Catherine Rickard: A problem shared? Talking to the workforce about financial worries
Increasing personal debts, demanding financial commitments and limited abilities to save for the future are a cause for concern; and 90 per cent of employers agree that employee financial worries have an impact on workplace performance.
Financial wellbeing is described as making the most of an adequate income to enjoy a reasonable quality of life and having the skills and capabilities to manage money well, both on a daily basis and for the future.
Research has shown that poor financial wellbeing is linked to negative impacts on health, with financial incapability associated with mental stress, lower reported life satisfaction, and anxiety or depression.
These effects of poor management of personal finances create a strong case for employers to provide financial education and support. For example, for every one million pounds an organisation spends on payroll, there is an estimated £40,000 loss in productivity due to poor employee financial wellbeing.
What’s more, employee mental health problems have an estimated total cost to UK employers of £8.4 billion a year in sickness absence and £15.1 billion a year in reduced productivity at work.
Overall, financial stress has been estimated to cost the UK economy £121 billion and 18 million working hours in time off work each year. Given this direct impact on employee productivity, there is a compelling case for employers to support their employees to improve their financial wellbeing.
However, openly discussing finances in the workplace is typically not the done thing, with employees often hesitant to raise financial worries with their employers. Yet in order to provide the most effective support, it is important to understand where employers should direct their efforts.
Surveying the workforce
One thing employers can do to bridge this knowledge gap is to conduct a confidential and anonymous employee survey concerning financial wellbeing. This can be packaged as part of a review of the ‘wellbeing offer’ and enables organisations to better understand and support their employees.
The survey format can explore issues such as how well employees are managing their money day-to-day; how well employees plan for life/future events; their use of credit and debt; their appetite for employer support and the desired nature/direction of this support and its form of delivery.
Including demographic questions such as age group; grade level; and marital status may help with identifying broad groups where financial stresses are most prevalent. Based on the findings from such a survey, organisations can tailor their support offering to the needs of their workforce in an effort to reduce the bottom-line impact of poor financial wellbeing.
Next month (13-19 November 2017) is the UK’s second ever Financial Capability Week organised under the umbrella of the Financial Capability Strategy for the UK and coordinated by the government-backed Money Advice Service.
Employers could use this platform to highlight the importance of financial wellbeing; promote greater awareness of effective money management; and encourage healthier financial decision making and behaviour.
This article is written by Catherine Rickard, senior research fellow at the Institute for Employment Studies