Having employees worrying about their finances can cost companies valuable time and resources. Fortunately, helping workers balance their chequebooks can do more than give them some peace of mind
It’s hardly a secret that the first quarter is a hectic time. Following the holidays, both employers and their employees can feel the weight of the post-Christmas expenses loom over them. But common as it might be, having staff worry about their personal finances can cut a huge hole in businesses’ profits.
In fact, financial worries are costing businesses £120bn a year, with approximately 17.5 hours lost a year due to employees taking time off work because of financial stress, according to research by Neyber, the startup enabling employees to more easily loan money. Moreover, the report revealed that 55% of employees believe financial pressure affects their behaviour and ability to perform in the workplace. Additionally, 50% would value financial assistance from their employer.
Commenting on the research, Heidi Allen, head of insights and engagement at Neyber, says: “Financial worries can affect different people in many different ways – from stress and anxiety, to loss of sleep and depression. This doesn’t just affect our relationships – both inside and outside of work – but also our behaviour and ability to focus. Our brains are magnificent things, but they have limited bandwidth. If they’re clogged with worries and stressors, it can leave us with little room to process other things, [which] has an impact on our ability to focus and perform in the workplace.”
And Neyber is hardly the only organisation to put the focus on how financial stress can affect people. For instance, recent research by Close Brothers, the merchant banking company, and the Chartered Institute of Personnel and Development (CIPD) found that 25% of employees worry so much about money that’s affecting their ability to do their job. That figure jumped to 32% in London and 31% of employees aged between 18 and 24. One in five even lose sleep over financial concerns. “Everyone worries about money at some point, irrespective of age, career stage or wealth,” says Jeanette Makings, head of financial education at Close Brothers. “But these results show it isn’t just an individual’s financial health at stake, but also business productivity and performance.”
But despite so many workers worrying about their finances, companies seem reluctant to do anything about it. Although 65% of employees rank financial wellness as important to them, only 7% of employers are doing something to help, according to research by Thomsons Online Benefits. Additionally, more than half of UK employers don’t provide staff with relevant financial benefits. Only 15% have a financial education programme in place. And if you ask Makings, these businesses are worse off for it. “Poor financial wellness is not just bad for individual employees,” she says. “It’s also bad for business.”
Given the benefits investing in employees’ financial wellness can have, it makes sense for businesses to start looking into how to implement these changes. The first step on the list should be ensuring you know what your workers actually need. “It’s imperative that employers understand the needs of their employees before implementing any wellness programme,” says Jonathan Watts Lay, director at WEALTH at work, the financial-education provider. “After all, every employee has their own individual circumstances that are likely to result in different priorities. For example, some will be looking to buy their first home, whereas others are preparing for retirement.”
In other words, one size doesn’t fit all. Meeting the criteria of diverse workforce demographics requires some flexibility. “With today's multi-generational workforce, communication has never been more challenging or more important,” says Allen. “Messages need to be delivered in a range of formats, especially when there is a call to action. Digital messaging is often the easiest and most cost-effective but would it resonate with all your people? Ask yourself if your youngest and oldest employees would both understand and act on your communication. The most effective communication strategies have purpose, clear objectives, are easily understandable, and delivered in a range of ways.”
While helping employees to better control their finances can at times feel like a colossal undertaking, the ROI makes it worth it. The research makes a direct link between an employee’s financial wellness and their productivity levels. Providing employees with clarity and support will unsurprisingly reduce stress levels and anxiety. But measurement is key to financial wellness. It should start with an analysis of where the organisation is currently, and involve periodic measures to show improvement, linking to other key metrics such as engagement, retention and productivity. “A relevant and well communicated financial wellness strategy can deliver business results and is mutually beneficial to both employers and employees,” concludes Watts Lay.
This article comes courtesy of Perkbox, the employee-benefits firm