Many employers are rightly concerned about how the cost-of-living crisis is hitting their employees’ financial wellbeing. But can (and should) organisations intervene? And if so, how? We discussed these questions in a recent webinar with financial wellbeing platform provider, Wagestream.
Emily Trant is Head of Impact and Inclusion at Wagestream. She told us about the “really strong link between financial stress and mental health, that flows through to performance at work”.
The situation is especially tricky for staff on low or fluctuating, hourly pay. Because much of their disposable income is spent on necessities like food, energy and petrol, they are being hit particularly hard by inflation. The resultant high stress levels tend to result in people being “distracted” at work.
This means “they’re more likely to have days off work, they’re more likely to be less productive at work, and they’re more likely to leave you and work for somebody they perceive cares about their wellbeing more”, Emily explains.
Don’t be afraid to get involved as an employer
Many employers have concerns about intervening directly to try and help with the cost-of-living crisis. They may feel uncomfortable about meddling in their employees’ financial affairs. However, they don’t need to worry, as Emily points out:
You’re already very deeply involved in your employees’ financial lives, because you pay them. You’re the number one source of financial goodness for them. So don’t worry about interfering, as you’re already in there, and you’re a huge source of positivity in their financial lives.Emily Trant, Head of Impact and Inclusion at Wagestream
Other employers, particularly those on tight margins, worry that they do not have enough money to “throw” at the situation.
But there are a number of things that can be done to help without having to spend lots of money. For instance, using the organisation’s group buying power can make it much cheaper for staff to purchase insurance.
Avoid taking a tick box approach to benefits provision. Offer employees suitable education and financial coaching to support their financial wellbeing. This can help them learn to budget, manage finances effectively, and make the most of what they earn.
Give them a range of choices
Understand who your workers are, their needs. and whether different employee groups have different requirements. Then you can provide them with what Jacqui Summons, Chief People Officer at EMIS Health and non-executive director at Zellis, describes as “choice architecture”.
“Choice and autonomy are essential,” Jacqui says. “Although we describe employers as wanting to do more to help their employees and being invested in their financial wellbeing, they’re not their parents and they’re not telling them what to do.”
Offering workers an appropriate tool kit, on the other hand, provides them with the means to make their own choices about what financial support works best for them.
Collectively with Wagestream and Zellis and this sort of tool kit, we can create a ‘choice architecture’. We play back information to people really clearly, so they have a deep understanding of their financial circumstances. We then present options for them in terms of what they want to do in those circumstances.”Jacqui Summons, Chief People Officer at EMIS Health and non-executive director at Zellis
Promote both short-term and long-term resilience
One big concern is that the cost-of-living crisis may tempt significant numbers of employees to opt out of auto-enrolment pensions in order to have more money in their pockets.
As Emily acknowledges: “It’s so tempting when you need that extra cash, but long-term, it’s potentially quite a problem.”
To resolve this tension between “long-term versus short-term resilience”, she describes herself as a “huge advocate” of payroll savings mechanisms. Indeed, Wagestream data reveals that employees are 56% more likely to save if their employers offer such a scheme — even if their incomes are low. Saving in this way becomes a habit.
“And these habits are really sticky. They last a long time. There’s also a lot of evidence that suggests even maintaining a savings balance of as little as £100 can be really material to someone’s ability to weather a short-term financial storm.”
Just as positively, the data also indicates that saving in this way does not impact on how much people pay into their pensions as they consider them “separate pockets of money”.
Appreciate the business benefits
These kinds of intervention also have positive business benefits. According to Wagestream data, employee retention increases by up to 16%, time to hire improves by 27% and payroll queries fall by up to 40%.
This, says Emily, is because “you’re giving your employees a tool kit to understand their financial situation and are taking away a lot of stress. We also see it in shift fill, particularly overtime. When you give people the ability to connect what they’re earning with the work they’re doing, they’re much more likely to work”.
If staff are unable to make this connection between work and pay, they’re far more likely to undertake a job on the side.
“We hear employers saying they’re having a hard time getting their employees to come in and take overtime. They’re having to rely on agency workers, which is really costly. Whereas if you connect that up, you can drastically increase your shift fill.”
In short, not only does promoting financial wellbeing benefit employees directly, it also helps the business to succeed.
Listen to the full webinar for more on how employers can help with the cost-of-living crisis.