Financial wellbeing – fad or fundamental?
You are most likely already delivering financial wellbeing – to an extent – regulation has driven the provision of workplace pensions. However, developments such as gender reporting and the Taylor review of modern working practices, have focussed the business mind on wellbeing, fairness and inclusion. We therefore need to ask ourselves: does pension planning only reflect the needs of certain cohorts – particularly those of greater affluence or age, potentially at the expense or exclusion of the priorities of other workers?
Even for those who value the workplace pension, this only addresses the “one day”. In order to offer an inclusive financial wellbeing strategy, perhaps you need an approach beyond pensions which looks across:
today I tomorrow I one day
Meeting everyday needs
Indeed it’s the “today” issues that are likely to be the most influential on an employee’s decision making. This decision making can impact you organisationally – most notably in terms of talent retention. No-one wants a talented employee who you have invested training and development in, and perhaps holds key client relationships, to be attracted by a competitor’s lure of an enhanced pay and benefits package. Perhaps it wouldn’t even be the employee’s first choice to change employer, but financial pressures may drive this decision.
The well-known Maslow’s theory states food, water, warmth and rest are basic requirements that need to be fulfilled in a pyramidal hierarchy before one can achieve their potential. It sounds simple, but in reality just affording basic housing and utility bills can be a difficult daily goal for many. This is demonstrated in our Generation WHY? research, which found that day-to-day living costs were a top priority for 51 per cent of respondents, closely followed by the cost of housing.
I recently read that London house prices are 14 times the average salary. See also the rapid upsurge of food banks across the country. Kings College research cited that even small changes in income or outgoings are leaving people with absolutely nothing. Some employees have even reported absence due to the inability to afford their commute. Add to this the threat of rising inflation and the potential impact on prices as a result of Brexit.
Is higher pay the solution?
The CIPD’s Labour Market Outlook (summer 2018) highlighted that 55 per cent of employers have increased salaries to improve staff retention. Is this the only and/or best solution? What’s the alternative?
Every £1 spent on financial wellbeing has been reported to have more impact than the equivalent salary increase. A key benefit of implementing a financial wellbeing strategy is that it not only supports an employee’s financial position but also actively demonstrates to employees that you care about them. This two-pronged approach is highly effective and the value to an organisation of an engaged employee cannot be understated.
The interconnectivity of a financial wellbeing strategy
You can implement a financial wellbeing strategy on a standalone basis, but what really excites me about this developing field is how this weaves a common thread through so many other core business strategies. It joins together all the pieces of the productivity puzzle: talent management and reward in an environment of squeezed budgets, employee engagement, workplace resilience, physical wellbeing and mental health, absence management, retirement strategy, employer branding in a market with so many employers seemingly struggling to obtain the right talent, even to a degree social mobility – all of which are key drivers in organisational productivity.
There is an abundance of statistics being quoted about the impact of a financial wellbeing strategy. Perhaps the question should be, why wouldn’t you develop a financial wellbeing strategy?
- One in five employees admit their concentration at work is regularly affected by financial concerns – Barnett Waddingham's Generation WHY? report
- 18 million working hours are lost per year due to financial stress – Neyber’s DNA of financial wellbeing report (2016)
- 88 per cent of organisations are concerned about the financial issues their employees are struggling with – Barnett Waddingham's Beyond Pensions report.
If this makes sense to you, you wouldn’t be alone in your thinking – the FCA, CIPD and the government have all published white papers on the subject, and many employers are reporting positive results from implementing a financial wellbeing strategy.
Building a financial wellbeing strategy
Constructing an inclusive financial wellbeing strategy is based on building an overall framework with independent solutions, including policy/procedural change and education, to break down financial barriers (not just a single workplace debt product). It should be designed to reach all employees who will all have differing needs across today, tomorrow and one day.
This article was written by Damian Stancombe, head of workplace health and wealth at Barnett Waddingham, and contributed to by Melissa Blissett, employee benefits consultant at Barnett Waddingham.
This article was provided by Barnett Waddingham.
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