Workplace Wellbeing: The Role of Financial Wellbeing at WorkReading Time: 5 minutes
Money; some say it’s the root of all evil. Others say it makes the world go round. What we know for sure is that it’s at the centre of many a heated argument, political or otherwise. Between wage stagnation and the looming economic uncertainty of Brexit, your average working professional has fair reason to worry about their long-term finances. So this will be part three in our four-part series on wellbeing in the workplace, looking at poor financial wellbeing. If you haven’t already, check out parts one and two!
What is financial wellbeing?
Financial wellbeing is basically a combination of how financially secure someone actually is, and how stable they feel their income is. The consequences of poor financial wellbeing are far-reaching, both on an individual and company-wide level. And while many professionals want or would benefit from increased pay, that isn’t the only factor behind their financial uncertainty.
CIPD findings show that almost three fifths of workers said they were facing obstacles in managing their finances, and the two fifths that did not were largely composed of older workers with at least fifteen years of experience. Over seven in ten workers aged 18-24 said they faced these barriers, along with three fifths of women and two thirds of public sector staff. The most common barrier to financial security was earning just enough to get by each month, affecting around three in ten. Most commonly, these were 18-24 year olds earning less than £24,999 a year.
In 2017, the CIPD commissioned a YouGov survey looking into the financial wellbeing of UK professionals. They touched upon the matter again in their annual “Health and Well-being at Work” surveys and addressed it directly in a 2019 article.
Despite more employers taking what the CIPD calls a “holistic” approach to workplace wellbeing and opening up the conversation around topics like mental health, their findings show that finance remains the least promoted area of employee wellbeing. The effects of this are clear to see, with the Joseph Rowntree Foundation finding that almost 13% of UK workers are experiencing in-work poverty.
How poor financial wellbeing affects productivity
Only 37% of CIPD-surveyed employers were taking action to tackle financial wellbeing in 2018. This was only a 1% increase over the previous year. Additionally, only one in seven were taking strategic approaches to address the issue. This is despite the fact that poor financial wellbeing damages productivity in a number of ways.
In 2017, one in four employees reported that money worries affected their ability to do their job. Almost a fifth said they had lost sleep worrying about money, and a tenth stated these concerns had affected their ability to concentrate and make decisions. Younger members of the workforce seem to feel the pressure most sharply, with a third of employees aged between 25 and 34 stating financial concerns had affected their performance at work.
But while this overlaps heavily with the near-third of workers earning £15,000 a year who also reported this, the same was true for a fifth of those earning salaries between £45,000 and £59,999. So while low wages are significant, the CIPD’s findings suggest that a lack of understanding of money management could also be to blame. It’s often said that people “live to their means,” and this might explain why people on higher salaries are also feeling financial burdens. They may live in a more expensive part of the country like London, or could have a family accustomed to the lifestyle their higher wages provide.
The damaging effects of poor financial wellbeing
It can be easy to think of financial wellbeing as mainly impacting stress and mental health, particularly for individuals in some kind of paid employment. But the physical effects cannot be ignored. As highlighted in Part 1, one in fifty UK households use food banks, and a growing body of evidence suggests they are not providing the nutrition that people require to lead healthy lifestyles. Other physical risks stemming from financial concerns can include difficulties paying for things like rent, heating bills or even life-saving medication.
An issue commonly affecting senior managers and those earning over £60,000 was the hassle of certain financial decisions. This could imply that the high-responsibility nature of better-paid positions is leaving senior staff with too little time and energy to chase better deals on things like gas and electricity, or simply that they’re making enough on those salaries to not care too much.
These findings have formed the basis for much of the CIPD’s continued research. In 2019, 24% of respondents rated financial wellbeing as a significant cause of employee stress. However, this proportion was much higher (35%) in companies with over 5,000 employees. They also found that while half of employers offered debt counselling, far fewer offered any additional services or sources of advice.
There are various methods that businesses use to provide their staff with additional financial security. Some companies use Wagestream to allow their staff to monitor their wages and access money from the next month to fill the gap until payday. While this flexibility can be helpful, it runs the risk of people digging themselves deeper into debt if they are living paycheque to paycheque. This is especially dangerous when combined with the low wages or inconsistent shift patterns often found in areas like the service industry.
One of our favourite examples comes from leading answering service provider, Moneypenny, who provide all new staff with the option of a small ‘new starter’ loan to tide them over in the transition from one job to another where paydays and bill payments rarely match up. It’s one of the many fantastic strategies in place that makes Moneypenny frequent high-flyers in the ‘Best Companies to Work For’ tables.
What makes it difficult for employers to improve the financial wellbeing of their staff is that many are averse to discussing their issues with HR or management, out of fear that it may reflect negatively on them as an employee. Given that financial status is often viewed as a metric for someone’s success, intelligence and societal worth, it’s understandable that talking about such difficulties can be incredibly difficult.
Confidentiality can be important in getting employees to open up about these issues. Weekly10’s feedback system can take a lot of the pressure off by making the process of raising an issue quick and easy. With the ability to route answers to different recipients (like a financial wellbeing officer or member of HR) you can raise issues in strict confidentiality. If you haven’t been following our series on workplace wellbeing so far, check out parts one and two. Next week, we’ll be discussing social wellbeing and the importance of an inclusive workplace culture.
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