Employees’ financial wellbeing is the elephant in the room
When people are in control of their money they are happier, less anxious and more empowered. But is it the employer’s responsibility to assist with employees’ financial wellbeing? A new report from nudge, called Elephant in the workplace, says that poor financial wellbeing is detrimental to business, observing:
“Our data and observations reflect the current realities of employees’ changing circumstances. 40% of HR and reward professionals said they have lost concentration or made a mistake because of money worries. Financial wellbeing is hindering people’s ability to do their jobs.”
However, says nudge, the future could look very different and that depends on employers.
“Change means opening up the conversation and speaking the unspoken truth - money worries are hurting business. Both employers and employees acknowledge the issue but seem reluctant to address it. As a result, people’s inability to talk about money has grown, it’s enormous, it’s equivocal and it’s evident. Poor financial wellbeing is the elephant in the room.”
Financial stress is the top cause of poor mental health in the UK. The Chartered Institute of Personnel and Development (CIPD) reported that mental ill health and stress feature prominently as the main cause of both long and short-term sickness leave.
Susanne Jacobs, leading organisational behaviour and performance specialist told nudge:
“Money represents so much more than simply counting the pennies in the bank account. Our finances and our ability to manage our money plays a significant part in our motivation, health and ability to perform at our best. The pandemic has amplified the inequity gap and for many has increased their worries about money and security. Self-reported symptoms of depression have increased during the experiences of COVID-19 and those who said they would struggle to meet an unexpected cost of £850 are part of those groups most likely to show these symptoms.”
nudge’s research uncovers that money concerns are stopping people from sleeping, socialising, concentrating, being productive and at times, stopping them from working at all. 25% of people have said their mental health is suffering as a result of money worries.
However, HR and reward professionals don’t know the true extent of their people’s poor financial wellbeing. ‘The Health and Wellbeing’ report from CIPD in March found that “More organisations are trying to take a holistic approach to support people’s health and wellbeing, with mental health being the most common priority, but financial wellbeing is still neglected as a priority area by most employers.” Employers are underestimating the enormity of poor financial wellbeing’s role in their organisation’s success.
As nudge recognises, the events of 2020 have aggravated people’s already deteriorating financial wellbeing. Many are struggling with redundancies, reduced pay, being furloughed and concerns over job security.
Employers, on the other hand, report drops in productivity, missed workdays and confirm that financial stress is a detriment to business performance this year. Put simply, employee financial wellbeing is a major risk to business.
However, says nudge, HR and reward professionals don’t know where to start and they need direction, empowerment and support from the top. It is generally in an employer’s interest to support their employee, rather than dismiss the problem as irrelevant to the business. If an employee is not working well, for whatever underlying reason, it will impact on their performance at work and may also affect their colleagues.
“Despite wellbeing moving up the agenda for many companies, the distinct lack of open culture from the top is limiting employees’ financial wellbeing. There aren’t enough leaders taking ownership, driving the conversation on money worries and leading by example. Ultimately, there needs to be gigantic behaviour change in the workplace - led from the top.”
There are numerous benefits for employers in helping their employees to achieve financial wellbeing. Says nudge:
“Improved financial wellbeing means happier, healthier employees - operating at optimum performance. Better performance means more revenue. More revenue means more to invest in resources, tools, and salaries. All of which equal happy, productive, and engaged employees.
“Happy employees mean less absences and medical support through poor mental and physical health. Less medical support means less strain on healthcare providers and more revenue to build a stronger economy. The benefits of improved financial wellbeing are endless.”
Susanne Jacobs concludes the report in saying:
“Financial worry and stress affect our cognitive capacity and performance at work. As we ease out of lockdown we emerge into a new landscape. A territory strewn with more change, uncertainty, and financial insecurity for so many yet to come. But it is also a place and time that offers us a unique chance to do work better. To enhance the experience of our employees. Supporting individuals to take (back) control of their money through deepened knowledge of finances and practical tools will pay dividends in performance and health. Creating human fit workplaces must be driven from senior leadership, sit as part of the organisation’s strategy and will be the source of cognitive and competitive advantage.”
Read nudge’s full report here.
related content
