Although inflation is set to fall this year, the consensus is that employers will have to find ways to support their employees for the next two years at least. There is also growing recognition that financial challenges and related wellbeing issues are nothing new for large sections of the workforce.
In 2018, well before the present crisis, a nationwide survey by the Money and Pensions Service found that 39% of UK adults didn’t feel confident managing their money and that 11.5 million had less than £100 in savings
While reactive financial wellbeing support during a crisis is valuable, these figures tell us that it would be better to have a proactive plan that looks after this critical aspect of employee welfare whether there is a crisis or not.
To make this happen, employers need to focus their plans on four key areas.
- Provide tailored and relevant support
Aside from the current challenges related to soaring inflation, other factors including age, stage of life and existing financial commitment have always influenced how an individual is impacted by money issues. Going forward, organisations need to adapt their support and communication to make sure that future financial wellbeing programmes aren’t just a catch-all but offer tailored support.
- Focus on sustained financial education
The most effective financial education programmes aren’t just one-off or infrequent reactive interventions that are often soon forgotten. They focus on helping employees develop the long term life skills that people need to help them manage their finances more effectively. One solution, as the CIPD puts it, is “just-in-time or on-demand learning linked to particular financial decisions.” The most important thing is to ensure that employees have the resources to help themselves.
- Strengthen employee assistance through robust external resources
Dealing with an individual’s financial worries is not something that most organisations have the resources or expertise to manage in-house – it requires help from a range of experts including debt management and counsellors. HR teams need to recognise this and develop more robust Employee Assistance Programmes (EAPs) that signpost staff to a range of confidential advice and support services. Managing financial wellbeing is not a static situation, so they also need to make sure those programmes don’t stay stuck in 2023 and continually review the value and relevance of the resources they recommend.
- Encourage the conversation about financial health
In-work poverty is at its highest level since records began in 1996. This is a highly sensitive and personal issue. So looking forward, employers must seek new ways destigmatise talking openly about financial issues at work. Creating a financial wellbeing policy that provides supportive new channels for flagging problems will help.
HR should be encouraging leaders and managers to have regular conversations with their teams to normalise talking about financial health and distress. They should also consider giving staff the in-built right to deal with personal financial matters during the working day. This helps catch problems early before they escalate and impact mental health.
Concluding thoughts
With debts mounting in many cases, employees are likely to feel the impact of the present crisis for many years to come. Yes, they should be making immediate interventions. But employers should also be looking at how they can embed what they learn during this time to make long term financial wellbeing support part of their organisational DNA.
