Financial wellbeing is central to the currency of culture
When you think about wellbeing at work what springs to mind? Mental health? Musculoskeletal issues? Or perhaps exercise and diet? The chances are that what you didn’t think about was the financial concerns of your employees.
And yet, research shows that financial worries top the list in terms of people’s concerns in life. According to John Boss, founder of wealth management company Aegis, money is the main worry by area of life for 41% of women and 32% of men. This is way ahead of other worries, such as career (26% for both women and men), health (23% women and 24% for men) and relationships (18% for women and 20% for men).
Not only is this a concern in terms of employee wellbeing, but it is having a significant impact on productivity. Boss says 2.7 hours per week per employee is being lost thanks to financial concerns, one sick day per year extra per employee is down to worries about money, and staff with financial issues are 1.5 times more likely to be looking for a new role.
Statistics show that almost half the people worry about health as worry about their finances. This is a big problem and the financial cost to the business is estimated to be somewhere between nine to 13% of payroll
And when it comes to impact on daily tasks, employees with financial worries are 12.4 times more likely to be unable to finish their tasks and the quality of their work is 8.5 times more likely to be affected than that of staff with no financial concerns.
With all these impacts, there is a strong case for HR to take a lead in supporting the financial wellbeing of their organisation’s people, believes Boss.
“There’s been some fantastic work in recent years on wellbeing in terms of health within businesses. But the statistics show that almost half the people worry about health as worry about their finances. This is a big problem and the financial cost to the business is estimated to be somewhere between nine to 13% of payroll. So it has a significant impact,” he says.
To start tackling the issue, Boss suggests HR professionals ask the following questions:
What is the demographic of your people?
As the research shows, there are differences in how females view finances and men. What about age? The younger generation has completely different money worries from those approaching retirement. So you want to make sure any solutions you offer are age relevant. How about salary range? People on higher salaries have different financial concerns from those on lower. And what is the cultural background of your staff? There are different pressures on financial spending. For example, the second largest expenditure in Chinese households is education. Other cultures have more of a saving mindset. The UK has a spending culture. Understanding this can help employers to target solutions more appropriately.
What are your people worried about?
Have you asked your employees what concerns them? Security for family is the top concern for most people. Loans and debts come second. In the UK, 70% of people carry over credit card debt each month rather than paying it off. Then there are mortgages and rent, which today account for a significantly larger percentage of take-home pay than five years ago. “Savings rates are at a historic low and that’s down to the fact that housing costs have increased so much. And this is impacting generational planning – the bank of mum and dad is now one of the biggest lenders in the country. With older employees feeding money down to younger generations, there is an impact on their own retirement. Add in low interest rates affecting pension annuities and it is frightening for many employees,” explains Boss.
How are financial worries impacting your people?
Understanding the connection between emotions and finance is important. Take borrowing. There is an emotional response and a factual response. With very low interest rates, it is a good time to borrow. But many people have it drilled into them that debt is bad and they must pay off their borrowing as quickly as possible. And, while logically this may not be the case, it can lead to sleepless nights and an impact on work.
There are simple steps HR professionals can take to help employees worried about finance, however. Teaching people about budgeting is one, says Boss. Companies can provide drop in clinics and financial education seminars. “There’s the old adage that people don’t plan to fail, they fail to plan. So simply sitting down with someone and putting information about what they can expect in retirement, how they can save or even circulating a financial article can be tremendously helpful.”
Review your existing practices and employee benefits. Some companies are still offering packages geared totally towards an older generation or have not kept up with new wellbeing solutions, for example.
Most importantly, make it clear whom employees can turn to when they have financial worries. This is where HR can clearly play a role, especially when it comes to helping staff deal with the stress of money worries.
“Make sure you start the conversation,” advises Boss. “We tend to be poor when it comes to talking about money, it can seem vulgar and embarrassing. So make it easy for people to have the conversation in a safe way.
“For business, there’s a huge financial cost to your employees having money worries, so try things out and measure the impact. But don’t forget there’s also the huge emotional cost to your people. So put financial wellbeing at the heart of your overall wellbeing strategy and give it the emphasis it should have as part of your organisational culture.”