Could talk be the most valuable ingredient in your financial wellbeing strategy?
The direct and indirect effects of COVID-19 have presented employees with a cocktail of changes to their financial wellbeing, both individually and collectively. Social and financial inequalities have become more entrenched than ever, employees who are financially vulnerable are ever more exposed, and even formerly financially stable individuals are finding themselves struggling with over-indebtedness when household incomes have fallen.
All of those factors undermine employees’ motivation, potentially hitting their performance at a time when businesses face a host of challenges that hinge on positive employee engagement.
One of the themes of Talk Money Week 2020 has been encouraging all of us to open up about money secrets such as debt, loans or levels of saving.
The worry caused by keeping financial secrets can be hugely damaging. Research from the Money and Mental Health Policy Institute showed that people who are in problem debt are three times more likely to consider suicide, so the risks of ignoring financial problems in the workforce are high.
Building the UK’s Financial Wellbeing in the Light of COVID-19, a new report from the Money and Pensions Service (MaPS), recognises that there will be longer term ramifications from this year’s crisis that will impact the financial wellbeing of employees for years to come.
Its recommendations include encouraging conversations around ‘moments that matter’ at points of financial transition in employee’s lives. Encouraging financial services firms to consider their relationship with vulnerable customers, the role of credit and a review of Statutory Sick Pay are also among the report’s suggested outcomes.
Many of the ideas in Talk Money Week and the MaPS report also have a pivotal role for employers in creating a safe environment where conversations about money can happen. That could mean building a culture where employees can admit they are struggling, especially if they feel they cannot do so with friends or family. It could also include a blend of informal support through financial wellbeing champions, alongside employee benefits that both enable staff to make the most of saving, while also reducing or eliminating debt.
Equally important will be longer term strategies that commit to helping employees – and future employees – forge a stronger financial basis for themselves. Younger workers, women and carers are just some of the groups that will need particular focus if they are not to suffer long-term financial consequences far beyond 2020.
The author is Maggie Williams, content director at REBA.