You put a lot of resources into caring for your employees’ health, safety and mental wellbeing. But are you doing what you should to ensure financial stress isn’t weighing on your employees at home, and at work? Mounting evidence not only suggests that it's an employer’s role to support the financial wellness of staff, there’s a business case to do so.
The business case for workplace financial wellness
It’s really quite simple – financially stressed employees are less productive and there’s lots of them. The UK Chartered Institute of Personnel and Development (CIPD) recently found that one in four workers admit that money worries have affected their ability to work properly, and in the 25 to 34 age bracket this increases to one in three. Given that Barclays quantified this as a four per cent loss in productivity, it’s no wonder the CIPD found there’s a “clear case for taking action and supporting employee wellbeing".
This raises the question, why haven’t more employers taken action? For some, there’s a fear of crossing the line that divides employees’ work and private lives. However, savvy employers will realise that it’s possible to reap the productivity gains that come from employee financial wellness programs without intruding inappropriately.
Starting the conversation around financial wellbeing
Employees may not feel comfortable discussing their financial position with their HR department or managers directly, but this isn’t the only way employers can help them to have this conversation. While employers shouldn’t give unlicensed financial advice, relevant and appropriately targeted support programs are appreciated by employees, with 38% of employees indicating they would move to a company that prioritised financial wellbeing.
When addressing the topic of financial wellbeing, a useful technique is to combine education with a timely “nudge” when key decisions are being made, according to the Rules of Thumb and Nudges:Improving the financial well-being of UK consumers report. If an employee receives a pay rise, for example, an employer is well-placed to nudge them towards resources that will help them to better manage these finances. Employers should look out for signs that employees may be under financial stress, such as an employee consistently pursuing overtime, and then use this as a prompt to share relevant educational materials.
Why employers need to action
For years, businesses have believed they are ticking the financial wellness box by offering financial counselling after exit interviews, or by inviting superannuation funds and insurers to sell their products to staff – but this doesn’t cut it anymore. This approach has seen millions of Australians take out exploitative payday loans or take on a share of the $32 billion owed on credit cards in this country. More sophisticated approaches are needed to identify those stressed by unhealthy debt and nudge them towards better solutions, sooner.
The trends overseas are clear. The US Society for Human Resource Management has identified a sharp increase in employers offering financial wellness tools and found it is a key workplace trend in 2017. Australian employers are in a position to act, have a financial incentive to act and in the absence of other effective strategies, have a responsibility to act now and get on top of the issue.