The phrase ‘financial resilience’ often conjures thoughts of the rules that govern banks. But for your employees, there’s a much more vital definition; the ability to withstand and recover from financial shocks.
In this context, financial resilience is a personal skillset with the potential to change your employees’ lives for the better. Additionally, with research showing that financially resilient employees are more focused, engaged, and productive when at work – employee financial wellbeing is also good news for your bottom line. win-win!
In this blog
The business case for financial resilience
Building financial resilience: The employer’s role
Case study: Alex’s journey from stress to success
Measuring the impact of financial resilience
Beyond the Stress Narrative
The link between financial wellbeing and workplace performance is well documented. More than half (54%) of employees say that financial stress has impacted their work for instance.
Often this stress arises because employees feel as though they have lost control of their finances. Financial resilience seeks to restore control by empowering people to make smarter, forward-looking choices. Being able to plan ahead by implementing resilience strategies, employees are less likely to be caught out by the unexpected.
What is financial resilience?
Financial resilience refers to the ability to withstand, adapt to, and recover from financial shocks or unexpected economic challenges. It includes the capacity to both absorb immediate financial stress and the ability to maintain essential functions while working toward recovery from immediate stressors.
Key components of financial resilience include:
Emergency preparedness: Adequate savings, insurance coverage, and accessible credit to handle unexpected expenses like medical bills, job loss, or major repairs without deriving into crisis.
Manageable debt levels: Maintaining debt-to-income ratios that allow for continued payments even during periods of reduced income, avoiding over-leveraging that could lead to financial distress.
Adaptive capacity: The ability to adjust spending, find alternative income sources, or restructure financial obligations when circumstances change.
Recovery mechanisms: Having clear strategies and resources to rebuild financial stability after a setback.
Financial resilience is different from simply ‘having enough money’. Mid-earners with good emergency savings, stable employment, and low debt shows more financial resilience than high-earners living payday to payday with significant financial obligations. Financial resilience emphasises sustainable financial practices and long-term preparedness rather than current financial status.
The business case for financial resilience
While financial resilience needs to be a personal endeavour, it pays to get involved a an employer. Freed from financial stress, employees are better able to focus on the task in hand, make smarter decisions and are more engaged in their work.
Zellis research has uncovered significant insights, including:
- 45% experience sleep disruption caused by financial stress, making them tired at work
- 22% believe they are less productive at work
- 17% report an increase in work-related errors
Building financial resilience: The employer’s role
Financial resilience doesn’t just happen. Resilience is built – not bought – and that process takes patience, practice and partnership. Employees still have to make the hard financial decisions, but employers can support them through the process with:
Financial education workshops
Offering basic but practical lessons in budgeting, saving and financial planning.
Earned wage access tools
Allowing employees to access payroll advances to cover unexpected expenses.
Transparent payroll communications
Providing tools that allow employees to better understand their pay cheque. Issuing regular communications about add-ons, such as employee discounts, will help your people maximise their benefits package.
Management training
Finance remains a deeply personal issue, so it’s entirely likely many employees will not discuss their financial wellbeing freely. Managers should be trained to identify the signs of financial stress, equipping them to proactively offer appropriate support and advice to those in need.
Case study: Alex’s journey from stress to success
Meet Alex, a Marketing Coordinator working at a large management consultancy. He’s a committed team member with three years’ service and is well-respected by his peers. Alex began experiencing financial stress due to his partner being made redundant unexpectedly. Faced with rising living costs, limited savings and a poor understanding of available support options, his performance and overall wellbeing has suffered.
From difficulty concentrating at work and taking more time off due to sickness caused by increased stress levels – Alex’s productivity sharply declined, and his managers noticed reduced engagement with colleagues and tasks.
Rather than watch him burn out, the company’s HR and payroll teams stepped in, introducing a range of wellbeing initiatives to Alex and his colleagues. These included:
- Financial Wellbeing Workshops: Regular sessions led by HR focusing on budgeting, managing debt, and building savings.
- Employee Assistance Programme (EAP): Confidential counselling and financial advisory services, accessible to all employees.
- Flexible pay provisions: A self-serve tool that allows Alex to draw down a salary advance as and when required.
- Saving and budgeting tools: Helping Alex to build up a rainy day fund to protect against future financial shocks.
- Financial Coaching: One-to-one sessions with financial coaches arranged via payroll/HR.
Using the tools and support provided, Alex was able to get through the period of uncertainty until his partner was able to get another job. The skills he learned have been put to good use as he now regularly uses payroll saving to put some money aside for the next unforeseen event.
However, while things worked out for Alex in the long-term, the initial impact on his mental and physical health – as well as the drop in productivity for the company – could have been mitigated altogether if these systems had been in place before he hit difficulties.
Measuring the impact of financial resilience
Providing employee financial wellbeing solutions is just the start. Your payroll and HR teams must be able to measure the effect of their efforts – and to ensure employees are receiving the support they need. But what are the KPIs you should be measuring?
Absenteeism
One of the most significant indicators of employee financial wellbeing will be absenteeism. Spikes in sick leave are cause for concern – whether they turn out to be related to financial wellbeing or not.
Presenteeism
Presenteeism describes a loss of productivity and engagement with tasks. Employees are physically present, but things like output and enthusiasm are lacking. You should also be closely monitoring productivity scores, employee engagement and retention rates.
Changes in mood or behaviour
Managers know their teams better than anyone. Equipping line management with the tools to have conversations when something just isn’t right with a colleague will lead to increased trust, better support processes and happier employees in the long run – whether the underlying cause is financial or not.
Technology and analytics
Your choice of HR and payroll platform will be hugely influential. Zellis provides a suite of analytics and reporting tools that allow you to capture and analyse this information natively, giving you realtime insights into employee financial wellbeing.
Conclusion: A financially resilient workforce is an unstoppable workforce
Employee performance is closely tied to stress and financial wellbeing. Helping your people develop financial resilience is a crucial tool to improve their overall wellbeing, driving up productivity, engagement and retention.
Understanding the pressures faced by your people and providing the right employee financial wellbeing benefits will help you build a more resilient, happier workforce.
Key takeaways
- Financial resilience enables employees to recover from unexpected financial shocks through proactive planning.
- Financial stress negatively impacts employee productivity and engagement in the workplace.
- Employers can support financial resilience by offering education, tools, and supportive workplace policies.
- Building financial resilience delivers measurable benefits like improved performance and reduced absenteeism.
- Financial resilience restores employees’ sense of control, reducing stress and enhancing wellbeing.
Discover the commercial impact of financial wellbeing
Financial pressure is hitting UK employees hard, and forward-thinking organisations are discovering that investing in their people’s financial wellbeing isn’t just the right thing to do; it’s a powerful business strategy that drives productivity, retention and growth. Watch this on-demand session with Chief Innovation Officer, Gethin Nadin to discover how leading employers are using smart, cost-effective financial wellbeing programmes to unlock real business results.
