The importance of identifying how much poor financial wellbeing is costing employers
Those with financial worries are 8.8 times more likely to have sleepless nights, 7.6 times more likely not to finish their daily tasks, 5.7 times more likely to have troubled relationships with work colleagues, and 2.2 times more likely to be looking for a new job.
These issues are costing employers dearly. We estimate the combined cost of lack of concentration, absenteeism and higher staff turnover represents between 13 and 17 per cent of an employer’s total salary bill. Across all UK employers, this could be as high as £50 billion per annum. That is more than the total spending on defence and more than 50 per cent of the annual education budget.
The positive news is that the research has identified a huge opportunity for HR and reward professionals to help employees live healthier, happier lives, and to deliver real, measurable outcomes for their organisations.
Financial worry and mental health
Some of the most shocking results came in response to questions about mental health. We asked if people agreed or disagreed with the following statements on a five point scale:
- I feel anxious and am prone to panic attacks
- I feel depressed and find it difficult to carry on with life.
We found that financially-worried employees are 3.8 times more likely to suffer from anxiety and panic attacks (50 per cent of those with financial worries vs 13 per cent of those with no financial worries) and 4.9 times more likely to suffer from depression (46 per cent of those with financial worries vs nine per cent of those with no financial worries).
It’s not about pay
The two groups that have the highest rate of financial worries are those earning £10,000–£14,999 pa (perhaps not surprisingly), but also those who earn more than £100,000 pa.
The percentage stating that they had financial worries in both of these groups is 49 per cent vs the national average of 40 per cent. More alarmingly, those earning more than £100,000 pa are more likely to suffer from panic attacks and depression than any other income group.
The conclusion? Financial wellbeing can clearly not be solved by higher pay. It is not the amount of money that you earn, but what you do with it that is the cause of worry.
The Financial Fitness Score
As a result of the research, we have developed a Financial Fitness Score that is based on responses to questions about employees’ money habits, resulting in a financial fitness score from 1 (‘Not in Control’) to 5 (‘Financial Freedom’).
The Financial Fitness Score is a strong indicator of whether someone will have money worries. 82 per cent of those with a score of 1 had money worries, versus only eight per cent of those with a score of 5.
As well as being beneficial for individuals, the average Financial Fitness Score of an organisation can be used as a quantifiable, objective measure and KPI for improvements in employee financial wellbeing.
About the research
The survey included more than 10,000 employees across 25 industry sectors. It was designed to better understand how personal money matters affect their day-to-day lives and performance at work.
Read The Employer’s Guide to Financial Wellbeing for the full research findings.
This article was provided by Salary Finance.
Salary Finance is sponsoring REBA’s Innovation Day, taking place on 22 November at County Hall, London.
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