4 ways to ensure financial wellbeing benefits meet employee needs in 2024

With living standards expected to drop again next year, organisations will need to renew their focus on financial wellbeing

Despite the temptation to kick back a little, the end of year is a time when we need to keep a keen eye on the challenges ahead, perhaps this year more than ever.

The Office for Budget responsibility has warned that living standards will be 3.5% lower in 2024/25 than before the pandemic. In effect, we are seeing the biggest drop in real living standards since the 1950s.

For employers this means that supporting the financial wellbeing of staff well into 2025 will remain a top priority. Even before last month’s Autumn Statement was announced, which made it clear that 2024 will be another financially challenging year for many employees, 824 HR leaders told Edenred that the cost-of-living crisis would have the biggest impact on employee performance next year.

Inevitably, this is having a negative effect on business performance.

Nearly two-thirds of employers (64%) said they were struggling to retain staff, a similar number (62%) reported falling levels of employee engagement, 39% were getting more requests for extra financial support and one-third (33%) said employees had taken up second jobs.

While most HR leaders (64%) believe their organisation had a duty to help empoyees with the cost-of-living, 54% said they had to compromise between the support they wanted to provide and ability to afford it. Investment-wise, more than half of the businesses (55%) we spoke to are balancing the need to support the financial wellbeing of staff with preparing their organisation for the impact of AI and automation. This, they said, will be the top area for investment next year.

Get the balance right

To achieve this balance, employers will need to find low-cost, effective means to boost employees’ overall financial position and support their wellbeing. Last year many employers gave pay rises and one-off payments. Clearly this isn’t a sustainable solution over the longer term.

Instead, HR will need to explore a wider range of options to retain, motivate, and engage people. While every organisation will need a long-term strategy to drive employee performance in uncertain times, they will also need tactical solutions that provide a rapid response to emerging challenges and opportunities.

4 actions for HR departments

1. Review the support you provide to drive financial wellbeing, engagement and performance. Does it align with the way the business works or do you need to make changes?

2. Similary, review your reward and incentives offering. Does it reinforce company values and encourage behaviour that underpins business success or do these require a tweak to drive new behaviours?

3. Ask employees whether your support is effective. What areas of financial wellbeing do they most need help with? Check your support covers all bases from discount schemes that enable employees to save money on everyday items through to employee assistance programmes to help any employees in financial distress.

4. Make sure you prepare a communication schedule that will enable you to remind employees on a regular basis throughout 2024 of the support available, how it will benefit them and how to access it.