Why the financial wellbeing of your employees matters
Successful companies understand that its workforce is its biggest asset. Their collective knowledge and skills set a company apart from its competitors, making them the backbone of the organisation. Therefore, arguably the greatest investment you can make is in your people.
Most companies wouldn’t hesitate to invest in something that benefits both the employees and the business, and that is shown to boost productivity. But often it’s difficult to translate that sentiment into more tangible terms. This is because it’s impossible to put a value on your employees and compare it to the value of your property or intellectual property, for instance – especially if employees are easier to replace. But there’s one area in which investing in employees simply makes sense, both for them and for the company: their wellbeing.
Why employee wellbeing makes business sense
The average fulltime employee will spend most of their waking lives at work. Therefore, it goes without saying that the troubles and stress they experience in their personal lives will inevitably seep in. Employers can expect that at any given time, at least some employees will be affected by stress and mental-health issues that undermine their ability to perform. It’s estimated that the problem could cost the UK economy more than £4 billion every year.
Productivity and employee wellbeing are inherently linked. If an employee is dealing with a lot of stress, morale and productivity will decline which affects time and brainpower. Dealing with financial problems is not always something that can wait until outside of working hours. Whether they are using parts of the day to deal with these types of issues or not - it is likely to have a detrimental impact on productivity and their capacity to think about other things.
To put it another way, financial worries don’t go away just because you’re at work. It's completely understandable, but it’s important to realise the business impact it has too. Therefore, it's beneficial for everyone for those instances to be reduced and for people to feel supported.
Helping employees to mitigate those risks is clearly not just a ‘good’ thing to do, but it’s also positive for the bottom line too. It’s one of the aspects of a company’s environmental, social and governance (ESG) considerations. The ‘S’ component of ESG covers the relationships that companies have with employees, customers, suppliers and the wider community.
But there are other factors that make employee wellbeing an important consideration. The COVID-19 pandemic saw employee wellbeing climb the list of issues that investors look at in companies from an ESG perspective. This means that employee wellbeing is no longer just an internal issue. Companies need to be aware of this and be able to show what they're doing to support employee wellbeing as they are being held more to account than ever before.
Feeling financial strain
An employee’s relationship with their finances can have a substantial impact on wellbeing. A study in 2019 found that 94% of UK employees had money worries, with three-quarters reporting that those concerns affected their work. Almost nine in ten larger UK businesses say they have been impacted by poor employee financial wellbeing, through outcomes such as reduced productivity, loss of talent and more short-term and long-term absences.
Financial worries can affect anyone at any time. The Money and Pensions Service explains that financial wellbeing is not just about how much money you have, but also about how secure, confident and empowered you feel financially. Maintaining financial wellbeing is therefore vital to any company that is committed to supporting the mental health of employees.
But how can you support employees in this area? It’s partly about emotional support, but there’s also a practical element too, especially when it comes to building financial confidence and wellbeing. In some cases, it will begin with financial education and equipping people with the tools to manage their finances effectively. This is where a financial advice organisation that can offer financial education is helpful – improving people’s day-to-day confidence and resilience as well as addressing their future and what’s worrying them.
Getting the most value from advice
But there can be an even bigger benefit of partnering with a financial organisation. Financial education is also about effective communication of existing reward packages and making sure that these are working well. Employees often need support when making decisions about those opportunities, so a financial expert can add a lot of value here.
It’s not just about knowing what rewards are available, it’s also about translating what the different arrangements can mean for them and their lifestyle. You only need to look at the number of people still in the default fund of their pension plan. While it will be right for some, more often it indicates that they haven’t engaged with their pension or even their wider benefits package to understand what would work best for them. This suggests that they may need support in doing so.
Financial education is about equipping people with the knowledge to make informed choices and giving them the information they need to feel more confident. If someone is there supporting you and talking you through the financial implications of what they’re doing – that peace of mind is reassuring as you worry less when you have someone in your corner.
The Workplace Financial Education Programme. St. James’s Place supports the National Wellness Conversation, which works with organisations to encourage employees to talk more openly about their finances.