Why the need for financial wellbeing support is here to stay
The wellbeing industry has grown tremendously in the past 10 years. According to Deloitte’s 2040 Future of Health report, 75% of health spending will be on wellbeing. A report by McKinsey, released in September, reveals that wellbeing is a priority for 50% of Americans. This rate, which has increased by 8% since 2020, shows where the industry is heading.
We have seen many trends that have dominated the industry in the last decade come and go. From yoga, meditation and mindfulness to mental health. But what’s next?
Financial wellbeing has been on the agenda for the last 10 years; however, it has never been so popular. The UK is struggling with an unprecedented rise in inflation, while at the time of writing, the United Arab Emirates faces 7% inflation and a 26% increase in per-household debt. In Turkey, on the other hand, household borrowing has increased 138 times since 2005, past the ceiling threshold and will begin to decline. All these macroeconomic findings indicate that employees will meet human professionals at work and start looking for solutions. So how can a solution be found for future needs?
Compensation is a hot subject. According to a study published by consultants Korn Ferry, companies update their salaries according to market conditions i.e. in order to stay relevant, they tend to update their salaries on shorter intervals as opposed to regular annual raises. Other focus areas are skills-based salary or bonus revisions. Skills-based premiums are highlighted because it gives people professionals the flexibility to pay key talent even more than their managers based on their skills.
Linkedin’s Global Talent Trends Report 2022 found that flexibility at work and employee autonomy in applying this flexibility has, for the first time, overtaken competitive salary.
According to the report, 83% of employees want more flexibility and 59% say flexibility is more important than salary. In addition, vacation opportunities and health insurance are on top of the agenda compared to pre-2020. Another finding is that when employees compare their own salaries with those of their friends and other individuals doing similar jobs, if they think they earn about the same amount, they place more importance on benefits, working conditions, learning and development opportunities.
Another exciting trend is that personalised total benefits packages are starting to become a norm. Let’s say the employee has a child and is having trouble paying for its daycare, while another needs support to finish a Masters programme they started. In such cases, creative or direct financial support, such as allowing the employee to leave on the relevant days and hours on the company’s pay, is paramount.
According to the results of the CIPD’s Reward Management survey 2022, employees feel better even when the company only has a written financial wellbeing policy. In short, while benefits are the topic of the day; the first step in terms of financial wellbeing is not rushing to get some benefits in place, but to publish and make financial policies known.
“Am I insane if I get mental health support?” was a common question about emotional wellbeing 10 years ago. We observe the same tendency with financial wellbeing. Individuals are under constant stress and shame about their spending and debt. That brings forth anxiety and questions about whether an individual’s problems are unique to them. It’s the same with people professionals – we might think employee financial issues are unique to our organisation and our responsibility. Only once we make policies seen and talk about them can we actually clear those clouds.
Making financial wellbeing policies visible may be the best first step to keep the issue debatable. This can be as simple as publishing when the salary hits the bank account if we currently have nothing else. Everything else can be added thereafter.
During the Covid-19 pandemic, Emma Davies, Dubai-based Masafi's chief HR officer, asked all employees how they could make their lives easier by working on financial wellbeing.
Many of the responses pointed in the same direction. 80% of Masafi’s employees are Indian, and send money to their families living in their home countries, paying high commissions to do so.
Once Davies understood, she took different commission rates from all the banks she worked with and proceeded with the most suitable one. She called a customer representative from this bank to the office on the second day of every month. Result? Very happy employees who pay fewer commissions, don't have to take part-time days off, and perhaps even go to the bank in a way that threatens their health.
Steve Cronin, who works on financial wellbeing in the region, said that feelings about money are woven with guilt; he says the only way to get over it is to start talking. What Davies did here was simply talking and trying to understand the need. Some might call it employee experience. We call it curiosity.
Companies that want to go to the next level are taking different actions in addition to visibility and starting discussions. At Wellbees we are seeing that some companies are making head-way by making interventions at different levels. These could be and are not limited to money-saving challenges, investor clubs, financial wellbeing training, and trainers inside companies.
Will financial wellbeing occupy the agenda like all other trends and then disappear? Yes, when current economic conditions improve and needs are met. But for now, it will completely permeate. What will stand out here will be the applications that make a difference and of course the companies creating them.
In partnership with Wellbees
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