4 ways to ensure financial wellbeing outlasts the crisis

Employers need to embed what they learn during this crisis to make financial wellbeing part of their organisational culture

Inflation may be forecast to fall to 5% by December, but the impact of the cost of living crisis on household finances will endure.

Most will not see an improvement in their financial situation until 2025. Coping with higher costs could leave some households less financially resilient for some time beyond that.

This means employers will have to find a way to support their employees for the next two years at least.

Just as importantly, employers should be looking at how they can embed what they learn during this time of crisis to make financial wellbeing part of their organisational make up.

There is certainly a need for this. Even before the present crisis hit, a nationwide survey by the government-sponsored Money and Pensions Service found that:

39% of UK adults (20.3 million) didn’t feel confident managing their money
11.5 million had less than £100 in savings
Nearly 9 million were in serious debt (with only around one-third receiving help).

What employers should take from this is that while a reactive response to a crisis is valuable, it would be far better to have a proactive plan that looks after this critical aspect of employee welfare whether there is a crisis or not. Support needs to be both more meaningful and sustainable.

To make this happen, employers need to focus their present interventions and future plans on four key areas.

1. Provide support that covers all demographics

Financial distress affects all levels of the workforce. While lower-paid workers have the highest levels of financial worries, the current crisis has highlighted that higher earners can also be hit hard.

Organisations need to adapt their support and communication to make sure that financial wellbeing programmes aren’t just a catch-all but offer tailored support.

2. Build financial resilience through education

CIPD research shows the most effective financial education programmes focus on helping employees develop soft skills – the attitudes, knowledge and behaviour that help people to feel in control of their finances. It also shows that sustained support for building financial resilience is better than generic one-off education interventions, which are often soon forgotten.

One solution, as the CIPD puts it, is “just-in-time or on-demand learning linked to particular financial decisions”.

The most important thing is to ensure that employees have the resources to help themselves.

3. Use expert external resources

Clearing debt and coping with the emotional strain often requires help from a range of experts including debt management organisations and counsellors. HR teams need to recognise this and develop a more robust employee assistance programme that directs staff to confidential advice and support services that most organisations simply don’t have the resource to provide in-house.

4. Normalise talking about financial health

Of the 20% of UK adults classified as living in poverty, 68% work. In-work poverty is at its highest level since records began in 1996, when this figure was below 50%.

Employers must de-stigmatise talking about financial distress at work. To make that happen, organisations will need to create a formal, evolving financial wellbeing policy that signals that they take issue seriously and outlines available support. This will help employees feel more comfortable asking for help and to manage expectations about what an employer can offer.

HR should also encourage leaders and managers to have regular conversations with their teams to normalise talking about financial health and distress. More radically, they should consider giving staff the right to deal with personal financial matters during the working day. This helps catch problems early before they escalate and affect mental health.

Undoubtedly, employees are currently feeling the mental and physical pressure of financial stress. But they have done before, and they will do again. By providing more meaningful and sustainable support, employers can make a difference now and reinforce a more positive employee experience.