Underestimating the impact of poor financial wellbeing
- 4 Min Read
With poor financial wellbeing costing the UK economy 1.6bn a year, we look at why this is the case, and what organisations can do to tackle this issue.
Research put together by Aegon have revealed the true impact on what a lack of employee financial wellbeing can have on the UK economy.
The report carried out by the pension and investment company delved into a number of topics, however, most noticeable researching what employees who struggle with financial problems do to overcome these struggles.
Through extensive research, they found that this has a significant impact on productivity at work. In addition to this over four million days are taken off every year due to these worries. Which result in this costing companies in the UK approximately 1.6bn every year.
Ronnie Taylor, Workplace Savings Director at Aegon, said: “Poor financial wellbeing is a huge issue impacting both employers and employees. We’ve uncovered significant evidence that it is damaging productivity in workplaces up and down the country.”
Aegon also found that although 43% of participants are struggling with financial woes. 45% of employers decide to not address this situation as they feel as if they would be intruding in their employee’s lives decide to approach their workforce about this.
Ronnie continued discussing this topic, advising what companies could do to address this situation. “Employers need help when it comes to improving employee financial wellbeing. Many aren’t aware of what they can offer employees, while others simply don’t feel it’s their place. That needs to change. Our research shows employees both need and want some kind of financial support and highlights just what a difference it can make.”
Although this research highlights the importance of addressing financial wellbeing, in today’s age there are many employers who underestimate the negative impact that poor financial wellbeing can have on a workforce. As studies by Close Brothers have found that this has led to reduced productivity, loss of talent, and higher absences from work, as well as poor retirement planning especially.
Jeanette Makings, Head of Financial Education at Close Brothers commented on their studies, saying “Financial wellbeing has been overlooked for too long, but business can no longer afford to be complacent. It is integral to unlocking employee performance, as well as attracting and retaining the best talent. But measurement is key as a one-size fits all strategy may seem easy to implement but is unlikely to be effective. In order to ensure that financial wellbeing strategies are impactful and cost-effective, they need to be properly targeted. By pinpointing which of the seven areas of financial wellbeing are the biggest issues and which employees groups are really struggling, employers can ensure that a programme is tailored to employee needs and will provide the best support to get financial health on track.”
To conclude, Professor Sir Cary Cooper, a leading expert in workplace wellbeing rationalised what benefits this could bring “The benefits of providing advice and support for employees on their personal financial issues are huge. And from an employee perspective, the availability of financial wellbeing guidance in the workplace is becoming a ‘must have’ rather than a ‘nice to have’. By hyper-personalising employee support, businesses can then ensure that their financial wellbeing strategies have the necessary impact.”
With many employees not being able to consider retirement plans or general future plans outside of the workplace. Addressing these concerns could drastically increase productivity, as well as workplace stress. Financial wellbeing could potentially be tackled through transparency at work, not only would this be able to aid financial problems but this could also aid employees in feeling more empowered, which should be an agenda for many businesses. Transparency can also help in employees working and communicating better with their employers, as everything is more out in the open.
Alexandra Anders, EMEA Talent Director at Cornerstone OnDemand further discussed the importance of this, saying “Employees will be scared to speak up if they don’t understand a task or have made a mistake, and that lack of honesty and transparency can create problems for the business too. You also risk losing great employees too quickly due to this management style, which impacts not only your company’s leadership pipeline but also hurts revenue; one recent study found that 40% of employees who don’t highly rate their supervisor’s performance have interviewed for a new job in the last three months, way ahead of the 10% of those who do rate their supervisor highly.”
While there isn’t one single strategy that will solve financial wellbeing as a whole, if organisations are openly addressing this situation, then this could have a positive impact on a workforce. And could encourage them to speak out more.