How to support employee financial well-being

With the latest inflation figures reaching 8.2%, many are predicting the UK will head into a recession by the end of 2022. As an employer or HR leader, part of your job is to help your employees fight off financial anxiety - keeping an eye on their mental well-being so they can enjoy coming in to work each day. After all, your team is what makes your business thrive. Supporting employees through the tough times ahead is going to be essential.

In this article, you'll learn a few steps you can take to support your employees' financial well-being.

What is financial well-being?

Financial well-being doesn't have one, strict definition. For many, the concept is something like:

"A state of being able to meet current and ongoing financial obligations and enjoying life without feeling insecure about the future"

Other definitions of financial well-being include:

• feeling in control of your finances
• having the ability to absorb a financial setback
• being able to have flexible choices with your money
• being on track to meet financial goals

Essentially, when an employee's financial well-being is good, they feel comfortable with money and look forward to the future.

Financial wellbeing means being able to meet our current and ongoing financial obligations without feeling insecure about the future.

Why does employee financial well-being matter?

When employees are secure with their financial well-being, the results are obvious. By supporting your team and making sure each individual feels good about their future, you can expect to see improvements in their work too.

Small business owners and HR departments, in particular, can improve employee engagement, attain new talent, and support their mental health by focusing on this crucial part of life. Here are just a few of the benefits:

Employee productivity

Almost 60% of employees said financial stress has increased since the onset of the pandemic. Stress is directly linked to productivity - it's difficult to concentrate at work if you're worried about money. By removing this burden, you can actually help increase employee productivity. In 2018, 11% of employees reported reduced productivity in the last 3 years due to financial stress.

Mental wellbeing

Money reaches all aspects of life, including home, work, family and personal health. As a result, it has a dramatic impact on overall mental well-being. Helping take care of an employee's financial well-being can be a massive boost to their overall quality of life by helping them feel less anxious for the future. Happy employees make for a happy workplace.

Retention rates and attracting new talent

Recently global epidemics such as Covid and the rising cost of living have led to extra financial stress and employee burnout. The end result? An unusually high staff turnover rate for many businesses in the UK - dubbed "The Great Resignation".

By supporting an employee's financial well-being, you can help keep more of your best workers around and potentially attract new talent at the same time. In fact, around 43% of employers believe that introducing a financial well-being strategy has a serious knock-on effect for employee retention.

How to support employees financially

Talking about supporting employees financially can be a touchy subject for many businesses. Most immediately think this means offering more money or blanket pay rises. Of course, while that is unavoidably a big part of the picture, real financial well-being is far more than that. There are many different ways you can support or offer guidance in this area of life. Here are a few of the most optimal methods:

1. Understand their financial issues

Not everybody experiences the same financial problems. Real help comes when you understand that each employee will have their own individual financial issues and anxieties. Financial concerns often vary by stage of life. While some employees might be focusing on travelling and education, others will be planning for big life milestones like having children, a wedding or purchasing their first home.

By developing a deeper, more comprehensive understanding of your employees' financial problems, you can create resources, programmes and support schemes that best fit their needs and priorities.

2. Employee discounts

Employee discounts are an excellent way to give back to those that work hard for you. Of course, some companies' discounts will mean more than others. Ideally, discounts should be for products/services that people require daily and can't go without.

For instance, if your business is a supermarket, automotive repair centre, or clothing shop, offering a certain percentage off the final costs can help them in their financial life.

But what about if your business isn't a daily essential? You can also partner with another company offering wholesale employee discounts to your team. By doing this, you can get real-life discounts that matter, improving financial well-being further.

3. Salary sacrifice

Salary sacrifice can help employees keep more of what they earn. They help by letting your team swap a portion of their earnings for another useful, non-cash benefit, such as a gym membership, a bike or even a company car.

With salary sacrifice, employees save money on National Insurance and effectively end up paying less for their chosen benefit than if they'd made the purchase themselves.

As an extra benefit, any employee who opts-in will also be saving your business money on National Insurance too. Don't overlook this tax-friendly incentive.

Almost 60% of employees have reported that financial stress has increased since the pandemic.

4. Money management advice

Something else companies should consider offering is money management guidance. This can include financial coaching, debt counselling - anything that helps your employees get a hold of their personal finances.

If you don't have in-house skills to provide this information, outsourcing is a fantastic option. Many firms will be able to provide financial advisers and experts for you.

When offering money management advice, focus on your employees. If people want to know more about saving for a house than consolidating debt, make sure you're providing the advice that matters most to them.

5. Pick the right pension scheme

Lastly, it's always a good idea to enrol your team in a quality pension scheme. In the UK, half of adults are worried they haven't saved enough to sustain their current lifestyle in retirement. This can range from a vague worry about the future to deep stress about what happens when they can stop working. Clearly, it's a worry that needs fixing - and you can help with that.

Giving your team a better pension scheme can do wonders for their confidence in the future. Specifically, you want a pension that:

• gives complete visibility into their savings
• is easy to manage
• helps them grow their savings over time

An employee's financial well-being focuses heavily on the future. Offering them a clear, outlined path to a successful retirement can make them satisfied with their job role and the outlook for tomorrow.

Conclusion

In this article, we've given a fundamental overview of how to support your employees' financial well-being. The importance of your team's mental state is tremendous and can have a big impact on your business's bottom line. After all, take care of your people, and they'll take care of you.

Is your company pension more of a hassle than a help?

At Penfold, we've rebuilt workplace pensions from scratch. Our pension for HR teams has been designed for forward-thinking businesses that want an unbeatable employee experience.

To find out more get in touch with our team of pension experts today!