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.

The Wellbeing Project’s money coach Jo Thresher says that organisations failing to consider the financial wellbeing of their workforce are shoring up problems that could have serious consequences in the short, medium and long term. She says many have not thought ahead to the difficulties they may be creating by adopting a hands-off approach to the financial wellbeing of staff. The organisations that fail to take action could pay a hefty price.

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 their woes rather than focussing 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.

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 – except, 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 rate and when it comes, may be unable to cope financially because they have not planned for it. Jo explains that the uncertainty surrounding Brexit frequently brings the lack of planning into sharp focus because she is so often asked about the possible effects of leaving the EU.  Those who ask sometimes do so in trepidation because they have not planned ahead – they have a sense of worry and foreboding but take no action to protect themselves, often because they don’t know what to do.

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 help available for childcare. 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. For organisations, this means they could have a swathe of the workforce who are there under duress.

‘We going to have an ageing workforce, which is fine if they want to work. But it’s not fine if they’re only working for money – they don’t really want to work but have to because they didn’t save enough for retirement,’ says Jo. ‘Think about how that affects the rest of the workforce.’

It will impact on culture, employee engagement, succession planning and talent management. The answer is to mitigate such risks by helping employees to save for retirement now so that they can leave when they want, 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.

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.

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