5 practical ways to improve employee financial wellbeing in 2023
The cost of living crisis continues to affect households across the world, and is having a negative impact on financial wellbeing for lots of people. Research shared by the Chartered Institute of Personnel and Development (CIPD) found that 34% of employees in the US said that money worries have had a “severe or major impact on their mental health” over the past year.
As a business, you might have already taken steps to support your employees with this important aspect of wellbeing. But is there more that you could be doing to ensure that your strategies are effective?
Produced by Darren Laverty, Secondsight Partner and workplace financial wellbeing strategist, read on to learn more about how to help your employees to feel financially stable and confident about the future.
Employees fear what might happen to their finances in the near future
The Office for National Statistics announced that inflation was 10.1% in the 12 months to March 2023. This was down slightly from February’s surprise jump to 10.4% but, according to a report by Reuters, is still the highest rate in western Europe.
Despite these rising costs, our financial wellbeing surveys have found that most employees are able to meet day-to-day expenses without too much stress. But thinking about the future is another story.
The results of our surveys have revealed that employees are concerned about what could happen to their finances in the future. Events that are of particular concern include:
- Coming to the end of the fixed-rate deal on their mortgage
- An unexpected bill, such as needing to pay for repairs on their car or if their boiler breaks down
- Their household bills rising further with inflation.
It seems that uncertainty could be the most worrying part of the current economic climate, more so than the recent price rises.
So, while financial wellbeing includes the ability to cover day-to-day bills and expenses today, a key part of it should focus on improving resilience for the future. This will help employees to feel more confident in their ability to cope with whatever might be around the corner.
The biggest mistake you can make is to base your financial wellbeing programme on assumptions
An interesting side-effect of the cost of living crisis seems to be that more of us are willing to discuss financial matters, which were previously a somewhat taboo subject of conversation. As such, financial wellbeing has become a more widely recognised concept that many organisations are actively working to improve for their workforce.
In fact, a report published by the Rewards and Employee Benefits Association (REBA) in association with WEALTH at work found that 94% of organisations view their financial wellbeing programme as integral to improving overall employee wellbeing.
While this is of course very good news, there is still a lot of work to be done. Our experiences speaking to attendees of our HR webinars show that many organisations are running financial wellbeing programmes based on assumptions about what their employees will benefit from. They appear to be taking a one-size-fits-all approach, meaning that employees may not receive the right support for their needs.
The next step is to design bespoke programmes that truly address the vital concerns and needs of your employees, regardless of their financial situation or stage of life.
5 practical ways to support employees’ financial wellbeing
Whether you’ve already begun offering a financial wellbeing programme, or you’re planning to do so soon, these five tips could help you to ensure your efforts have a positive impact for all employees.
- Ask your employees exactly what they need help with
Even though you’ve read about one of the top concerns that our surveys identified, an effective financial wellbeing strategy will always be geared towards the specific needs of your own workforce. That’s why the first step to creating yours is to ask your employees what they need help with.
You can do this using anonymised surveys or questionnaires requiring employees to score how much they agree with various statements about financial wellbeing.
- Identify the challenges that your workforce is facing
When you have received insights from your employees about their concerns and needs, you will have a much clearer idea of the starting point for your financial wellbeing programme. This is the data that you can base your next decisions on, because it tells you exactly what your workforce needs help with.
Some people may be more vulnerable to financial stress than others, so look out for signs that someone may need a little bit more support, or different support, than others in the company.
Some scenarios to look out for are:
- People who rent rather than own their own home
- People who have additional family commitments, such as a large family or a family member with a disability
- People who work part-time
- Single-parent families.
Regardless of whether someone is vulnerable, the fact remains that all decisions should be based on data rather than assumptions. Just because someone may be at additional risk of financial stress, doesn’t mean they necessarily are. By the same token, someone who seems to be in a very stable financial situation could still require additional support.
This demonstrates how vital it is to create a bespoke strategy that can cater to people at all different stages of life and who have different needs than others.
- Check in regularly to measure the success of initiatives
Collecting insights from your employees to base your programme on is just the first step. If you want to know whether the programme has been a success, you’ll need to make that feedback a consistent feature of your communications.
When you first begin building your programme, decide which key performance indicators you will use to measure its success. Perhaps you want to increase the average score that employees give to the survey, or a particular question, by a certain percentage within 12 months, for example.
Keep track of how the programme is affecting employees’ financial wellbeing by regularly asking them for anonymised feedback or to complete another survey to compare to the original results.
Each time you receive feedback, it’s important to reflect on what you have learned and see whether you need to make any tweaks to the programme based on this.
- Ensure advice and resources offer practical help
Of course, the most obvious way to offer employees greater financial stability is with pay rises or one-off bonuses. This may not be practical for all organisations, though.
There are a huge range of ways that you can support your employees that don’t entail large or ongoing spending.
Travel season ticket loans, discount vouchers for retailers, and flexible working hours to potentially reduce the cost of commuting are all relatively low-cost options that could enable your employees to improve their financial stability. You could also help employees to determine whether they are eligible for grants or additional government support by pointing them towards educational materials and resources.
Transparent and accessible information about how to progress through the company and become eligible for a higher salary is also important. This will help employees to increase their income over time and place themselves in a more stable position.
- Management teams should model behaviour to encourage participation
Having your management teams on board with the programme is vital for ensuring its success. Make sure they understand the reason for the programme, the data that the actions are based on, and the intended impact on the company.
What’s just as important as the management teams understanding the programme is that they act as role models for their staff. If they can encourage their teams to make use of the resources available to them by talking about them regularly – and ideally being seen to be taking benefit from them – this could help to improve participation. As a result, your programme has a greater chance of reaching those who will benefit the most.
Get in touch
If you want to know more about how you can help your employees to feel more confident about their finances, please get in touch.
Email email@example.com or call us on 0330 332 7143.
This blog is for general information only and does not constitute advice. Information correct at time of publishing, 5th May 2023.