This article is by Heng Chew, our intern from Sheffield University.
Just over two years ago, the World Health Organization declared the Covid-19 outbreak a pandemic. Now, the aftershocks of the pandemic continue to rock the global economy.
The crisis forced governments, firms, workers, households and individuals to reflect on their working culture and resilience in times of crisis. In 2020, Deloitte’s research found that 80% of organizations believe worker wellbeing is important or very important to their success over the next 12 to 18 months. Wellbeing is now a key priority, but most discussions about employee wellbeing focus on the physical and emotional aspects amidst remote and hybrid working transitions.
However, the financial pillar of wellbeing is often neglected, despite the heightened sense of urgency and awareness around financial security during the pandemic. In 2020, a YouGov poll commissioned by The Food Foundation found that over 1.5 million adults in Britain were unable to obtain enough food, with 6% of respondents having borrowed via personal loans to make ends meet. In 2021, Credit Karma reported that UK consumers raked up £4.1 billion of debt in Buy Now Pay Later(BNPL) schemes, and an estimated 7.7 million Brits accumulated “significant” outstanding balances on BNPL schemes. These statistics are concerning because they show that many people are ill-prepared for financial adversity, ill-informed about financial debts, and inexperienced in proper financial planning.
With employees’ recovery from the financial impact of Covid-19 still in transition, it is ever more important for employers to be addressing financial wellbeing now.
At Maji, we’re supporting companies in creating and implementing data-led and employee-focused financial wellbeing strategies.
Top tips for employers:
Devise a financial wellbeing policy (or improve your existing policy)
In 2021, CIPD’s Reward Management Survey found that half of employers do not have a financial wellbeing policy. Money worries can affect employees’ mental and physical health, which in turn can lead to lower work performance, productivity and profitability. On the contrary, high employee financial wellbeing yields numerous benefits such as improved work culture, brand image and financial savings.
Every company (even those on limited budget) can acknowledge their commitment and provide guidance to their employees by taking these simple steps to build a basic financial wellbeing policy:
- Let your employees know what financial advice they can get for free (e.g. the UK government’s Money and Pensions Service)
- Review employee benefits you currently offer (e.g. retail discounts, childcare vouchers, etc) and make sure that your workforce is fully aware how to make the most out of them (e.g. improve induction, sent regular alerts/reminders/emails, reintroduce statements, etc)
- Encourage your workforce to talk about money problems and ensure that employees’ voices can be heard (anonymously).
- Commit to a fair and equitable pay system, free from prejudice/bias (e.g. staff bonuses, pay rises, company shares, etc).
- Outline a clear career progression, with the corresponding remuneration and rewards
Later steps may include expanding your benefits packages, offering financial education and individualized financial advice.
In 2020, the Money and Pensions Service found that 52% of the UK’s adult population find it hard to talk openly to someone about their financial situation. Even though the same survey found that 48% have worried about money once a week or more in the last month. In order to build a healthier financial wellbeing culture for your employees, gauging your employees’ financial needs is key to devising a relevant strategy before implementing appropriate support measures. Therefore, the first step towards better financial wellbeing is to break the money taboo and open up conversations.
A top-down approach is critical. Leaders must embrace the mindset change from believing that employees’ personal finances do not matter to employers, to acknowledging that employees’ financial wellbeing plays an important role in workplace culture and productivity. Senior leaders, managers and wellbeing champions must lead by example in actively encouraging a finance-friendly culture where it is okay to talk about money (and to worry about money) by listening actively, showing compassion, sharing resources and giving reassurance. Moreover, employers should try to understand the financial context and harness ideas from the workforce by providing portals (e.g. employee survey, suggestion boxes, etc) where employees’ voices can be heard (anonymously).
Improve financial literacy and numeracy
The UK has one of the lowest levels of financial literacy, one-in-three adults in England and Northern Ireland cannot even work out the correct change from a shopping trip (UCL, 2018). 57% of the working age adult population in England are estimated to have the numeracy level of children leaving primary school (Pro Bono Economics, 2021). In April 2020, 8 out of 10 UK employees had a workplace pension (ONS,2021), yet how many can actually grasp the concept of compound interest which is vital to understanding retirement savings? In 2019, National Numeracy found that the actual weekly cost of poor numeracy to the UK economy is £388 million, much higher than the estimated £7 million. Hence, over 90% of business leaders and MP’s now agree there needs to be a renewed focus on adult numeracy by employers. In particular, employers should provide links to ‘back to basics’ financial topics such as budgeting, credit scores, interest rates, savings and retirement calculation, etc. Furthermore, employers can run regular financial education days, create an online learning hub or invest in an external provider to deliver a holistic financial education programme for staff.
Personalized financial support for the post-pandemic world
Certainly, aggregated financial wellbeing reports across the organization are super useful in devising customized improvement strategies (e.g. focusing education on a particular financial topic). However, to truly maximize the benefits of employee financial wellbeing, companies should realize that every single individual has different financial needs (e.g. debt management, pension schemes, insurance policies, long term goals such as buying houses/cars, etc). Therefore, firms should link financial wellbeing messages to HR systems to support employees during significant life events (e.g. maternity leavers/returners, bonus payouts, promotions, etc). By showing empathy and tailored support, employers can boost long term employee relationships, increasing loyalty and decreasing turnovers. Ultimately, improving employer brand image and reputation, enhancing top talent attraction and retention.
For more practical steps to building a corporate-wide financial wellbeing strategy, check out our next Maji blog to be released on the 14th of April!
Maji is a holistic financial wellbeing platform that provides personalized and data-driven tools, resources and educational content at affordable prices. Book a chat with us today and get a free demo!