoilt for choice. Eventually, a holistic balance, with quality championed over quantity, was found. Benefits were sought that worked for both the employer and employee in a complementary way, while being aligned with wider business principles and policies.

This led to the thinking that perhaps a holistic benefits strategy is only as good as its impact on employee wellbeing and happiness. Improved wellbeing became the goal and wellbeing teams were set up across the UK, in businesses and benefit consultancies alike.

Studies were done to prove what everyone intuitively knew – an improvement in employee happiness leads to an increase in workplace productivity. HR departments could finally justify their benefits spending with hard numbers.

However, recent events have led more and more stakeholders to give serious consideration to a new factor when considering benefits – employee resilience. Resilience, or a person’s ability to handle change and difficulties both at home and at work, underpins wellbeing.

Resilience can be observed in many ways, including mental resilience, physical resilience, and financial resilience – the ability to persevere when cashflow becomes an issue.

Today, employers are encouraged to design a mental wellbeing strategy that would nurture resilience to not only benefit employees but ensure that benefits offered are suitable and flexible enough to be relevant for most employees, most of the time.

Why financial resilience should play a key part in your mental wellbeing strategy:

1. It supports mental health

Different benefit types should work together in a complementary way and there is an intricate link between mental health and someone’s financial wellbeing or even just finances.

In a recent UK-wide poll, the Money and Mental Health Policy Institute found that almost four in 10 people with a mental health problem said their financial situation had worsened their mental health problems.

Conversely, the poll also found that almost one in three people said their mental health problems had made their financial situation worse.

It’ll be perilously easy for someone with either a low level of financial resilience or suffering with poor mental health to enter a repetitive cycle where both these scenarios might gradually become worse.

2. It has a positive effect on employee wellbeing

Overall wellbeing is made up of its component parts – generally categorised as physical, financial, and mental wellbeing.

Naturally, helping to improve your employees’ financial resilience – with financial education or financial guidance for example - would lead to higher levels of financial and overall wellbeing making it easier to help mental health.

3. It has a positive impact on employee retention

An organisation’s suite of employee benefits (in addition to salary and pension) has long been an important HR tool when attracting talent, but Barnett Wadington’s research has shown that it is less effective when it comes to retention.

The top three reasons people gave for changing jobs over the last year were:

Being unhappy in their role;
Inadequate pay; and
Poor line management.

However, resilience in general strengthens people’s resolve and enables them to take charge of their own happiness in the workplace. An increase in overall happiness and higher levels of mental wellbeing therefore is likely to have a positive effect on someone who thinks of leaving.

4. It has a positive impact on your bottom line

Our research shows the impact of resilience on an organisation’s bottom line.

We identified a group of respondents showing higher levels of workplace resilience and a group displaying lower levels. When we compared the results between these two groups, we found that the more resilient group is more than twice as productive as the less resilient group (where productivity was measured as the percentage of contractual hours per day respondents were actively engaged in work).

One reason therefore, to shore up your mental wellbeing strategy with financial resilience interventions is that you are likely to directly improve your business productivity.

A more indirect reason would be that by supporting the mental health of your employees you invest in their wellbeing and overall happiness and as the correlation between happiness and productivity has already been established this should provide ample justification for its inclusion.

*In January 2023 Barnett Waddingham surveyed more than 3,000 UK full and part-time employees as part of its annual employee benefits research