28th September 2016
Wellbeing of staff has become a priority for an increasing number of employers, with efforts to promote better physical and mental health within the workplace. This can involve anything from offering subsidised gym memberships to providing counselling. However, another key area which may not always be considered is financial wellbeing. A growing number of businesses are now realising the importance of this.
As a leading provider of payroll and HR solutions, we take a vested interest in all areas of companies’ HR management and financial planning, including helping staff with money issues. Here we look at how to build a strategy to help employees achieve better financial health.
Reasons to Focus on Financial Health
Research carried out earlier this year by the CIPD found that finances were one of the top three causes of stress for employees, together with work pressures and issues linked to families and relationships. Another study has suggested that as many as 46% of employees are worried about finances.
Unfortunately, while some causes of stress are now often discussed quite openly, finances typically continue to be regarded as taboo. As a result, staff may be extremely reluctant to confide in employers over this.
However, the reality is that hidden financial strain takes a toll on mental and physical health. It has been estimated that more than 17.5 million working hours are lost in the UK annually due to stress caused by money worries. Additionally, even where staff are not actually off sick, many say their performance and productivity are adversely affected by worrying about money, which can cause lack of sleep and distraction.
So what are the causes? There are a number of underlying reasons which mean that many members of today’s workforce may feel financially pressured. For instance, many people only have a very small amount of money saved, estimated by the CIPD to be typically less than a single month’s salary.
Younger employees are often especially vulnerable, since they are impacted by a range of issues such as high housing costs and one-off expenses in setting up home. They may also have to make student loan payments in addition to their other household bills. Young people are also likely to be inexperienced in budgeting, a factor which the Government has recently tackled by making financial education a mandatory requirement in schools.
How Can Employers Support Staff?
Nearly 60% of those organisations in the UK which have a wellbeing strategy in place have now introduced a financial element, while many more are considering doing this in the future.
If you are planning to offer your staff support in dealing with finances, the best starting point, as with wellbeing strategies in general, is to find out what the needs of your employees are. Ways to do this could include carrying out surveys or focus group sessions.
The most popular option is to provide financial education, offered by 29% of businesses who took part in a recent survey by Close Brothers Asset Management. This can include seminars and workplace sessions as well as online resources and webinars. The range of subjects covered can include budgeting, understanding debt, payday loans, debit and credit cards, APR rates and how to understand and compare different savings and investments options.
A large number of organisations are also offering help with savings. Provision can include not only pensions, which are now being rolled out to all companies under auto-enrolment, but also workplace ISAs, employee share schemes and other savings vehicles, designed to help staff to build up a financial buffer.
Other benefits, such as childcare vouchers and tax-efficient salary sacrifice schemes, may be able to help staff make their money go further. It is therefore helpful to have an HR and payroll management system which caters for employee benefits. Some employers also offer hardship loans to staff, which can be provide welcome assistance if they are affected by an unexpected personal crisis.
Communication and Giving Accurate Information
As well as any financial measures, it is important to make individual support and counselling available for staff who are under stress, whether this is caused by money or other issues inside or outside the workplace. Making sure that people know where to turn for help is a key part of a wellbeing strategy.
However, HR staff need to be careful about drawing a line between informing staff and offering them financial advice which could be seen as trying to persuade them to take a particular course of action, for instance in making pension arrangements.
The CIPD has highlighted possible pitfalls faced by companies if they are accused of giving employees the wrong advice. While there is a need to ensure that staff are given accurate financial information on issues such as choosing pension schemes, it should be the individual staff members who make their own decisions on these issues.
If you are looking for payroll and HR solutions to help both HR staff and individual employees to manage finances, our Amity software is ideal. It offers high flexibility and self-service functionality, with the ability to view your personal information, including online payslips, securely from anywhere via the web.
Amity’s easy to use payroll software can be used to manage pensions, employee benefits and expenses and for a whole range of HR functions.
Payroll and HR Solutions – Click here to find out more about Amity, our fully integrated cloud based HR systems and payroll software.