Do employers have a duty to do more for their employees’ financial wellbeing? I don’t just mean paying them more, but should companies take an interest in supporting their staff’s financial stability in other ways or is that simply none of their business and not what an employer is there to do?
A recent study from Neyber, a fintech firm that provides salary-deducted loans, financial education and savings via employers, shows that Britain’s workforce is more worried about money than anything else. It surveyed 10,000 workers and discovered that money troubles were the most common cause of stress, followed by health, retirement provision and work-life balance. Perhaps it’s unsurprising that money worries are so common since the research found that half of the workers they surveyed said they regularly had to borrow money to meet their basic financial costs.
That figure rises to 70% among the under-30s, contributing to a rise in personal debt in the UK, which is up by 7% compared to last year. So is the answer that employers should provide more support and guidance, or is it just none of their business? More and more people are suggesting that it’s not just helpful for their staff, it makes good business sense for employers to do more.
Good business sense
Growing numbers of employers are choosing to support their staff and there must be a good reason. A new report from the Punter Southall Health and Protection ‘Employee Wellbeing Research 2018’ shows that 52% of businesses are now including financial wellness in their overall wellbeing strategy.
Jeanette Makings is head of financial education at Close Brothers. She says that employers should do more to help their workers manage their money because it’s the right thing to do but also because it can boost productivity. “There are huge amounts of benefits with employers. We did research with the CIPD in 2017 that basically showed that there’s a direct link between financial worry and performance at work. “What it showed was one in four employees in the UK worry about money to the extent that if affects how they perform at work. You don’t park how you feel at the door,” she says. “That rises to 33% of young workers 18-24. If you take that at face value, and you look at the impact of that on UK GDP for example, all we need to do is fix that even only by a couple of percent and it could help productivity as well as workers’ health. “It’s good for workers and good for business, why wouldn’t you?”
Charles Cotton, performance and reward adviser at CIPD, the professional body for HR and people development, agrees. “Poor employee financial wellbeing is a clear and present danger for companies and their investors,” he says. “Money troubles can reduce employee health, lower their productivity, affect firm performance and weaken the organisation’s brands.”
Employers may wonder exactly what kind of support they can offer and whether their employees would even thank them, but Makings says businesses are in a great position to help their people. “I believe they are in a fantastic position to help the financial wellbeing of staff for a number of reasons,” she says. “One, they have access to often large numbers of people. Two, they provide rewards and benefits which are the backbone of people’s financial wellbeing. And three, generally employees trust the messages they get from their employers.”
Who needs help?
It might seem likely that young and/or low-income staff are the workers most in need of financial advice and support at work but it’s all about targeting the help appropriately. Alan Morahan, spokesperson for workplace savings adviser Punter Southall Aspire, says: “Financial wellbeing isn’t so much about how much money someone earns; it’s about the use of money. “A person earning a high salary without the skills to manage their money can end up in financial difficulty, while someone on a low salary might be good at finding a way to make ends meet and stay out of financial difficulty. “Without the right skills, anyone can find themselves struggling to manage their money, which can create stress and anxiety. This can impact their health and wellbeing, and so financial education programmes are a crucial part of wellbeing strategies.”
What can employers actually do for their workers?
In an ideal world, we’d all get pay rises and our financial worries would be solved but of course, it just doesn’t work like that. However, there’s still lots that employers can do. Here are a few ideas.
Review the perks they offer
Many employers offer their staff perks and rewards, and employers can look at those to ensure they fit with their workforce’s needs. Makings says: “Working out what reward package suits their needs probably starts with asking them. This is not about employers spending more money, it’s about being really smart and aligning their reward spend to their work population.”
David Price, CEO of the firm Health Assured suggests some everyday expenses that employers can help with: “The cost of commuting to and from work can set employees back a considerable sum over the course of the year. “To help ease the money employees spend on travel, employers can help by providing a number of travel options such as a company car, introducing a scheme whereby they will make a contribution of as much as 50% of the cost of a bicycle for an employee or subsidising public transport costs. “The cost of childcare can be a significant financial burden for families, and finding affordable and suitable childcare can be a big challenge. Employers can help employees struggling with childcare costs by providing the Childcare Voucher scheme or making onsite childcare for their employees available.”
Engage them with their existing benefits
It’s possible that some staff don’t fully understand the financial implications of benefits currently offered by their employers. For example, if a company offers death in service benefit then this might reduce the amount of life insurance a worker feels they need. Or they may not fully comprehend the pension provision or any share schemes being offered. Extra advice, support and education can help workers get far more out of the benefits already being offered.
Help with financial planning
Providing financial advice to workers can help them manage their finances and form long-term plans to improve their stability and, with it, their financial comfort. Makings says: “Simple things like you think your savings goal will be achieved in less than five years or more? If less than 5 years then you only want a cash product really, so it’s useful to give workers guidance and simple strategies they will then find effective. “Sometimes that means going in and just providing support when people approach retirement, sometimes it’s communication and explaining any changes to pensions and the sort of decision they will need to make.”
As more employers begin to offer their staff financial support, it could be that providing useful, reliable information to workers will become key in recruiting and retaining the best staff. And once they’re employees, it could be key to keeping them focused on the job and not distracted by financial worries.