Why understanding employees’ money worries helps HR
It’s no surprise that January is a tough time financially for many households. While the idea of ‘Blue Monday’ started as a marketing campaign, GoCompare’s research showed the average UK household expected to spend £719 on Christmas in 2019.
That extra spending over the festive season catches up to us in January and can leave many out of pocket and falling into high-cost debt.
What may be more surprising to hear is that most employees are affected by money worries year-round. For the past four years, Neyber’s DNA of Financial Wellbeing research has annually surveyed over 10,000 employees across the UK.
The latest report showed that financial worries was the top concern of employees for the third year running.
Over half of employees had borrowed for essential needs in the past year. For those who were in unsecured debt (not mortgages or student loans, but including things like credit cards, overdrafts and loans), the average amount per person was nearly £7,600. This was in line with TUC’s findings that average household debt has now tipped £15,000.
The flipside of this is that many employees have little savings – with one-third having less than £1,000 set aside. Of those without savings, 80% had unsecured debt, compared to the UK average of 59%. It is difficult to build financial wellbeing through savings, without first addressing the debt burden many employees are facing.
So what can HR do about it?
Supporting employees with their financial wellbeing isn’t just about being nice. It links back to an organisation’s bottom line. The research found that for a company of 1,000 employees in one year, money worries could result in:
- 125 days off work (£14,625 in absences)
- 90 employees struggling to focus at work (£15,795 in lost productivity)
- 110 employees looking for a new job (£428,596 in turnover)
To help you implement a well-developed financial wellbeing strategy, organisations should consider these five key steps:
Step one: understand your employees’ needs
You need to understand your workforce in order to create an approach to financial wellbeing that responds to their specific needs. It’s not one-size-fits-all. Utilise financial wellbeing providers who can help you develop this understanding of your workforce and personalise the education and resources offered to different employees.
Step two: identify what you’re trying to achieve
If you implement a financial wellbeing strategy as a ‘tick box’ exercise, you won’t see results. There needs to be a clear set of objectives which ties into the strategic priorities of the whole organisation, not just HR. Ensure you implement the necessary tracking to monitor your return on investment so you can share successes with senior stakeholders.
Step three: ensure senior leadership engage
Without senior leadership buy in, it’s very difficult to lead a significant change in the business. Strong support must come from Board level, but line managers must also be aware of what’s on offer to promote with their teams. That’s why it’s so important to have clarity from the beginning about how financial wellbeing impacts those things that are occupying the minds of the C-Suite and Board members – retention, productivity and cost reduction.
Step four: embed it in your culture
It’s taken a long time, in some cases years, for your employees to get to their current financial state. You won’t see results overnight. Make your strategy an integral part of the company culture and strategy, not a separate policy. That’s why it’s important to get senior buy in – to ensure sustainable implementation over the longer-term.
Step five: measure, learn adapt
What works now may not work in five years’ time, or even two or three. The employee wellbeing space has changed significantly in the past five years, and it will continue to evolve. Be agile and constantly monitor how your financial wellbeing strategy is impacting your employees.