For many business owners, the notion of an official employee financial wellbeing program can often be overlooked (other than providing fair pay and a clear policy regarding tax and benefits), it can seem unnecessary to take any other action regarding employee finances. What’s becoming more and more apparent, however, is that employers do need to take a more active approach toward implementing employee financial wellbeing programs.
The pandemic has rapidly increased the adoption of digital working practices and is driving significant changes to business models, and this is expected to be the new normal post-covid. It’s imperative that designing the right employee financial wellbeing strategy and embedding it into workforce data, can help companies reduce turnover, lower absenteeism, and improve productivity. The core problem seems to be that wages are not rising quickly enough to meet the higher costs of living. But this issue is compounded quickly by other factors. Employees are borrowing more money to cover expenses, struggling to manage finances as a result, and ultimately feeling less secure (and in some cases less motivated) in their jobs. As an employer, you can’t solve all of these problems all the time. But developing a strong employee financial wellness program can certainly help.
The CIPD’s survey (which 420 employers responded to) finds that:
- 12% of employers have introduced, or plan to introduce, a financial wellbeing policy in direct response to the pandemic (29% already had one)
- 19% are planning or considering becoming an accredited Living Wage Foundation employer (a further 18% of employers are already accredited and another 18% already pay the ‘Real Living Wage’ without being accredited)
- 24% of employers have explored how the pandemic has impacted their employees’ financial wellbeing, so they’re better able to identify the right kind of support. Another 18% plan to do so by the end of March 2021
- Nearly a third (30%) of employers say the pandemic and the economic crisis has prompted them to consider how fair their pay and benefits are. A quarter (25%) are taking corrective action or plan to do so.
Many employers already recognise the moral and business case for supporting employee financial wellbeing. Money worries affect our mental and physical health, which in turn can affect work performance. To help address this, nearly half of employers have a financial wellbeing policy in place.
Patrick Leahy, Founder of Float said:
“Ideally, a financial wellbeing policy should form an integral part of every employer’s holistic wellbeing strategy. But even small employers with a limited budget can do their bit with a simple policy that acknowledges their commitment and lets their workforce know where they can seek help if they need it.”
Why employee financial wellbeing is important
There is a clear business case for supporting employee financial wellbeing. It’s an integral part of creating a healthy workplace where people can flourish, reach their potential and make a significant contribution to their organisation’s performance. There is also, of course, the moral argument: we should take action because it is the right thing to do.