Workplace wellbeing: The role of financial wellbeing at work
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 and why does it matter?
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 sure, many of us would love a pay rise. But that isn't the only factor at play here.
In 2019, PwC's eighth annual financial wellness survey found that nearly half of employees regularly struggle to meet their basic monthly expenses. Employees who report high financial stress have been found to be more likely to have a credit card. And to make matters worse, high-stress employees are four times more likely to have trouble making credit card repayments.
CIPD has also continually studied the issue in their annual "Health and Well-being at Work" surveys. Their 2019 report surveyed over 1,000 UK organisations responsible for employing a combined 3.2 million people. Of those organisations, only a quarter acknowledged that poor financial wellbeing is a significant cause of employee stress. But more than a third paint employees as lacking the skills or knowledge to choose the right financial benefits.
The blame game of poor financial wellbeing
If employers are right about their staff, that would be a damning indictment of employee incompetence, right?
There's just one problem with that. On the upside, nearly half of employers actively communicate reward policies to staff. But only a fraction actually consult their employees about the sorts of schemes and benefits they actually want or need.
Comparatively well-off people making decisions for lower income people without any understanding of their lived experiences is a real problem. If you don't see the issue here, you should watch a really rich person go on The Price Is Right.
Despite more employers taking what the CIPD calls a holistic approach to workplace wellbeing. That includes opening up the conversation around topics like mental health. CIPD findings show that finance remains the least promoted area of employee wellbeing. The effects of this are clear to see. In fact, 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 201. 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.
PwC's survey found that 67% of all employees find it stressful to deal with their financial situation, which is the highest rate since 2012 (61%). But we're not talking about a small amount of stress here.
An eye-watering 59% of employees rate financial matters as the most stressful aspect of their job. By comparison, the next-most common response was the job itself at a mere 15%. You might like to pretend that employees can leave their troubles at the door. But these sorts of stressors will eat away at your people and their engagement.
So, what about the suggestion that financial incompetence on the part of employees is to blame?
Well, it's true that employees don't always have the keenest financial knowledge. And some people out there definitely try to live beyond their means. But there are also factors outside of their control. Consider the fact that it's just plain more expensive to live in some parts of the country, like London.
And yet, depending on your industry, living in these places could be an absolute necessity. Even with a good remote work policy, you're bound to experience turnover if your staff all have to move to cheaper cities.
The damaging effects of poor financial wellbeing
It can be easy to think of financial wellbeing as mainly impacting stress and mental health. But the physical effects cannot be ignored. We've already pointed out that 13% of UK professionals live in poverty. And if you've read part one in our wellbeing series, you know that one in fifty UK households use food banks. But 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 it could simply mean 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.
So what can you do about it?
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 and access next month's wages to stay afloat.
This flexibility can be helpful. But 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. They provide all new staff with the option of a small 'new starter' loan. This helps 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 anxious about how discussing their finances might reflect on them.
Financial status is often viewed as a metric for someone's success, intelligence and societal worth. So it's definitely 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, you can raise issues with HR or management in strict confidentiality.
If you haven't been following our series on workplace wellbeing so far, check it out. Parts one and two are linked in the intro. Next week, we'll be discussing social wellbeing and the importance of an inclusive workplace culture.