How to ease the effect of financial stress on employees
Financial anxiety is the number one source of stress among employees, ahead of both health and family issues.
So, with the Consumer Prices Index rising 10.1% in the 12 months to March 2023, it stands to reason that there are lots of stressed-out employees in offices and worksites across the UK today.
CIPD figures show that more than a quarter of UK employees say money worries affect their ability to do their jobs, while nearly one-third feel their productivity levels have been hit by cost-of-living-related concerns.
And those on low incomes are far from the only ones affected.
A recent US-based Morgan Stanley report found that financial stress affected employees at all income levels, with money worries haunting 52% of those with annual household incomes of $100,000 or more.
The same is true in the UK, where people are feeling the effects of higher living costs no matter how much they earn. Whatever their income, their monthly outgoings have almost certainly rocketed over the past year or so.
And while having to miss out on a holiday or reduce pension contributions is undoubtedly less stressful than being unable to heat your home, the resulting strain can still cause anxiety and prevent higher earners being on their game.
So, employers keen to mitigate the associated stress on their employees need to take a holistic approach that encompasses practical assistance people can use to boost their bank balances today, preventative measures to avoid future financial hardship and mental health support for those struggling to cope.
Here are four ways to achieve that.
1. Bolster your discount scheme
Discounts on the goods and services driving up the rate of inflation are one of the easiest ways to make an immediate difference to employees across the board.
Food, insurance and utilities tend to be the three big hitters in this area, so make sure your discount programme includes offers that help your workforce to alleviate some of the biggest price hikes.
As with all employee benefits, it’s essential that these discounts are made easily available via user-friendly technology and spotlighted by communications that ensure all employees are aware of the deals.
2. Encourage small lifestyle changes
Small changes make a big difference: the savings you can make by taking a packed lunch into work and walking or cycling rather than taking the bus, for example, could easily come to £50 a week.
And the key to convincing people to start taking such steps is to demonstrate how much they can save, not just once but again and again. Light-hearted ‘nudges‘ such as sharing packed lunch recipes or sandwich filling ideas, are one option.
If you can let people work from home sometimes, you could also highlight how much this saves them on the daily commute.
3. Debt management education and support
Given the inflationary pressures the nation faces, it’s hardly surprising that credit card debt has hit record levels in the last six months.
A typical household owed £2,277 on credit cards as of January 2023, according to The Money Charity.
It’s therefore important to educate employees about the costs involved in borrowing this way, and to provide information about free debt advice services – such as StepChange – for those who are in too deep.
You may also want to consider running a salary advance scheme that can help avoid unexpected costs turning into credit card debt – and reassure others that emergency cash is available, for the right reasons.
As mentioned, backing this up with employee access to mental health support including, where possible, a confidential helpline, is the final piece of the puzzle.
4. Encourage people to think longer term
When times are tough, it’s human nature to sacrifice long-term plans to meet immediate needs. But by failing to maintain savings levels, even wealthier employees can end up robbing their future selves and causing even greater financial stress and anxiety down the line.
As with lifestyle spending changes, the best way to encourage people to keep saving is to demonstrate the impact reducing their contributions will have on their future incomes.
So, a good pension modeller could be one of the best ways to future-proof your workforce in financial stress terms.
In partnership with Equiniti
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