It’s never been more critical to understand how to support your employees’ financial stability. With the cost-of-living crisis deepening, more and more employees are now under financial strain.
Worrying about money impacts your mental and physical health and makes it harder for employees doing their jobs properly.
Why prioritise employee financial wellbeing?
Did you know that money worries affect 77% of employees today? Stagnant wages, increasing inflation, and the rising cost of food, energy, and fuel have caused a cost-of-living crisis that’s the worst in Europe.
On top of this, there’s an underlying feeling of instability with job losses in the technology sector and, in contrast, an abundance of positions in other sectors like care, hospitality, and retail.
Almost three-quarters of people are financially stressed
Taking a holistic approach to employee wellness has never been more important. Today, employee financial wellbeing is a critical priority.
Let’s’ discuss how organisations can support your employees’ financial stability and why every organisation needs to do it.
What does financial stress look like?
Financial stress can cause a wide range of mental and physical issues, including:
Lack of sleep results in difficulties making decisions and increases the chances of making mistakes. It can also cause severe illnesses like heart disease and stroke if it continues.
Weight loss or weight gain
Worrying about money can cause overeating or loss of appetite. Both can cause fatigue and listlessness, and make it hard to concentrate.
This is a paralysing feeling of hopelessness which destroys motivation and affects cognitive functions. It also causes physical illnesses such as high blood pressure.
Physical symptoms include panic attacks, shaking and excessive sweating, all of which can have a long-term impact on self-esteem.
Withdrawing from social situations
Worrying about money can stop people from going out because they don’t want to spend money. It can also mean they’re too preoccupied to interact with others. But socialising is vital for mental health.
Arguments between couples are most often about money. Instability at home has a huge impact on people’s mental health and performance at work.
Destructive coping tactics
Feelings of desperation about money can result in excessive drinking, smoking, and gambling. In extreme cases it can be a contributing factor in self-harm and suicide.
It’s clear that no business can get the best from an employee who is suffering from financial stress.
What does employee financial vulnerability cost employers?
In the UK, 4.2 million working days are lost annually due to absences caused by poor financial wellbeing. The cost is estimated to be £626 million.
Employee financial vulnerability also increases staff turnover, raises the likelihood of workplace accidents, and results in poor decision making and low motivation – to name just a few.
In a study by SHRM, 80% of employers said that financial stress decreases employee performance and lowers productivity.
How to support employee financial stability
Here are three things you can do to improve employee financial resilience:
1. Offer perks that focus on better money management
Here are some perks your business could offer:
Earned wage access (EWA)
Earned wage access (EWA), also called ‘on-demand pay, is a perk that improves employees’ financial stability. EWA gives employees the peace of mind that they can cover unexpected expenses.
To find out how on-demand pay boosts employee financial resilience, take a look at How can on-demand pay benefit your employees’ financial wellness?
On-demand pay can save your business money by lowering recruitment and training costs because it gives you an edge over your competitors when it comes to attracting and retaining talent.
Explore this plus other Business benefits of earned wage access: An HR manager’s guide to discover more ways earned wage access can benefit your organisation.
Organisations like Octopus Money Coach work with employers to offer employees financial coaching. With personalised coaching sessions tailored to individual employees’ financial situations, it’s a cost-effective way for employees to feel more confident in managing their finances.
It’s a good idea to ask employees what benefits they would like because their responses will depend on their particular circumstances.
Also consider tapping into data collected through HR technology like people analytics to understand issues affecting your workforce so that your benefits package helps you meet organisational goals.
2. Help employees gain financial knowledge
Very few schools teach financial education, and a lack of financial management skills can lead to financial stress. Many people become trapped in a cycle of debt because of poor financial decisions they’ve made in the past.
When people read advice online about money management, it can be confusing and overwhelming. So, many businesses are addressing this issue by providing financial education for employees.
Your organisation could promote employee financial wellbeing by:
- Webinars on financial topics that are most important to your employees. If in doubt what these are, don’t be afraid to ask them. You don’t have to create your own webinars, you may be able to tap into external providers on a low-budget.
- Access to unbiased financial advice. There is a common perception that financial advice isn’t for everyone, or is only needed for life-impacting financial decisions like mortgages. But this isn’t the case.
- Partnering with a financial coach such as Octopus Money Coach which helps employees on and individual level to manage their finances better.
Supporting employees’ financial knowledge will increase their confidence to make the best financial decisions. Better financial decisions lead to better money management, which means employees will be less likely to feel financially stressed.
3. Promote a culture of trust and openness
According to a survey carried out by the Money and Pensions Service, 29 million UK adults don’t feel comfortable talking about money. That’s despite 49% of people being worried about it.
Unfortunately, talking about money carries a stigma because many of us have been brought up to believe it’s a taboo subject.
By promoting a culture in which people feel more confident to open up about money, you can find out what particular financial challenges they face.
Try to focus on the areas of finances your specific workforce is struggling with
Once you know what the difficulties are, you can address specific areas (for example, retirement planning, issues around paying for company expenses upfront, etc.)
To normalise talking about money, consider leading by example. If people in senior positions in your company share money difficulties they’ve experienced, this can break down barriers.
Financial champions can be a great way to get engagement
Why not appoint financial champions? These are employees you train to offer support to colleagues with money concerns. Financial champions can work alongside your HR team, who should also be given financial training.
Financial champions can be invaluable because often it’s easier for people with money worries to approach a peer rather than a professional or a family member at first.
Having someone to talk to, in confidence, can be the first step towards facing and addressing financial problems.
Do employees want financial support from employers?
Today’s employees have high expectations in the workplace. Offering people perks, flexibility, recognition, and employee benefits that give them genuine value demonstrates that your business genuinely cares for them.
Research by Nudge Global revealed that 67% of employees would like their employers to offer more financial wellbeing support.
If your business understands how to support employee financial stability and provides the help people need, you can stand above your competitors and increase the profitability of your business.