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Why financial wellbeing is no longer just a 'nice to have'

2020-06-15

Posted on: 2020-06-15

Whilst some employers may have thought of financial wellbeing as an optional extra, they are now waking up to the importance of providing these services for their employees. This is because financial wellbeing is a major driving force behind a person’s overall wellbeing and has a big influence over their mental health. Healthy, happy employees are more productive, so it is in everyone’s interests to prevent health issues caused by financial stress.

Is it any of my business?

The fact that employers have historically thought of their employees’ finances as a private matter should not now prevent them from offering support as part of a holistic wellbeing package. We are seeing an acknowledgement of the links between mental, physical, and financial wellbeing, with money worries significantly contributing to mental health problems.

One in four UK workers reported to the CIPD[1] that money worries have affected their ability to do their job. Financial worries can impact productivity in several ways – whether through losing sleep, lack of focus, stress, depression, or other mental health conditions. As a result, employers looking to reduce the number of absence days and improve performance are increasingly focused on the link between financial wellbeing and greater productivity.

Research by Salary Finance estimates that money worries cost the UK economy £120 billion and 17.5 million lost hours of work.[2] So whilst treating employees’ finances as a private matter might seem like the easier option, it’s hard to ignore the knock-on effect to your business’s bottom line.

Your responsibility as an employer

Employers have a duty of care to their workforce and can play a vital role in delivering essential support and benefits to help improve financial wellbeing.

Employers are uniquely positioned to deliver financial advice at the moments when their employees most need help. They are often engaged with many of their employees’ key life events, including starting work, changing jobs, becoming parents and retiring. As such, employers are well-placed to offer structured guidance and timely signposting to their staff.[3]

Furthermore, CIPD research suggests that many large organisations view supporting financial wellbeing as an ethical responsibility, and 85% cite their reason for expanding financial well-being initiatives as being ‘the right thing to do’.[4]

Is it relevant to my workforce?

All employees can benefit from financial wellbeing. Worrying about money is not limited only to those with debt, to younger workers, the lower paid or those planning for retirement; everyone worries about money at some point in their lives. In fact, those with the highest pay levels experience high levels of stress related to finances.

What’s also clear is that financial wellbeing is not just about how much workers earn, but about the level of control they feel they have over their finances, irrespective of pay and grade. Employers are facing increased pressure to help their employees take good financial decisions, make the most of their earnings, and feel more in control of their money.

With financial worries intrinsically linked to mental health and subsequent employee performance, employers can play a critical role in helping their employees to talk about, overcome or even prevent some of their financial worries.

 

[1] CIPD, ‘Financial well-being: the employee view’, published January 2017, p. 3. Accessed at https://www.cipd.co.uk/Images/financial-well-being-employee-view-report_tcm18-17439.pdf (21 May 2020)

[2] Neyber, ‘The DNA of financial wellbeing: summary report’, published May 2016. Accessed at https://www.neyber.co.uk/financial-wellbeing/nhs-andhealthcare (9 June 2020).

[3] Money & Pensions Service, ‘Thematic Review: How can we improve financial wellbeing in the workplace?’. Accessed at https://www.fincap.org.uk/en/thematic_reviews/how-can-we-improve-financial-wellbeing-in-the-workplace (9 June 2020)

[4] CIPD, ‘Employee financial well-being: why it's important,’ January 2017, p.23. Accessed at https://www.cipd.co.uk/Images/financial-well-being-why-its-important-report_tcm18-17441.pdf (4 June 2020)

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