As the link between money worries and employee productivity becomes clearer, payroll has an important part to play in supporting a financial wellbeing strategy that reduces pressure on employees.
Our latest report illustrates the connection between financial wellbeing and performance perfectly. (Under pressure: How financial stress effects employee wellbeing and productivity).
The survey of 2,502 workers in the UK and Ireland found that 77% have experienced financial stress and anxiety over the last 12 months. The problem is most marked among workers under the age of 35, where this figure rises to a massive 83%.
More than half (54%) of all age groups experiencing such stress indicate their productivity had fallen as a result. Again, the number increases to 61% among younger employees. The phenomenon is also more marked among men than women (63% compared with 50%).
Some 45% of financially stressed respondents say their sleep had been affected by the situation, leaving them more tired at work. A third are less able to concentrate. This means some are more error-prone and less able to make sound decisions (17% respectively). Some also find it more difficult to communicate effectively (14%).
Wellbeing is an essential part of high performance. Business leaders need to think about investment in wellbeing, not as an insurance against people falling ill tomorrow, but as a means of driving greater performance and productivity today.”Gethin Nadin, Chief Innovation Officer, Zellis & Benefex
In other words, initiatives to tackle financial wellbeing are no longer simply a nice-to-have. There are clear business reasons why they must form a key element of wider wellbeing strategies.
How payroll supports financial wellbeing
This is where the payroll function comes in. Accurate and accessible payroll services play a central role in getting financial wellbeing right.
Put another way, if employers are serious about supporting employees, providing them with effective, easy-to-access payroll information is vital. Furthermore, having the right tools and processes in place makes it simpler to track the impact wellbeing initiatives are having on performance.
About 8 in 10 employees are not completely confident of being able to understand every aspect of their payslip or being able to spot an error. Payslips include many acronyms and specific financial terminology. Employers often fail to offer sufficient explanation or access to help.
To make matters worse, employees who lack confidence with numbers or have low numeracy skills already find it much more difficult to understand their pay and manage their finances. This situation can have a negative impact on their productivity and overall wellbeing.
INearly half (44%) of employees say a mistake with their pay would cause them to experience financial difficulties, such as not being able to pay the bills on time. Some 46% indicate it would make them more stressed and anxious too.
Educating employees on pay is actually a way for employers to mitigate risk. It ensures that employees have the necessary knowledge to check payslips and immediately flag errors.
Payroll professionals can resolve such errors more quickly and minimise the impact, both on employees and the company’s reputation.
Optimising payroll services for financial wellbeing
Employers should establish and signpost simple, formal processes for employees to ask questions and raise concerns about their pay with payroll professionals. There should also be a a feedback loop to show that the system works effectively.
Just as important is that employers take full advantage of the functionality inherent in their payroll systems. This includes ‘hover-over’ functions that enable workers to get more information and context about items on their pay advice to understand why certain deductions have taken place.
For example, instead of just seeing an unexplained National Insurance deduction figure, the employee would benefit from a brief message explaining what this tax is and what it funds.
MyView PayNow financial wellbeing app
Other services that can make a big difference to employees’ lives are MyView PayNow and Work Report.
MyView PayNow is a financial wellbeing app developed with our partner Wagestream. It enables employees to access up to 50% of their earned wages instantly for a fixed transaction fee. This flexible pay approach is also known as earned wage access. 72% of employees surveyed by Wagestream felt more in control of their finances as a result of using it.
The app’s pay and spend budgeting tool helps staff manage their finances more effectively too. They can see in one place how many shifts they’ve worked and how many are due, their expected pay, and what they have spent.
Another advantage of MyView PayNow is that it supports employees to build up a rainy-day fund or save for a specific life goal. This is particularly valuable at a time when 35% of people in the UK have less than £100 in savings.
Once individuals set a goal and a deadline, the app’s Build function simply calculates the relevant monthly contribution and automatically moves it to their savings pot on payday. People can save up to £100 per month, up to a total of £1,000. They can access the money instantly if required. There is also a monthly prize draw to encourage them to continue managing their money wisely.
Work Report for employment and income verification
Work Report is an online employment and income verification service, provided by our partner Experian.
It gives employees an instant, automated means of confirming their personal information to potential lenders, for example during a mortgage or loan application.
Such information includes their employment status, salary and whether their income is stable or not. This enables lenders to determine whether applicants are in a position to keep up repayments.
The system works by automatically extracting the minimum amount of data from your payroll system and sharing it instantly with the lender. This inevitably saves time and effort for everyone.
Ready to support employee resilience and productivity?
The payroll function can, and should, act as a key hub for effective financial wellbeing initiatives. Making this a reality requires an advanced modern payroll system and the right complementary services.
Find out more on how we can help you promote your people’s financial wellbeing.