Amid soaring inflation rates there are predictions of a recession hitting the UK by the end of the year. If you are an employer or HR manager, your responsibility extends to assisting your workforce in mitigating financial stress and ensuring their mental wellbeing. In this way, they can appreciate their work environment, which is crucial for your business growth. Therefore, standing by your employees in these challenging times is crucial.
In this post, we will discuss various ways to enhance your employees’ financial wellbeing.
Defining financial wellbeing
Financial wellbeing doesn’t have a single, fixed definition. To many, it represents something akin to: “A state of being where present and future financial commitments can be met without feeling uncertain about what lies ahead.” Other interpretations of financial wellness include:
- feeling in control of your financial situation
- having the ability to withstand a financial blow
- having the freedom to make decisions regarding your finances
- being on the right track to achieve your financial objectives
In essence, when an employee’s financial wellbeing is robust, they feel secure about their financial situation and are optimistic about the future.
Why is employee financial wellness crucial?
When employees are financially secure, the benefits are readily noticeable. By ensuring each team member feels confident about their future, you can expect to see improvements in their work as well. By focusing on this vital aspect of life, business owners and HR teams can boost employee engagement, attract new talent, and support their mental health. Here are some of the benefits:
- Productivity: Since the pandemic, nearly 60% of employees have reported increased financial stress. Stress and productivity are directly linked; it’s challenging to focus on work when you’re anxious about money. By eliminating this obstacle, you can potentially enhance employee productivity. A 2018 survey revealed that in the subsequent three years, financial stress reduced productivity for 11% of employees.
- Mental wellbeing: Financial concerns impact all aspects of life, including home, work, family and personal health, profoundly influencing overall mental health. Assisting employees with their financial wellbeing can significantly improve their overall life quality by reducing anxiety about the future. Happy employees contribute to a happy workplace.
- Retention rates and talent acquisition: The recent global health crisis and increasing living costs have led to extra financial stress and employee burnout. The outcome? An unusually high staff turnover rate for many UK businesses, termed as “The Great Resignation.” By addressing an employee’s financial wellbeing, you can help retain your most competent workers and attract new talent. In fact, about 43% of employers believe implementing a financial wellbeing strategy significantly influences employee retention.
Ways to enhance employee financial wellbeing
The thought of improving employees’ financial wellbeing can be a sensitive topic for many companies. It is often equated with providing higher wages or across-the-board pay raises. While that is certainly a part of the solution, genuine financial wellbeing extends beyond that. Several other ways can offer support or guidance in this aspect of life. Here are a few effective strategies:
1. Understand employees financial dilemmas
Financial problems differ from person to person. The key to offering help lies in understanding that each employee will have their unique financial issues and worries. Financial concerns often change with life stages. While some employees might be focusing on travelling and education, others will be planning for significant life events like starting a family, getting married or buying their first home.
By gaining a more in-depth understanding of your employees’ financial difficulties, you can devise resources, programs and support schemes that cater to their specific needs and priorities.
2. Offer employee discounts
Employee discounts are a great way to reciprocate the hard work put in by your team. Of course, the value of these discounts will vary across companies. Ideally, discounts should be on products/services that are daily necessities.
For instance, if your business is a supermarket, a car repair centre, or a clothing store, offering a certain percentage off the final costs can aid them financially.
If your business doesn’t offer daily essentials, consider partnering with another company that offers wholesale employee discounts to your team. This approach can help provide substantial discounts, thereby improving their financial wellness.
3. Encourage salary sacrifice
Salary sacrifice can help employees retain more of their earnings. It allows your team to exchange part of their income for another useful, non-cash benefit, such as gym membership, a bicycle, a company car or even their pension.
With salary sacrifice, employees save money on National Insurance and effectively end up paying less for their chosen benefit than if they’d bought it independently. Moreover, any employee who chooses this option also saves your business money on National Insurance. This tax-friendly incentive should not be overlooked.
4. Provide financial management advice
Companies can also consider offering financial management advice, including financial coaching, debt counselling – anything that helps your employees gain control of their personal finances. If you lack the in-house expertise to provide this information, outsourcing is an excellent option. Numerous firms can provide financial advisors and experts.
While offering financial management advice, focus on your employees’ needs. If people are more interested in learning about saving for a house than consolidating debt, ensure you’re providing the advice that caters to their specific needs.
5. Enhance your pension scheme
Lastly, it’s important to enrol your team in a high-quality pension scheme. In the UK, half of adults are worried they haven’t saved enough to maintain their current lifestyle in retirement. This worry can range from a vague concern about the future to deep anxiety about what happens when they can no longer work. It’s an issue that requires addressing – and you can assist in resolving it.
Providing your team with a better pension scheme can significantly boost their confidence in the future. Specifically, you want a pension that:
- provides complete transparency into their savings
- is easy to manage
- aids in growing their savings over time
The concept of financial wellbeing among employees is heavily future-focused. Providing them with a clear, outlined path to a successful retirement can make them satisfied with their job role and their future outlook.
Penfold’s workplace pension scheme is the first pension for employees that they will actually enjoy using. Helping them understand how much they’ve saved already, what it will pay for and how to save for the lifestyle they want.
Wrapping Up
In this post, we’ve provided a basic overview of how to enhance your employees’ financial wellbeing. Your team’s mental state is of paramount importance and can significantly influence your business’s overall performance. After all, if you take care of your people, they will take care of you.
Is your company pension more of a hindrance than a help? At Penfold, we’ve redesigned workplace pensions from the ground up to provide an unrivalled employee experience. Book a demo now to find out more about bringing financial wellbeing to your team.