Improved financial literacy increases productivity in the workplace. Here’s three ways employers can support this.
We know that businesses work best when their teams are fully engaged, motivated and supported. In order for this to happen, workplace stress – which research shows is often caused by poor financial wellbeing – must be kept to a minimum.
Along with slowing wage growth, poor money management skills and an underperforming economy, insufficient financial literacy is a leading cause of money worries.
We recently took up our own research on UK employees to dig a bit deeper into why poor financial literacy is an ongoing issue and how employers can change this for the better.
Our research findings
Our findings show that less than half (44%) of UK employees are offered financial literacy education. On first thoughts, you wouldn’t necessarily believe this to be unusual, as people aren’t really accustomed to discussing personal money matters amongst colleagues. However, after looking further into our findings, it’s clear that there is a crucial need for a greater understanding of pay and benefits.
The majority (58%) of employees admitted they don’t fully understand their payslips, with less than a quarter (24%) checking their statement every month.
Similar findings are shown regarding workplace benefits and pensions, as 32% said there isn’t enough information on benefits available to them, while a quarter said they aren’t clear on their different pension options.
This knowledge gap can impact an employee’s motivation and engagement – so much so that staff turnover is likely to increase, causing a rise in costs to hire replacement talent. In turn, this can lead to further business problems in terms of performance, productivity and costs.
Employers doing more to help close this knowledge gap will significantly improve their team’s wellbeing and attitude towards work, as our research findings support:
There are three vital things employers can do to help encourage better financial literacy and understanding amongst their staff.
1) Developing financial education programmes
As the figures suggest, more needs to be done to help improve the education around key personal finance concepts. What better way to do this than creating and running financial education programmes internally? Sessions can come from individuals both internal or external to the company if they are knowledgeable in this area – from the likes of Income Tax and National Insurance, to pension schemes and fully understanding the ins and outs of a payslip. The aim of these programmes should not be to provide financial ‘advice’, but should simply educate employees on key payroll concepts to help them gain a better understanding.
These knowledge sessions could extend to cover certain state benefits and the eligibility to claim them. Hundreds of thousands of low-wage employees could be receiving benefits, like Universal Credit, but simply don’t know they’re eligible.
2) Engaging employees with benefit choices available to them
What good is having a top range of benefits available, if most people aren’t aware of what’s on offer? The more benefits not made use of, the more money the company wastes.
Putting a more thought-through benefits strategy into place – for example getting feedback from employees and putting together detailed information packages or sessions – will aid in ensuring the needs of your people are covered, as well as increasing employee awareness around each one. It’s a win-win.
3) Improving access to HR systems
With the digital world continuously moving forward, employees’ access to HR systems must be improved. Empowering them to access their payslips and other pay documents using self-service on a range of devices, allows them to feel more clued-up and comfortable with their pay wherever, and whenever.
The same applies to benefits. Offering simple access at any time from either a laptop or mobile device means employees can make their choices from home, taking their time to research what would benefit them the most and even discuss with partners or family members.
Actioning each of these would significantly raise awareness and improve financial literacy, leaving your people feeling more supported, engaged and loyal. With less workplace stress, lower employee turnover and higher productivity as a result, there are positive outcomes for everyone involved.
If you’d like to discover more about ResourceLink or how our people can help you transform your payroll and HR operations, we’d love to talk.Talk to us