Building financial resilience in your workforce
The financial situation in UK households is proving to be persistently tricky.
The cost of living crisis continues to stretch households, and financial resilience is at worrying levels.
The Office for National Statistics documented that 31% of households would be unable to afford an unexpected expense.
Beyond the inability to deal with unexpected bills, financial resilience also requires protection against job loss, illness, death or accidents.
However, The Money Charity reported that 51% of working-age people in the UK live in households with less than three months wages in savings.
Living with vulnerability
This lack of financial resilience leaves households vulnerable with the consequences of this being far reaching; anxiety and other mental illness are often associated with financial stress.
Clearly this situation is untenable and if left unresolved will lead to consequences for individuals that can affect them in the workplace.
Building financial resilience will ensure that employees can handle unexpected expenses, from the obvious domestic mishaps to bigger life events that disrupt a household’s income and should be an essential part of all employers’ financial wellbeing strategy.
Employees are increasingly looking to their employers rather than the state to support them, but what’s in it for employers?
Having a safety net in place can reduce financial stress that often creates wider health issues and absenteeism in the workplace.
Avoiding this can result in increased productivity and job satisfaction, leading to better employee retention and loyalty while supporting the attraction of talent.
Indeed, The British Safety Council found an average of 18 million days were lost to mental health conditions last year alone.
It’s time for employers to get creative with the solutions they offer:
1. Identify your employees’ needs: A financial wellbeing survey creates opportunities to explore areas of vulnerability for your employees, assess whether the employee benefits you already have in place are understood and meet the complex nature of your diverse workforce. Once you have this insight, solutions can be wide ranging to suit a variety of budgets.
2. Review your employee benefits: Updating your current reward package may be something to consider. Increasingly employees are looking for benefits that not only support their financial health in traditional ways like income protection or pension planning but also reduces costs in monthly household budgets, for example, gym membership, travel, food shopping or entertainment purchases.
3. Offer financial education and support: An essential step is to enhance the financial literacy of your employees, wherever they are on their journey. Education will ensure employees understand the advantages of the employee benefits you already have on offer. Targeted individual support can complement this wider approach by offering access to one-to-one financial information and guidance from a financial services professional or via a comprehensive employee assistance programme (EAP) designed to support people in crisis.
4. Give access to flexible working arrangements: Allowing employees to reduce commuting and childcare costs can give valuable support to many households. A simple adjustment to your policies could support people through sustained pressure on their ability to make ends meet.
5. Encourage open dialogue: Use opportunities like Talk Money or Debt Awareness Week to encourage open discussion. Engaging them in conversations about money may get employees to open up about financial worries, lack of understanding or lack of ability to budget effectively. By breaking down the stigma around money you can create an environment where employees are able to discuss their financial resilience and consider ways to improve it.
Importantly, what’s needed is a shift in thinking from both the employer and employee. Financial resilience is not a quick fix, both need to recognise that financial resilience needs to be built in this cost-of-living crisis but long lasting enough to sustain them through another cost-of-living crisis or the inevitable bumps in the road we’ll all face in future.
In partnership with Broadstone
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