Helping people and businesses thrive through financial wellbeing

A recent PwC survey found that a majority of a typical organisation’s workforce admit to being permanently stressed over their personal finances. Talking about it isn’t easy either, a UCL survey of 15,000 people found that the average person was more comfortable talking about the number of sexual partners they’d had than revealing what they earn.

So how can employers address this issue? What strategies can work to deal with employee distress and distraction stemming from their purses and wallets?

Making a start

To answer that exact question, Jason Butler of Salary Finance recently held a webinar in collaboration with HRD Connect to look at the common mistakes companies make, the changing demands of employees as more millennials join the workforce, and what businesses can do to ease the burden of financial stress.

“It’s a state where someone can fully meet their current financial obligations and feel secure in their financial future and are able to make choices to enjoy life.”

For most people, money is the most consistent form of stress – many people find managing their finances painful and it can negatively impact on their performance at work.

“Good employers understand that supporting their employees to make better financial decisions will have happier and more productive staff,” Butler says. “There is also evidence that suggests that absenteeism rates drop as a result of lower stress levels among employees.”

Data from Salary Finance was recently included in a project by Harvard Business School showing that when specialist finance help and support is made available to employees, absenteeism rates are reduced by up to 28%.

Tackling the problem

As part of the webinar, attendees were polled on how important they felt financial well-being among employees was to overall performance. Happily, a majority of those who responded recognised the importance of addressing the issue.

But what exactly is financial wellbeing? After all, it’s a term that may mean different things to different people. Butler explained it simply: “It’s a state where someone can fully meet their current financial obligations and feel secure in their financial future and are able to make choices to enjoy life.”

Tackling this is critical, “Because if you’re not able to enjoy the here and now, then the future becomes a source of tension and worry,” he said.

Setting the scene

Of course, there are different levels of stress. A growing wealth of evidence has enabled researchers to divide the working population into four discrete parts. The first, and most serious category is made of the 3% of people classed as distressed. “These are people who are not only in debt but facing real and immediate financial problems,” Butler explained.

Next up are the 16% who can be described as unstable. Generally living month to month and don’t have any contingency plans in case something goes wrong – “A scenario that is extremely stressful for those involved,” Butler said.

Butler reports that the majority of employees – between 45% and 60% – are in an ‘exposed’ position, where, despite living reasonably comfortably, remain vulnerable to joining the ranks of the distressed should one or more financial shocks (sudden large bill, illness etc) occur.

“If you can get people into a savings habit through a structured approach you can make an immediate impact.”

This leaves a quarter of people in a comfortable position, largely free of financial worries in both the short and long term. Butler and team at Salary Finance are focusing on moving people up the ladder from ‘distressed’ and ‘exposed’ to the happier rungs of the comfortable.

Climbing the ladder

But how? In the first instance, it involves helping employees manage problem debt and helping them build resilience by saving to meet unexpected costs.

“Once they’ve got on an even keel, we aim to then start looking longer term: setting a goal, or planning for retirement for instance.”

However, despite how important all of this clearly is, there remains a reluctance among many companies to venture into actively helping and supporting their employees’ financial well-being. According to a poll run during the webinar, cost implications topped the list of reasons stopping companies getting involved in the process.

So what can be done? Butler pointed out that there are a number of quick and easy wins for business leaders to help employees:

First, think about ways you can help staff boost their short-term savings. “If you can get people into a savings habit through a structured approach you can make an immediate impact,” Butler explained, using the example of Salary Finance’s Save products that deduct the money before it reaches employees. “It’s a simple psychological tool, the pain of missing out on something they never had is much less than giving up something they already possess.”

Second, companies might want to consider improving access to affordable credit. This isn’t about encouraging further borrowing, but if the company has it in its power to lower the cost of employee debt, then using Salary Finance’s affordable loan product may help.

A third area centres around education and tools. That’s not simply around the mechanics of credit, debt, and budgeting. “You’ve also got to address the emotional aspects of money,“ Butler said. “We make all decisions on an emotional level, so understanding what drives things like impulsive spending or poor budgeting can make a real difference to how people manage their money and what effect that has on their personal wellbeing.”

“The pain of missing out on something they never had is much less than giving up something they already possess.”

Consider, are you putting enough resource behind this? While companies can’t be expected to transform into the Money Advice Service, well-targeted training for HR staff to help employees in this area can make a real change. Butler’s experience shows that the most useful ways of delivering this include running live events as well as laying on workshops or bringing in external experts to talk to staff.

Then, consider the cost of work and whether staff are being priced out of team building. “At Salary Finance we provide some food and drink on a Friday,” Butler says. “It’s not much, but if someone is struggling with the cost of socialising or team bonding, taking some of that cost away can help those who may be struggling financially to join in. Think about how you can help.”

Finally, remember, it costs nothing to signpost free help. “The money advice service highlights this as a really tangible way to help employees – give them the information they need and encourage them to get help and advice. A well-targeted policy of help, advice, listening and support can really make a difference not only to your employees’ lives but to your company’s performance too.”

The webinar is still available on demand, to register, click here. For more information about Salary Finance, click here. 

Jason Butler

Jason Butler is Head of Financial Education at Salary Finance. He spent 25 years as a financial advisor before deciding in 2015 to focus on personal financial wellbeing. He is the author of a number of books on the topic and is also a personal finance columnist for The Financial Times.

HRD Connect Curators of the New Business Landscape. HRD Connect produces industry-recognized content for senior HR leaders. Through articles, case studies, Q&As, podcasts, events, and more, we offer truly progressive and cutting-edge insights designed to help people leaders address core HR challenges and add greater value to their business.

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