This article was co-authored with John Petter, CEO of HR software provider Zellis.
It isn’t a new discovery that money worries have a direct impact on your employees; financial concerns are a serious cause of mental health issues, which themselves result in increases in both absenteeism and presenteeism, reduced engagement and productivity, and all manner of personal problems that make day-to-day working life a struggle.
Unfortunately, the prevailing social and economic conditions have made money worries increasingly common. Only rarely are employees, especially amongst the younger generations, faced with one specific financial challenge. It’s much more likely they are dealing with some dangerous combination of home ownership struggles, slow wage growth, too much borrowing, being a victim of a scam, and worries over their retirement savings.
This is all underpinned by low financial literacy, which Andy Haldane, Chief Economist at the Bank of England, has said is actually getting worse in the UK. Financial education is supposed to start in school, but many students say they don’t receive it. And once they leave the school system, most people aren’t exposed to any kind of financial literacy education unless it’s self-taught.
What role should employers play in addressing this issue?
The answer is that employers should take a greater role in increasing literacy and awareness. Currently less than half (44 percent) of UK employees are offered financial education, according to research from Zellis. The traditional view that personal money matters shouldn’t be discussed in the workplace is still pervasive. In fact, according to The Close Brothers, the majority (58 percent) of UK employers don’t have any sort of financial wellbeing strategy in place.
But let’s look at it from a different perspective: what’s the central transaction in the relationship between an organisation and its employees?
That’s right, it’s pay and reward.
So it only seems natural that the employer should play a part in helping employees make their money go further, by explaining how key concepts like benefits, tax, and pensions actually work. Zellis’ research indicates that this is currently an underserved need. They found:
- Most (58 percent) employees don’t fully understand their payslips
- Less than a quarter (24 percent) check their statement every month
- Around a third (32 percent) say they don’t have enough information about benefit choices
- A quarter (25 percent) say the same about their pension options
And while trust in traditional financial institutions like banks is at a low point, employers can step in to provide much needed support and education. But we must make it clear that they shouldn’t try to provide financial ‘advice’, which is something regulated, professional, and typically relates to money choices (i.e. investments) that involve a degree of risk.
What practical steps can organisations take, then, to support employees – and what are the potential business benefits? Here are a few quick ideas:
Run financial literacy programmes
These could be created internally, or you could bring in an external expert to help. They should be inclusive of different ages, background and levels of knowledge, and could cover topics such as how to understand a payslip, how to access benefits, how the tax system works, and how to manage your pension.
Closing the awareness gap can make a huge difference. Consider, for example, the hundreds of thousands of low-wage employees who don’t claim Universal Credit simply because they don’t know they are entitled to it. An organisation that helps to bring this information to light can really change the lives of its employees.
Communicate benefit choices
Your benefits package can make all the difference when it comes to attracting and retaining talent. However, organisations struggle with low levels of employee uptake either because the benefits on offer are not deemed relevant and useful, or because not enough is done to promote them and explain their value.
A solution is to involve employees closely in the process of designing a benefits package, improving both relevancy and awareness. Benefits awareness can also be boosted using a ‘total rewards statement’, offered as part of or alongside the payslip, which shows the total value of all pay and benefits received from the employer.
When employees are more engaged with their benefits it not only contributes to better financial wellbeing, but to better employee-employer relations as well.
Re-think your HR systems
Of course, helping your employees feel in control of their pay and benefits means having modern and user-friendly HR systems. When these systems are outdated, clunky and not mobile-friendly, important life-admin tasks such as updating bank details, checking your payslip and making pension contributions become harder and more frustrating.
The reality is that today’s employees expect near consumer-grade levels of technology in the workplace, so organisations that still rely on archaic systems need to re-think their approach. Convenience is key – if employees can get easy access to important pay and rewards information, they’re more likely to take positive steps towards improving their financial wellbeing.
Offer mental health support
The last tip is the simplest, but arguably the most important. Stress and worry can be made considerably worse in the absence of having someone to talk to. As an employer, you can help fill this gap by offering counselling. While it won’t be a direct fix for most financial problems, it will offer reassurance and let your staff know that it’s OK not to be OK.
Now we are into 2020, it would be amiss not to find a place for financial education and counselling in your HR strategy.
We’ve known for a while now that money worries aren’t good for the health of your staff or your business – so why not do something about it?