Supporting employee financial wellbeing is no longer just a moral obligation; it’s a crucial business imperative. That’s because financial pressures, including the rising cost of living, increasing debt, high energy prices, and stagnant wages are putting UK employees under immense stress – and it’s taking a toll on their performance.
In this blog post, we explore how employee financial wellbeing affects productivity, attendance, and retention. We then outline some practical steps you can take to create a winning financial wellbeing strategy that will benefit both your employees and your business.
In this blog
Financial stress is destroying productivity
The business case for improving employee financial wellbeing
Four practical steps to improve financial wellbeing
Conclusion and key takeaways
Financial stress is destroying productivity
According to PwC’s Employee Financial Wellness survey, 60% of full-time employees feel stressed about their finances. This stress isn’t left at home. In a report by Censuswide and Unum, almost a third (29%) of UK employees say financial worries have negatively impacted their productivity at work. That’s over eight million people.
This comes at a huge cost to employers. The most recent research undertaken by the Center for Economics and Business Research (CEBR) found that absenteeism due to financial worries is estimated to cost UK employers £3.7 billion annually. Meanwhile, financial stress-induced presenteeism – where employees are at work but not fully performing – is projected to have an even higher annual cost of £6.6 billion.
What’s clear is that when employees are struggling financially, they’re not thriving – and neither is your business.
The business case for improving employee financial wellbeing
By improving employee financial wellbeing, companies can lower absence rates and increase productivity. But this isn’t all – they can attract and retain top talent, too.
There’s a compelling and growing link between financial wellbeing and employee retention. The PwC survey found that almost half (46%) of financially stressed employees feel there isn’t a promising future for them at their employer, with 36% actively looking to leave. That’s double the percentage of non-financially stressed employees (18%) who are doing the same.
Meanwhile, nearly three-quarters (73%) of financially stressed employees say they would move to an employer that takes their financial wellbeing seriously. With the cost of replacing an employee starting at 40% of a frontline employee’s salary and rising to 200% for top performers, prioritising financial wellbeing could do a lot to protect the bottom line.
The good news is that, as financial wellbeing becomes a differentiator, organisations with a clear, inclusive strategy will attract the best talent. In fact, according to Deloitte, Gen Z and Millennials now value wellbeing, purpose, and flexibility more than pay alone.
Four practical steps to improve financial wellbeing
Putting in place an effective employee financial wellbeing strategy doesn’t have to involve a massive overhaul of your financial strategy, nor does it have to cost more to your business. Here are some easy steps you can take that can make a big difference.
1. Consider offering a payroll savings scheme
Research found that 41% of employees want to be able to save directly from their earnings via payroll. A payroll saving scheme helps employees do just that – it sets aside a regular amount from their earnings into a separate savings pot.
2. Improve financial education and literacy for all employees
Budgeting tools and financial education can make a huge difference to your employees’ financial wellbeing. Meanwhile, educational elements within payroll systems can help demystify financial terminology and empower employees to better understand their finances. Make sure you understand and support age-specific financial requirements to ensure you are catering to the needs of your entire workforce.
3. Offer flexible pay (earned wage access)
Also known as on-demand pay, flexible pay (earned wage access) allows employees to access a portion of their wages before their scheduled payday. This can help them avoid debt and manage unexpected expenses. By offering this option alongside budgeting tools and financial education, employers show they care about their team’s financial wellbeing.
4. Reimburse expenses faster
Speeding up the expense claim process can help protect employees from being out of pocket. This can be particularly important for those with low or no savings – a significant slice of the population.
Conclusion: Now’s the time to take action
Supporting employee financial wellbeing has the potential to be your next competitive advantage, not only building a culture of trust and offering support in your employees’ time of need, but cultivating a thriving workplace where employees are happy, secure, and productive. For HR and finance leaders, the question isn’t whether to act, it’s “how soon can you start?”
Key takeaways
- 60% of full-time employees are stressed about their finances.
- Financial worry is costing organisations billions in lost productivity and absence.
- By improving employee financial wellbeing, companies can lower absence rates and improve productivity.
- There’s a compelling and growing link between financial wellbeing and employee retention.
- Small practical steps like offering payroll savings, improving financial education, and offering flexible pay can make a big difference.
Ready to boost your competitive edge?
Join our upcoming webinar Financial Wellbeing as a Business Growth Driver, learn to harness this strategic lever, and make your organisation more successful.
