A High Price To Pay

The consequences of failing to address financial problems can be extremely damaging to individuals. But many employers are unaware that the same is true for organisations.

Evidence shows finances are a big worry for employees, as revealed by Neyber’s financial wellbeing report last year. Bank of England data released in March shows that credit card borrowing alone – without any other debt or financial problems taken into account – jumped to its second-highest level in January since before the financial crisis.  Consumers borrowed an additional £746m on credit cards over that one month. This is particularly worrying because analysis from earlier in the year shows that credit card debt is trapping consumers for longer than previously thought. The Bank of England and the Financial Conduct Authority found 89% of card debt was held by consumers who were also in debt two years ago.

Last month, official figures revealed that, for the first time since records began, UK households are more likely to be borrowers than savers. Households became net borrowers last year for the first time since data began to be collected by the Office for National Statistics (ONS) in 1987.  Figures also show that savings levels are at their lowest level since 1963.

The Wellbeing Project’s money coach Jo Thresher says many organisations have not thought ahead to the difficulties they may be creating by adopting a hands-off approach to the financial wellbeing of staff. In its 2018 Global Human Capital Trends report, Deloitte found that, whilst 88% of UK businesses had wellbeing programmes, only a third offered initiatives that Deloitte considered ‘beyond the traditional’, such as financial fitness.  Personnel Today also reports that only 10% of organisations have a financial wellbeing strategy in place. According to Thomsons’ Employee Benefits Watch 2018/19 report, almost a quarter (22%) of employers said they did not want to get too involved in their employees’ financial lives and one in five believed that it was not their role to do so.

Yet Jo says that failing to consider the financial wellbeing of a workforce means that organisations could face serious consequences in the short, medium and long-term.

In The Short Term

One of the first things to be affected is productivity, explains Jo.  Those who are worried about finances may be preoccupied with these challenges rather than focusing on the job and may suffer from sleep problems, which means they turn up to work tired and stressed.

Absence rates are also affected by sickness caused by poor financial management, points out Jo. A tell-tale sign of financial problems in the workforce is a rise in absence at the end of the month as money problems hit. Some may encounter a temporary but recurring dip in their wellbeing as a result, whilst others may be forced to take sick days because they have run out of money for train and bus fares or petrol to get into work. That will have an inevitable negative impact on overall productivity in the organisation. This is borne out by CIPD’s Employee Financial Wellbeing report, which found that one in four employees said financial concerns have affected their ability to do their job, rising to a third in London.

Another short-term problem can be turnover.  Jo outlines that it is common for those with financial difficulties to move jobs for small amounts of extra pay. ‘You get people leaving jobs, moving to a new one for an extra £1k or £2k because they’ll think that will sort their problems out,’ says Jo.

This is disruptive to the business – it costs time and money to recruit a replacement, and results in loss of knowledge. The irony is, of course, that the move won’t necessarily solve the financial problems unless the individual is able to identify a different way to manage their money, which will help them avoid this monthly rollercoaster.

‘It’s not always about having more money or less money – it’s about not doing the right things with the money they have,’ explains Jo.  ‘This is where financial wellbeing workshops can help.’

In The Short To Medium Term

There are other challenges facing organisations that do not address the financial wellbeing of their workforce.  It has been a decade since the credit crunch and we have all become used to especially low interest rates, but, for many people, that low rate is now the norm rather the exception. Jo points out that we are now used to paying less for mortgages than we would in rent, which was not always the case for previous generations.

She believes that many employees are simply unprepared for a rise in interest rates and, when it does come, may be unable to cope financially. When changes come, they will hit some people hard, says Jo: ‘The knock-on effect could be significant.’

It may mean that a greater proportion of the workforce is struggling with their finances. Some may be forced to take a second job to make ends meet, spreading themselves more thinly, and others may leave employment altogether, especially if they have young children and are unaware of the childcare help available. Others will stay in the workforce, but fail to be fully focused on their job and have a higher sickness rate than before.

Yet none of this is inevitable.

‘There such a huge link between mental health and money and if we support people to have that emergency fund, they’re more likely to bounce back from problems,’ explains Jo.

In The Long Term

Lack of financial support brings significant long-term impacts on an organisation too. Jo points out that retirement planning can be very poor amongst employees and one result is that many will be unable to retire when they want to. This will impact on culture, employee engagement, succession planning and talent management. The answer is to help employees save for retirement now so that they can leave when they choose to, rather than being forced into staying.

The savvy company will take a strategic approach to mitigate the risks that financial problems might bring to an organisation. Jo points out that employees often feel a great sense of gratitude when their employer supports them in improving their financial management in a way that is genuinely helpful to them.

‘Individuals want someone who will help them join up their work and their personal life – this is what we do. And if your employer is paying me to help you to plan your retirement or find support, you kind of see your future with that employer,’ she explains.

A report last year by the Working Group for HM Treasury and the Financial Conduct Authority showed 90% of employers recognise that financial concerns have an impact on workplace performance. With analysis by the Resolution Foundation showing that typical incomes stagnated in 2017-18 and annual income growth being expected to reach only 1.3% by 2022-23 – which is well below the pre-crisis average of over 2% – now is a good time for organisations to act. Helping employees to address their financial wellbeing is a win-win for organisations. They are supporting employees to make the most of their money and plan ahead and, at the same time, minimising HR headaches now and in the future.

To find out more about how The Wellbeing Project can help support your workforce’s financial wellbeing, go to:



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