Record levels of inflation, rising energy prices and increased interest rates have coalesced to create a cost-of-living crisis.
Many employees will have never before experienced such a challenging financial environment, making support for their financial wellbeing a vital consideration for senior management and HR teams.
Financial worries have been proven to trigger depression, affect sleep patterns and damage relationships – and this, in turn, can have a negative workplace impact, reducing engagement, productivity and retention, and increasing absenteeism.
WTW’s Emerging Trends in Healthcare Delivery Survey, however, has revealed that only 33 per cent of organisations believe they’re providing effective help. Yet WTW’s Global Benefits Attitudes Survey showed that 52 per cent of employees lacked high levels of wellbeing in relation to their financial security.
In light of the crises, almost two-thirds (62 per cent) of organisations are now reviewing their benefits programme.
Here we outline six key ingredients to an effective financial wellbeing programme that offers an accessible, structured support system.
By providing financial education, employers can empower employees to manage their money responsibly. It can give them agency to be proactive, rather than depending on others, and helps to prevent financial problems from both occurring and escalating.
Financial education can be delivered via a range of channels, from seminars, workshops, and videos to advisory literature and one-to-one coaching sessions. The focus, however, should be on interactivity and inclusivity.
Employees can be taught to build a personal savings plan to meet unexpected costs, how to set financial goals, how to manage external financial pressures and how to budget effectively. They can be taught about credit card consolidation, credit card interest rates and the risks and considerations surrounding ‘buy now pay later’ deals.
In some cases, financial health checks can also be offered as part of the wider programme.
Planned well, financial education can bestow confidence and transform employees’ relationship with money.
Employee Assistance Programmes (EAPs) can be an effective tool for resolving financial problems. They allow employees to choose the most appropriate counselling option from a range.
Using the EAP provider’s Management Information (MI) reporting, employers can understand the volume of finance-related contacts their provider has supported and any specific areas that their financial wellbeing programme should focus on to better meet workforce needs.
EAPs can also signpost employees to free sources of advice and helplines that deal with such topics as debt, savings and budgeting.
WTW’s 2022 Global Benefits Attitudes Survey (GBAS) found that 42 per cent of employees felt the option to save directly from their salary was the most helpful way for them to manage their day-to-day finances.
Here, a direct debit facility or a payroll deduction into a corporate ISA can offer a valued solution.
A cash ISA will offer tax-free interest and where an ISA offers access to a share scheme, employees are also exempt from tax on dividend income and from capital gains tax (CGT) liability.
For many, the mortgage market can be confusing, time-consuming and stress inducing.
By educating employees about the housing market and helping to steer them through what can be a bewildering array of mortgage options, this can be alleviated.
Some businesses have agreements with mortgage brokers who provide advice, source products and give administrative support to employers. This is done via one-on-one meetings, telephone calls or online.
Usually, it is the broker or mortgage lender that takes full responsibility for any advice given. This means there will be no legal implications for the employer if the advice given results in problematic outcomes.
In most cases, providing mortgage advice will have no cost for an employer, but employees may need time set aside during their working day to attend a meeting.
Fostering a culture of open communication is an important element that will underpin any successful financial wellbeing programme, but consideration should also be given to the inherently sensitive and confidential nature of financial matters.
For those employees who are uncomfortable about sharing intimate financial details, employers can position themselves as a conduit, signposting plans, processes and resources which the employee can access independently.
A financial wellbeing programme must have clear objectives to meet workforce needs and for employers to gauge its success.
Moreover, it is not enough to simply present a programme, checks are needed to ensure employees are accessing it and fully understand how it can help them.
Feedback should be captured and analysed to inform the programme’s evolution.
Do any trends, for example, become apparent and what is their direction of travel? What is the take-up rate for what is being offered? Has there been a reduction in absenteeism caused by financial worries? Does EAP data reveal recurrent issues that could inform future approaches? What are employees reporting as their challenges and what do they need?
Ensure too, that employees are aware of additional benefits that offer financial support for their circumstances.
By formulating and implementing an effective financial wellbeing programme, senior management and HR teams can help employees cope with the present crisis and mitigate the impact if the situation deteriorates further.
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