How to support employee financial wellbeing for business owners?
Concerns surrounding money are the biggest cause of stress among the adult workforce in the UK. This is only compounded during times of economic uncertainty, such as the current cost of living crisis and a looming recession.
Such widespread financial stress means employers have a responsibility to keep an eye on their employees' financial wellbeing, not least because employment, wages and salaries are all directly linked to financial health.
If you’re looking to help create a work environment which fosters financial wellbeing, we’ve put together a clear guide on how to increase financial wellbeing and support employees through financial stress and worries in the workplace.
What is financial wellbeing?
Financial wellbeing is not simply a question of having a certain amount of money, it’s about how secure a person feels with regards to their financial situation and whether their income is sufficient to fulfil their financial needs and responsibilities. What may be a financially stable and secure situation for one person may be a place of precarity for another, depending on whether they have family members to support or loans and debts to pay off, among other factors.
In short, financial wellbeing can be defined as being securely and confidently able to meet your financial responsibilities and goals, while looking forward to a future of financial stability.
Ways to safeguard employee financial wellbeing
As an employer, you have the power to make a big difference when it comes to your employees’ financial wellbeing. While the methods and approaches to doing this will look different within every company or organisation, there are certain universal steps that can be taken to help relieve some of the stress workers feel as a result of their finances. These steps are outlined below.
Get to know the financial issues your employees face
In order to be able to address employees’ financial issues and deduce ways to help, you first need to fully comprehend the issues they’re facing. Using that information, you can put together programmes or plans to help alleviate their concerns. If they’re worried about paying their heating bill, for example, you could offer reimbursement for heating used by employees working from home, much in the same way as you would offer remuneration for a home workplace set up.
Offer free financial guidance and education
A great way to help employees feel more in control and at ease with their financial situation is by offering financial education programmes free of charge.
The reality is that many people haven’t had access to financial advice throughout their life and therefore may be partial to making suboptimal financial decisions. Offering guidance and education on the subject can help workers feel equipped and empowered to better handle their personal finances.
Offer perks, benefits and discounts for employees
One of the key ways employers can help relieve financial pressure for their employees is by offering a benefit package that helps stretch their monthly pay cheque. This may come in the form of discounts on company products or products and services from affiliated companies, bonuses to reward hard work and reimbursement for travel expenses, childcare and workplace meals. Perks of this nature can make a big difference to worker financial and general wellbeing as it alleviates the burden of certain costs, some of which can be very cumbersome, such as travel and childcare.
Pay fair salaries
The most obvious and direct way you can help employee financial wellbeing is by paying fair salaries that take into account the cost of living and sufficiently compensate for the level of difficulty and the quantity of work carried out. Naturally, receiving a salary proportional to one’s financial responsibilities reduces money-related stress.
To ensure you're paying fair salaries, continuously check average salary ranges across your sector. If you're paying below the market average, you should consider raising salaries.
Provide resources and financial services
Another good way to support financial wellbeing for employees experiencing money issues is to offer a library of financial resources and information about financial products and services. Examples of such resources include apps and online budgeting tools, financial planning and money management software, debt advice and guidance services, investment and savings advice resources and money saving tips.
Having this library of resources in place will help employees feel like they have a place to turn when they encounter financial issues or need support and guidance about money. You could even go one step further and support your employees by helping them speak to an independent financial adviser, where they can receive bespoke advice around cash management, pensions, investments, and so on.
Offer support with pensions
For many of working age, retirement is viewed as a far-off concern and therefore not a financial priority. This view becomes especially dominant during a cost of living crisis, and many choose to reduce the amount they contribute to their pension pot in order to free up funds for the present.
As an employer, you should offer clear and detailed information around pensions and their importance, and ensure staff aren’t creating a savings gap by contributing too little. Of course, the amount they feel able to contribute will be directly linked to their salary (see point no. 4), but nonetheless you should ensure there is adequate information and support available to employees on the topic of their pensions. That way, you can help guarantee that they experience financial wellbeing going into retirement as well as in the current day.
Keep communication about finances open
Simply setting up resources and a benefits package won’t necessarily be enough to quell financial anxiety in the workplace. It’s important that you remain open to feedback and suggestions from staff on the subject and are willing to make adjustments and implement new measures where needed.
Additionally, it can be very helpful to cultivate an environment where employees feel able to discuss their financial wellbeing openly and honestly about any issues they may be experiencing. Feeling listened to and supported can go a long way in making workers feel more secure with matters of finance.
Why is financial wellbeing important?
The financial wellbeing of every employee within a business is important, not only on a human level, but also a business one. In addition to helping workers feel secure and empowered in their finances, which will help them flourish in every aspect of their life, it also has a direct effect on how well a business performs. This is due to a number of factors.
Firstly, stress affects both physical and mental health of those experiencing it. Worries around finance inevitably create stress in individuals, and workers with poor health, be that mental or physical, are not able to give 100% to their work. They may also be required to take more sick days than their financially stable counterparts. This can have a big effect on the overall productivity of a company. Conversely, employees who feel secure in their finances and are not consumed with stress when contemplating it, are able to perform to a higher standard in the workplace.
Secondly, if employees feel their wage or salary is not sufficient to cover their living expenses or is not proportional to the level of work they are doing; they are unlikely to stick around long. Instead, they’ll seek out better paid opportunities where possible. High staff turnover can have an impact on workplace cohesion, relationships and general performance. It is also expensive to have to regularly recruit and train new staff. Offering fair remuneration can lead to better staff retention which, in turn, benefits business.
In summary, financial wellbeing has a huge effect on the health of an individual and how engaged and productive they can be within a work environment. In the midst of a cost of living crisis, financial wellbeing support for employees should be a chief concern among employers as a large number of staff are likely to be affected. In the interest of supporting employees and cultivating a productive, healthy workplace, employers should make investing in financial wellness a priority. They can do this by offering fair pay, benefit schemes, and financial guidance, education and services.
Here at The Private Office we can help business owners, self-employed or entrepreneurs with a range of financial planning matters. If you’d like to learn more why not get in a touch with one of our experts.
Please note: this article is intended for general information only and does not constitute individual advice. A pension is a form of investment, the value of such investments can fall as well as rise - you may not get back what you originally invested.