Wellbeing affects employees of all businesses. As the British social reformer John Ruskin highlighted almost 150 years ago: “In order that people may be happy in their work, these three things are needed: they must be fit for it, they must not do too much of it, and they must have a sense of success in it”.
In the recent 2018 HSE report, stress-related sickness absence now represents 57% of all sickness absence. Over the last decade, employers have introduced many techniques to help stressed employees, from counselling services to mindfulness and resilience training, to mental health first aiders.
To measure how ‘financially fit’ UK employees are, Close Brothers produce an annual Financial Wellbeing Index. The index looks at eight pillars of financial wellbeing and measures employees in categories such as debt, budgeting and planning, protection, and savings and investments.
The results paint a stark picture of financial wellbeing in the UK. We look at the latest index, why financial wellbeing is so important, and what employers can do to improve the financial wellbeing of their staff.
Employers failing to support financial wellbeing
The Employee Financial Wellbeing Index measures how financially fit employees in the UK feel in eight key categories. Each category is assigned a score out of 100, according to a scale developed by Close Brothers Asset Management, and an average of each category score delivers the overall index figure.
When it comes to their overall financial wellbeing, UK employees score just 53.6.
Professor Sir Cary Cooper from Manchester Business School, a recognised world-leading expert on wellbeing in the workplace, says: “Although many businesses have made great strides to look after the mental wellbeing of their employees over the last decade, not as many employers have supported their financial wellbeing.”
Key findings of the research include:
- 94% of employees admit to worrying about money. Of this group, three quarters (77%) say that money worries impact them at work
- More than a quarter of employees (28%) are unhappy with the state of their finances
- More than half (55%) of employees say that their workplace offers nothing to improve employee financial wellbeing
- Women score significantly lower than men, scoring just 48.1 on the index compared to 58.3 for men.
Why poor financial wellbeing is an issue
Poor financial wellbeing is not just an issue for an individual employee. It can also impact the performance of a business.
The Employee Financial Wellbeing Index found that the top five challenges that businesses faced that were associated with poor financial wellbeing were:
- Reduced productivity (22%)
- Loss of talented staff (22%)
- Reduced employee engagement (19%)
- Higher absence rate (19%)
- Demands for salary rises (19%)
It means that businesses are being affected by a lack of productivity, from staff being distracted by money worries to sickness absence, as the stress takes a physical or mental toll.
What employers can do to help
The research found that one of the issues is that employers substantially underestimate the impact of money worries on employees at work.
Just 30% of employees think that money problems are a major issue, when in reality it affects 77% of employees.
So, what can employers do to help?
Experts suggest that any employer solution needs to include three things.
- Financial education
Financial education can raise awareness and confidence. It enables employees to develop the tools they need to deal with the complexities of their financial lives.
Consider hosting a pension saving, or a protection seminar for your team. Ask a local professional to come into your business to share their knowledge and expertise and help your employees to better understand their finances.
- Access to financial advice
An annual review with a financial adviser can improve employee financial wellbeing as it provides employees with both reassurance and a plan of action.
By looking at all areas of a person’s finances, the adviser can identify any gaps or key risk areas, and recommend the steps needed to help that person to achieve their goals.
- Access to financial solutions
In addition to a workplace pension, there are other ways in which an employer can provide access to financial benefits.
In terms of the wellbeing index, employees scored just 42.5 out of 100 on protection. So, as an example, you could consider offering life insurance benefits to provide the peace of mind that your employees’ families would be protected if their breadwinner were to pass away.
Many employers also provide access to discount/voucher schemes. These allow employees to benefit from discounts at popular high street and online retailers.
Improving financial wellbeing works
The encouraging sign is that a significant proportion of employers are taking steps to address the issue of employee financial wellbeing, although almost half of businesses (48%) do not have a financial wellbeing strategy.
And, when asked about their reasons for implementing a financial wellbeing strategy, employers said:
- To improve employee engagement (35%)
- To provide a valued employee benefit (32%)
- It is part of their people strategy (32%)
- To improve their employees’ overall financial wellbeing (28%)
- To improve their employees’ mental health (25%)
These strategies do work. Nearly a third (30%) of employers say that it helps improve employee productivity, a quarter (24%) say it assists in talent acquisition and retention, and 22% say that it helps to fulfil their strategic business objectives.
Take steps to improve your employees’ financial wellbeing today
The results of implementing a financial wellbeing strategy are clear to see. You’ll have employees leading a more positive and healthy life, leading to a more engaged and productive workforce.
As the research concludes: “It’s simple; when employees are happy, organisations thrive.”
If you or your clients need any help in implementing their financial wellbeing strategy, please introduce them to us.