The importance of employee financial wellbeing The importance of employee financial wellbeing

The importance of employee financial wellbeing
25 Sep 2018

A single email sent by a line manager at a large company to the HR team summarises how the problem of employee debt can weave its way through an individual’s working day.

The manager intimated that one of their team had been “struggling for some time with massive debt, with loans at 89% Annual Percentage Rate (APR) and various credit card bills, all of which massively affected day-to-day life and were a constant worry”. The employee concerned had little disposable income to make the level of repayments required, creating a problem that had become crippling.

Sadly though, this is not an isolated issue and the reverberations for employers are real. Such situations can affect an individual’s mental health, behaviour and relationships, thereby also impacting their productivity, absence rates, engagement levels and health and wellbeing.

For example, employees with financial problems can end up being distracted as a result of fielding calls from creditors and debt collectors. Such anxiety may then manifest itself in increased levels of absenteeism, workplace errors or accidents. 

Moreover, colleagues with financial worries are more likely to be withdrawn, hesitant and negative in their interactions with others, which can have a negative effect on team relationships. 

For instance, in a recent survey entitled the ‘DNA of Financial Wellbeing 2018’, 69% of the 580 employers and 45% of the 10,000 employees questioned believed that negative financial pressures had repercussions on job performance. Three out of five workers admitted that money worries changed their behaviour, a figure that rose to 72% if they were under 34 years of age. One in ten staff also said they were unable to focus on work, while 6% had to take time off. 

This is because financial health is a key wellbeing issue. The study indicated that 35% of those suffering from financial worries felt stressed, 33% were anxious, 26% were losing sleep and 20% felt depressed.

The cost of financial difficulties

Looking on the bright side though, at least the subject is no longer just being swept under the carpet. Indeed, 72% of chief executives and 74% of senior managers said they were now aware of the problem.

More worryingly, the number of people suffering financial difficulties does appear to be on the rise, up from 58% last year to 63% this. The number of people with less than a month’s savings has also increased from 24% to 32%, while 14% have no savings at all.

But employees are not the only ones affected either. There is a substantial cost for employers too. In fact, we calculated that, in the UK alone, lost productivity, higher absence rates and greater employee turnover costs business in the region of £120.7 billion (US$158.57) every year.

Although there is no magic wand to wave to make the situation go away, wellbeing programmes can help by shining a light on the issues and mitigating some of the negative effects. Research by Deloitte suggests that, far from being a 'fluffy concept', such initiatives assist in making employees feel healthier, while there are also business benefits in terms of improved staff retention, engagement and output.

It seems that employers are starting to understand this situation, with 86% of those surveyed recognising that wellbeing is a driver of productivity – even if they are dragging their feet when it comes to taking action. A huge 59% admitted they offered only a basic wellbeing programme or nothing at all, with the most common initiative being the introduction of flexible working. 

Nonetheless, Deloitte suggests that the return on investment from such schemes can be substantial and have a significant impact on the bottom line.

Financial wellbeing initiatives

As to what an effective wellbeing initiative looks like, they can focus on everything from the personal, such as fitness, nutrition and counselling, to the workplace, which includes career development, work/life balance, rewards and incentives. Exploring issues such as workload and pace of work is also important.

But another useful consideration is building up workers' financial literacy. Creating an open, safe and transparent environment to talk about money can dramatically decrease stress and boost wellness. 

Providing financial support and education in the form of budgeting advice, 'how to' guides, workshops, presentations, multimedia or reading material is likewise a supportive thing to do. Not only can it help employees in practical terms today, but it may also help them prepare for unforeseen future events too.

Some employers are also starting to offer improved benefits packages and savings schemes to foster more of a savings culture. They are likewise finding ways to help staff members manage their budget on a day-to-day basis by providing affordable loans to help consolidate debt. Repayments here are taken directly from workers’ salaries at no cost to employers.

The employee referred to at the start, for instance, now has a loan taken out at 6.9% rather than 89% APR, which amounts to a huge drop over previous monthly payments. As a result, the move has “changed my life and removed a massive amount of worry and stress”, they say.

The aim in introducing a financial wellbeing initiative is, after all, to enable staff to keep hold of more of their money and ensure it works for them, thereby freeing them up to focus on the job in hand without unwonted distractions.

 Heidi Allan 

Heidi Allan is head of employee wellbeing at Neyber, which creates workplace communities to enable employees to borrow and save together at fairer rates in order to reduce the indebtedness of the UK’s workforce, thereby helping to increase staff engagement and productivity. Heidi was previously vice president and proposition manager at Barclays and has more than 23 years’ experience in the financial services sector.

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The hidden problem of sleep deprivation

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A single email sent by a line manager at a large company to the HR team summarises how the problem of employee debt can weave its way through an individual’s working day.

The manager intimated that one of their team had been “struggling for some time with massive debt, with loans at 89% Annual Percentage Rate (APR) and various credit card bills, all of which massively affected day-to-day life and were a constant worry”. The employee concerned had little disposable income to make the level of repayments required, creating a problem that had become crippling.

Sadly though, this is not an isolated issue and the reverberations for employers are real. Such situations can affect an individual’s mental health, behaviour and relationships, thereby also impacting their productivity, absence rates, engagement levels and health and wellbeing.

For example, employees with financial problems can end up being distracted as a result of fielding calls from creditors and debt collectors. Such anxiety may then manifest itself in increased levels of absenteeism, workplace errors or accidents. 

Moreover, colleagues with financial worries are more likely to be withdrawn, hesitant and negative in their interactions with others, which can have a negative effect on team relationships. 

For instance, in a recent survey entitled the ‘DNA of Financial Wellbeing 2018’, 69% of the 580 employers and 45% of the 10,000 employees questioned believed that negative financial pressures had repercussions on job performance. Three out of five workers admitted that money worries changed their behaviour, a figure that rose to 72% if they were under 34 years of age. One in ten staff also said they were unable to focus on work, while 6% had to take time off. 

This is because financial health is a key wellbeing issue. The study indicated that 35% of those suffering from financial worries felt stressed, 33% were anxious, 26% were losing sleep and 20% felt depressed.

The cost of financial difficulties

Looking on the bright side though, at least the subject is no longer just being swept under the carpet. Indeed, 72% of chief executives and 74% of senior managers said they were now aware of the problem.

More worryingly, the number of people suffering financial difficulties does appear to be on the rise, up from 58% last year to 63% this. The number of people with less than a month’s savings has also increased from 24% to 32%, while 14% have no savings at all.

But employees are not the only ones affected either. There is a substantial cost for employers too. In fact, we calculated that, in the UK alone, lost productivity, higher absence rates and greater employee turnover costs business in the region of £120.7 billion (US$158.57) every year.

Although there is no magic wand to wave to make the situation go away, wellbeing programmes can help by shining a light on the issues and mitigating some of the negative effects. Research by Deloitte suggests that, far from being a 'fluffy concept', such initiatives assist in making employees feel healthier, while there are also business benefits in terms of improved staff retention, engagement and output.

It seems that employers are starting to understand this situation, with 86% of those surveyed recognising that wellbeing is a driver of productivity – even if they are dragging their feet when it comes to taking action. A huge 59% admitted they offered only a basic wellbeing programme or nothing at all, with the most common initiative being the introduction of flexible working. 

Nonetheless, Deloitte suggests that the return on investment from such schemes can be substantial and have a significant impact on the bottom line.

Financial wellbeing initiatives

As to what an effective wellbeing initiative looks like, they can focus on everything from the personal, such as fitness, nutrition and counselling, to the workplace, which includes career development, work/life balance, rewards and incentives. Exploring issues such as workload and pace of work is also important.

But another useful consideration is building up workers' financial literacy. Creating an open, safe and transparent environment to talk about money can dramatically decrease stress and boost wellness. 

Providing financial support and education in the form of budgeting advice, 'how to' guides, workshops, presentations, multimedia or reading material is likewise a supportive thing to do. Not only can it help employees in practical terms today, but it may also help them prepare for unforeseen future events too.

Some employers are also starting to offer improved benefits packages and savings schemes to foster more of a savings culture. They are likewise finding ways to help staff members manage their budget on a day-to-day basis by providing affordable loans to help consolidate debt. Repayments here are taken directly from workers’ salaries at no cost to employers.

The employee referred to at the start, for instance, now has a loan taken out at 6.9% rather than 89% APR, which amounts to a huge drop over previous monthly payments. As a result, the move has “changed my life and removed a massive amount of worry and stress”, they say.

The aim in introducing a financial wellbeing initiative is, after all, to enable staff to keep hold of more of their money and ensure it works for them, thereby freeing them up to focus on the job in hand without unwonted distractions.

 Heidi Allan 

Heidi Allan is head of employee wellbeing at Neyber, which creates workplace communities to enable employees to borrow and save together at fairer rates in order to reduce the indebtedness of the UK’s workforce, thereby helping to increase staff engagement and productivity. Heidi was previously vice president and proposition manager at Barclays and has more than 23 years’ experience in the financial services sector.

OTHER ARTICLES THAT MAY INTEREST YOU 

The hidden problem of sleep deprivation

Making the most of your company benefits strategy

 The link between physical and mental health revealed