Neil Buck: Boost financial well-being and we can boost performance

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Last week, the Chartered Institute of Personnel & Development (CIPD) and Close Brothers released a new survey report about the financial well-being of employees, the impact it can have on their mental and physical health, as well as the negative knock on effect for their employers.

I can just imagine most eyes are rolling right now after reading that, wondering what else employers are now being expected to do when they are already feeling under cosh from the introduction of the national living wage last year, auto-enrolment pension scheme contributions and so on.

But obviously, there is a significance to employers since as the paymaster, they play a vital role in the financial lives of their people.

The CIPD/ Close Brothers Survey, Employee Financial Well-being: Why it’s important, highlights include stats such as:

  • one in four workers report money worries have affected their ability to do their job,
  • one in ten say they have found it hard to concentrate or make decisions at work because of money worries
  • 19% have lost sleep worrying about money
  • almost a third of those earning between £35,000 and £44,999 a year admit that financial worries have affected their work.

Contrary to what you might immediately think, the survey suggests this problem is not restricted to only to those with debt, the young, the lower paid or impending retirees.

Everyone worries about money at some point in their lives, and indeed I dare say everyone is probably more acutely aware of their financial situation since the most recent financial crisis in 2008.

People worry about saving for a home, the cost of raising a family, funding elderly relatives in care, where to invest their savings, losing their job and so on and given that people are not robots they simply don’t leave their problems on the doorstep of their workplace when they walk in in the morning.

So invariably there is an impact on the employer in many ways.

Negative impact on employers

Stress caused by pay levels, lack of financial awareness or an absence of employee benefits can affect work performance.

For many employees, the perception that their contributions are not being acknowledged can have a negative impact on their self-esteem, health and productivity – all of which impacts on performance, productivity and therefore ultimately profits.

What role can employers play?

Offering financial education is an important part of securing financial well-being.

Employers who recognise this and who support staff will have more financially secure staff who make well-informed decisions and who, as a consequence, will be more engaged, happier and more productive at work. That means less turnover, less sickness absence, less stress, less misconduct and so on.

However, like most things to do with HR management, taking action in the right way and at the right time (sadly there is not a magic bullet or a quick fix but a holistic approach of doing many little things to help the situation e.g. open communication, right levels of pay and benefits for the role, trust, education, fairness etc) – will improve the bottom line.

Clearly this survey report suggests it does definitely make financial sense for an employer to care enough to ensure its staff aren’t concerned about their own financial situation.

But of course it’s not just employers that have a responsibility for an individual’s financial well-being.

The individual themselves, the government, the financial services industry as the stakeholders all have a responsibility and an important part to play in employee financial well-being – the success of doing so will have a positive knock on effect in many ways.

This is summed up in the report:

“Boost financial well-being and we can boost performance. Boost performance and employers will have more money to invest in their employees through higher pay, better benefits and more training and development.

“The higher our productivity, the bigger is our economy and the more able it is to generate the funds needed for schools, hospitals, roads, and so on.

“Higher financial well-being can also lead to lower levels of stress and poor mental health, with implications for health service expenditure.”