30 April 2019
At this year’s annual DC and Financial Wellbeing Conference we invited Kerry Shiels from BT to talk about the work they are doing in financial wellbeing. Here, Shaun Southern looks at how improving the financial wellbeing of your employees can lead to a more productive and happy workforce.
The importance of financial wellbeing
Research tells us that improving the financial wellbeing of your employees can be a great investment for companies. Not only can it aid employee happiness and productivity, but it can also help companies to recruit and retain staff.
It’s unsurprising that employees with money worries are more stressed than colleagues without this pressure. However, did you know that they’re also more likely to be less productive at work and more likely to take time off work.
Recent research shows that this is a problem affecting a large minority of employees:
• 19% of employees have lost sleep worrying about their finances (CIPD, 2017) and 5% have taken absence from work in the last year because of financial worries (Financial Capability)
• 55% of UK employees report that facing financial pressures negatively affects their behaviour at work and their ability to perform in their job (Neyber, 2016).
What is financial wellbeing?
What do we mean by 'financial wellbeing'? There are four key pillars:
• Having control over day to day finances
• Ability to withstand a financial shock, such as an unexpected bill
• Financial freedom to make choices, such as doing enjoyable things such as seeing friends or follow a hobby
• Having a financial plan for the future.
How can employee insight help?
It’s imperative to get insight into the specific financial issues faced by your employees. Analysing employee data can help with this, supplemented by asking employees through surveys or focus groups.
We analysed data for one of our clients and identified that lower paid employees took more sick days just before pay day. This raised an important question; are these employees running out of money leaving them unable to afford to travel to work? For another client, their employee data highlighted that employees with poor financial wellbeing took 50% more sick days than those with good financial wellbeing.
In these examples, employee insight helps to highlight the scale of efficiency gains available if a company improves financial wellbeing across their workforce. It also helps to identify potential solutions for the companies in question; for these two examples, potential solutions could include introducing travel loans or providing education on budgeting skills.
This type of focus is important, otherwise money could be wasted on services which your employees don’t need; resulting in no improvement in financial wellbeing and a poor return on your investment.
Data can’t definitively tell us ‘why’ trends are occurring, but it is essential for identifying what a company’s key issues are. Once you understand the financial headaches your employees face, you can tailor your benefit and financial wellbeing programme to provide the right help.
LCP DC Quarterly Update
What's on the horizon for defined contribution pensions? In this edition of our DC update we look at key market updates from the past quarter, as well as news on legislative changes that may require you to take action.Read the update