Our recent webinar employee financial wellbeing: providing a supportive workplace brought together LCP’s experts Heidi Allan, and David Millar to discuss the latest research on employee financial wellbeing - including the negative impact of the Covid-19 lockdown.
This research highlights the significant business savings that companies can achieve by improving the financial wellbeing of their employees. More and more employers are introducing cohesive financial wellbeing programmes aimed to have a positive impact on employees’ lives and also their productivity at work.
Watch the full recording on demand here.
What is the state of financial wellbeing amongst UK employees?
LCP’s report on employee wellbeing surveyed over 10,000 UK employees. It found almost half of employees said they do not feel in control of their financial future, and a third have less than one month’s saving. For a significant proportion of employees, especially younger workers, these financial worries affect behaviour at work. Absenteeism, lost productivity and higher turnover because of financial worries all lead to increased cost for employers.
More worryingly, these statistics were a snapshot of life pre-Covid-19. Since the pandemic hit, over half of employees are worried about the impact this will have on their personal finances, and one in three worried they will lose their job entirely.
The role of the employer
There is an increasing awareness among employers about the impacts of poor employee wellbeing on an organisation’s productivity, retention, and absenteeism. Many employers have benefit programmes designed to address physical or mental wellbeing, yet fewer are addressing financial wellbeing.
There are often concerns that money invested in financial wellbeing strategies should instead go towards increasing employee pay. While this feels intuitive, research shows that one in five employees earning over £70,000 are unhappy with their financial health. Increased pay is not a silver bullet, and can instead lead to ‘lifestyle inflation’, the ability to get into higher levels of debt, and does not address the underlying issue of poor financial capability.
For those organisations who are looking to implement a financial wellbeing strategy that addresses this underlying financial capability, it can be difficult to know where to start. The financial wellbeing market in the UK has grown considerably over the last five years. Giving employees information alone is not enough, and instead a financial wellbeing strategy should focus on a mixture of education, practical solutions and helpful products to help change financial behaviours.
The exact blend of these needs will depend on analysis of each specific workforce. This will help determine where the highest priority groups of employees are, as our research shows it is not as simple as targeting younger or lower-paid workers.
How to effectively communicate a financial wellbeing strategy
Any financial wellbeing offering will fall flat if employees are unaware of it. Employers must not focus solely on making communications accurate and understandable, but also on how to get a high level of engagement. The aim should be to ensure communications are read, actually understood and used to make a logical decision or action.
Best practice for your financial wellbeing strategy
Financial wellbeing programmes can often get put into the ‘nice to have’ bucket by companies. Yet the reality is that there are significant costs from having poor employee financial wellbeing – reduced productivity, increased absenteeism and presenteeism. It is therefore possible to show that a good financial wellbeing strategy can provide very high returns.
Whether building a new financial wellbeing strategy, or reviewing an existing one, organisations must:
- Consider the potential cost savings that improving financial wellbeing could achieve through reducing absences and increasing productivity;
- Get under the skin of employees to understand what their real financial wellbeing issues are – this can be via a survey, focus groups and analysing existing people data;
- Review existing benefits and providers to see if there are gaps;
- Consider how best to find and implement the right solutions to fill those gaps – be that financial education materials, digital budgeting apps, savings and debt products or helping employees save on mortgages, wills – and how they will fit together into a cohesive programme;
- Have a communication strategy that delivers a high level of employee engagement;
- Continually evaluate and evolve the strategy.
LCP’s financial wellbeing team are available to support organisations with any of these aspects, and the employer toolkit from our recent employee wellbeing report can also provide a starting point.
For the full discussion around financial wellbeing and communication, watch our webinar on demand here.