Why financial wellness is a must-have employee benefit
The chances are you’ve spent considerable effort on making sure your company is offering an attractive employee benefits package packed with perks and rewards. But have you thought about adding financial wellness employee benefits? In this article we’ll show you why you shouldn’t ignore the financial wellbeing of your employees any longer.
Businesses have always strived to be competitive and to stand out in their field. They’ve also learned that offering a range of benefits that employees appreciate can help reduce business costs too.
Offering attractive benefits is a useful recruitment tool. But a superb benefits packages can also help reduce employee turnover and target absenteeism levels.
Financial wellbeing lacks attention in most organisations when it comes to corporate health and wellbeing activity. The pandemic has forced financial wellbeing into focus. So now we’re beginning to see the tide turning towards embracing financial wellness too.
Just as your employees come up against health challenges, they also face money worries and stress relating to their finances.
UK employees have low levels of financial resilience and capability
Levels of financial resilience in the UK are relatively low. This means that any financial shock (normally an unexpected expense or some kind of emergency) can create financial difficulties and therefore stress.
Limited savings, rising debts, and a reliance on benefits all limit someone’s financial resilience.
As a nation, we also lack financial capability. This is largely due to the limited education available in schools when it comes to managing finances and understanding areas like pensions, mortgages, and borrowing.
As a result, many people lack confidence in making financial decisions. In fact, a 2018 financial capability survey found that 47% don’t feel confident making decisions about financial products and services.
Why offer financial wellness employee benefits?
When it comes to the benefits and rewards that you currently offer, how do your employees feel about them? Only 13% of employees surveyed by the CIPD believe that their organisation has allocated enough budget to improve employee financial wellbeing.
There are clear signs that employees would like their employers to provide financial support.
So while they might not explicitly ask for it, your employees are highly likely to appreciate a greater focus on financial wellbeing benefits.
Next let’s look at the potential business gains of offering financial wellness employee benefits:
Worrying about money, also called financial stress, takes its toll on your employees. One of the most obvious signs of financial stress is unhappiness.
When an employee is unhappy they are unlikely to be performing at their best or collaborate as well with their colleagues.
Employees who are suffering from financial stress tend to be distracted at work too. This is usually because their worries can make it harder for them to concentrate.
Being distracted usually leads to a drop in productivity as the employee struggles to maintain focus.
But giving attention to your employees’ financial wellbeing, you can make a significant difference to their ability to manage their financial worries.
Even small steps, such as signposting to debt advice services for example could help your employees feel more in control of their finances and reduce stress. Relieving that stress allows employees to be more positive and happy. It’s been proven that happier employees are more productive.
A lack of financial wellbeing can have a knock-on effect on the overall health of your employees. Like other stresses, financial stress builds up and leads to poor physical and mental health.
It’s widely recognised that stress can lead to anxiety and mental health issues. What perhaps isn’t so widely known is how this can affect a person’s physical health.
This link between stress and absenteeism has led to businesses investing more than ever in benefits that address poor mental health.
Stand out from the crowd
Recruitment is tough right now and the job market has dramatically changed in the last 18 months. In October 2021, a report found that there were over 1 million vacancies. More than ever, candidates can afford to be selective with the job offer they accept.
Companies must start doing more to set themselves apart from their competitors. Taking a positive approach to addressing the financial wellbeing of your employees can help you do that.
Improve employee retention
With the current shortage of candidates, many employers are desperately searching for ways to boost employee retention. While bringing new talent into your organisation can be a great thing, it’s also costly. So retaining your current employees has to be a priority.
Financial wellness employee benefits have the potential to significantly and positively impact your employees’ lives. On-demand pay makes it possible for employees to access their earned pay at any time before their usual payday.
This revolutionary way to pay employees is also known as a salary advance. On-demand pay provides a safe and secure way to access some extra funds to deal with a financial emergency. Unlike credit cards, overdrafts, and payday loans, on-demand pay with Openwage isn’t a form of borrowing.
On-demand pay is also free for employers to offer to employees, so it’s a great tool for your financial wellbeing strategy.
Offering employee benefits that help them feel more in control of their finances may encourage them to stay longer with your company. Given that it can be hard to find this type of benefit, it’s a perk they may not get elsewhere.
How to support employee financial wellnesswith benefits
Employers are perfectly positioned to offer financial wellbeing to their employees, and it can be win-win all round. But before you can establish a way of boosting your employees’ financial wellbeing, it’s important to understand the issues that they face.
Some of the most common causes of financial stress experienced by employees include:
No savings to deal with an emergency (like a boiler breakdown)
Lack of ability to effectively budget
Running low on funds in the run-up to payday
Research by Close Brothers shows that 94% of employees admit to having money worries, and 77% of them say that it impacts their work performance.
Employers massively underestimate the financial wellbeing of their employees. But it’s safe to say that many of your colleagues are struggling with money worries but are too ashamed to talk about it.
There are many ways you can support your employees’ financial wellbeing. Here are a few ideas to give you inspiration:
Open communication: Encourage employees to talk more openly about their financial wellbeing by offering different channels, like an Employee Assistance Programme.
Financial education: Provide information sessions to boost your employees’ financial literacy covering topics such as budgeting and saving.
Financial wellbeing benefits: Implement one or two considered financial wellbeing benefits, like on-demand pay, free private health insurance, and discounts on things everyone needs like groceries.
Can your business afford not to offer financial wellbeing employee benefits?
The potential business gains of helping to reduce financial stress among your employees is clear. What of the flip side though? If companies carry on offering the typical physical and mental health-related benefits, what can they expect?
There are substantial costs that your business is likely to incur by neglecting the financial wellbeing of your employees. Let’s look at these:
We have already considered the impact of financial stress on your employees. We already know that this can lead to issues with both physical and mental health and therefore lead to absence.
When an employee is off sick, your business is operating below capacity. This sees other employees feeling pressured to pick up the slack. If this is a regular occurrence, this can lead to these employees also developing symptoms of stress and your absenteeism rates can grow.
Even if those left behind to pick the work do not go absent there is still going to be a major impact on their morale. As morale falls so does productivity. The end result is a workforce that, as a whole, fails to deliver.
Increased employee turnover
Just as addressing the issue of financial wellbeing can assist with employee retention, neglecting this area can make it harder to retain your employees. A better paid position, or a company that offers better perks can seem like a more attractive option when someone is feeling the financial pinch.
Perhaps it is not the amount being paid that is the issue and instead, it’s the frequency of pay that matters. The offer of weekly or fortnightly pay holds appeal to many.
Although the accepted norm has become monthly pay, the benefits of this are heavily weighted towards the employer. Monthly pay cycles cause stress for employees.
But recent technological changes have made it possible to pay employees on-demand. This shift presents an exciting opportunity to give greater freedom to employees to choose when they get paid without impacting the employer’s cashflow.
Want to know more?
If your company is interested in providing a financial wellbeing benefit that costs you nothing and can help reduce financial stress among your employees, then get in touch.
The information in this article is for general information only. It does not constitute professional advice from Openwage. Openwage is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the information in this document relates to your unique circumstances.
Openwage Limited does not currently carry out regulated activities and is not authorised or regulated by the Financial Conduct Authority.
Openwage is a distributor of Modulr FS Limited, a company registered in England with company number 09897919. Modulr FS Limited is authorised and regulated by the Financial Conduct Authority as an Electronic Money Institution (Firm Reference Number: 900573)