To improve employee financial wellbeing, demystify payslips, talk, and educate

Most employers have implemented dedicated policies and strategies to support employees’ mental and physical health. But the same is not so true of employee financial wellbeing – despite the ongoing cost-of-living crisis.

An effective financial wellbeing programme helps colleagues understand exactly what support is available and how they can use it. It can also generate the behavioural changes required for employees to feel more confident and in control of their finances.

This, in turn, leads to better decision-making and a more sustainable approach to financial management and planning, all vital skills in today’s tough economic climate.

One of the most impactful things that employers can do when it comes to financial wellbeing is to help employees develop a positive relationship with money, where they control money rather than the money controlling them. Employers should be helping their employees to view money as a positive enabler in their lives, not as something that’s confusing, scary and difficult to manage.

Gethin Nadin, Chief Innovation Officer, Zellis (pictured, below)

We know that 83% of employees expect organisations to step up financial wellbeing efforts. The ‘Employer’s Guide to Protecting Financial Wellbeing for the Workforce’ provides clear guidance on how to support your people effectively. It’s based on insights from leading experts in financial wellbeing, renumeration and payroll. It also includes data from a survey of 2,000+ UK and Ireland employees.

What should employers be doing to boost employee financial wellbeing?

For nearly half (43%) of respondents, the best financial wellbeing measure employers could take would be to help them read and understand their payslips more effectively.

• Present information more clearly to all staff (rather than just new joiners)
• Avoid acronyms
• Give employees concise guidelines alongside payslips explaining how to read them and which figures are most important
• Help on how to check and query tax codes
• Information to assess eligibility for tax exemptions and make appropriate claims

Employers should be encouraging their people to regularly ensure pay is correct, commission and bonuses have been accurately calculated, and deductions are as expected. By better engaging our people in their pay and payslips, we are ensuring they take a more proactive and preventative view of their overall financial wellbeing.

Gethin Nadin, Chief Innovation Officer, Zellis (pictured)

What role do managers play in promoting employee financial wellbeing?

37% of survey respondents suggest that employers train line managers to understand how best to support people who are struggling with both financial and mental health issues.

This includes creating a psychologically safe environment for employees to approach their manager and discuss their financial circumstances. They should then be signposted to the right support services.

Other suggestions about how employers could help in the short-term, meanwhile, included introducing cost reduction schemes, such as travelcard loans, payroll saving schemes to make it easier to save, and low-cost loans to manage short-term financial emergencies.

6 target areas for employee financial wellbeing programmes

To generating real behavioural change, we recommend investing in at least one of the following:

1. Providing access to affordable credit and financial support

Removing some of the cost associated with existing debt gives staff more control over their finances and helps feel more optimistic about their financial future. Payroll lending is one low-cost, risk-free way to support people who are struggling with high interest rates, for instance.

2. Offering insurance against key risks

Benefits, such as income protection schemes and critical illness cover, are neither well known nor understood by employees in the UK and Ireland. But they do provide an easy and cost-effective means for people to protect themselves against key risks. As a result, employers should focus on educating them on which schemes are available and why they are valuable.

3. Boosting awareness of spending patterns

Encouraging employees to become more aware of how much they spend and where they spend it is, arguably, the single most important way employers can influence their short-term behaviour. To do so, it is useful to start evaluating how benefits can be employed to support financial wellbeing. Particularly useful ones in this context include employee discount schemes and salary sacrifice in exchange for non-cash benefits.

4. Improving financial understanding

Finance-related communication and education is vital to encourage higher levels of financial literacy, which in turn reduces anxiety and boosts wellbeing. Just as important is providing staff with access to specialist advice on state benefits and tax credits in order to open up potential new income streams, particularly for lower-paid workers.

5. Planning for the future

Employees generally engage more effectively with their finances if they perceive money as a useful tool to achieving their goals. Such goals could include going on a big holiday, paying for a wedding or buying a new home. Employers have an important educational role to play in this context. 

6. Accumulating savings

One of the most powerful ways for staff to build a sense of financial wellbeing is to create a savings pot. This helps protect them from the stress caused by unexpected expenses, such as cars or boilers going wrong. Options here include payroll saving schemes, ISAs, pensions and share incentive plans.

 Ultimately, employers can’t provide a safety net which catches people when they make poor or ill-informed decisions. But what they can do is encourage and enable people to make smarter and more informed decisions, and ultimately, to change behaviours in a positive way.

Jacqui Summons, Chief People Officer at EMIS Health, Non-Executive Director at Zellis (pictured, above)

To find out more, access the full report: Employer’s Guide to Protecting Financial Wellbeing for the Workforce.