Working with renowned corporate wellbeing expert Dr Cary Cooper, new research from Close Brothers reveals that employers are underestimating the impact of poor employee financial wellbeing in the workplace.
While 88% of employers think that their employees worry about money, just a third (30%) think money worries impact their staff while at work. However, the reality on the ground is very different. Three quarters (73%) of employees say that money worries impact them at work.
Employers don’t just underestimate how many employees are affected by poor financial wellbeing in the workplace, they also underestimate the scale of the problem. In Close Brothers’ newly developed Financial Wellbeing Index, in which employees score their wellbeing in each of the seven areas of financial health, employees across the UK scored themselves an average of just 53.6 out of 100. Whereas, employers given the same test, estimated their employees’ financial wellbeing at 70.5 – nearly a third higher than the reality.
This reality gap isn’t helpful for employee understanding and engagement, but it’s also restricting maximising their people strategies and impacting business performance. 48% of businesses do not have a financial wellbeing strategy, and of those that do, just 18% describe it as comprehensive. There are signs this is improving, however; 27% of employees plan to implement one within the next three years.
Employers confirm that poor employee financial wellbeing is damaging their business revealing it has led to reduced productivity (22%), loss of talent (22%), and higher absences (19). Poor retirement planning is of particular concern with half of employers (48%) stating that fewer people are retiring from their organisation than they would like, and the same proportion saying the rate of retirement in their organisation is increasing their people costs. A further 45% say that the rate of retirement in their organisation is negatively impacting their succession plans.
Conversely, the benefits of improving employee financial wellbeing are clear. Of those organisations that are already tackling the issue, nearly a third (30%) say that it helps improve employee productivity, a quarter (24%) say it assists in talent acquisition and retention, and 22% say that it helps to fulfil their strategic business objectives.
Jeanette Makings, Head of Financial Education at Close Brothers said: “Financial wellbeing has been overlooked for too long, but business can no longer afford to be complacent. It is integral to unlocking employee performance, as well as attracting and retaining the best talent. But measurement is key as a one-size fits all strategy may seem easy to implement but is unlikely to be effective. In order to ensure that financial wellbeing strategies are impactful and cost effective, they need to be properly targeted. By pinpointing which of the seven areas of financial wellbeing are the biggest issues and which employees groups are really struggling, employers can ensure that a programme is tailored to employee needs and will provide the best support to get financial health on track.”
Professor Sir Cary Cooper, a leading expert in workplace wellbeing, ALLIANCE Manchester Business School, University of Manchester said: “The benefits of providing advice and support for employees on their personal financial issues are huge. And from an employee perspective, the availability of financial wellbeing guidance in the workplace is becoming a ‘must have’ rather than a ‘nice to have’. By hyper-personalising employee support, businesses can then ensure that their financial wellbeing strategies have the necessary impact.”