Financial stress is known to have an enormous effect on mental wellbeing, and can be both the cause and effect of mental health problems. Take note: if you think these problems in your team’s personal lives have nothing to do with you, you’re mistaken.
Research by Bensinger, DuPont & Associates revealed 47 per cent of employees report that problems in their personal lives can affect their work performance. More than 16 per cent reported personal challenges caused absenteeism, and nearly half struggled to concentrate.
So how can businesses focus on alleviating employees’ financial stress and support those whose mental wellbeing is being affected?
Create an open dialogue
Rob Briner, professor of organisational psychology at the University of Bath, states: “It’s important to remember that debt isn’t something the employee is doing, but instead a situation they have found themselves in.”
He suggests employers should offer advice on the actions employees can take to help resolve situations that lead to financial stress. This could include benefits education, debt counselling, advice on debt consolidation and open discussion in workshops. Offering staff the opportunity to follow up on a more personal basis in a one-to-one meeting, or even watch a webcast in private, is another way to normalise the subject and keep discussion going.
Financial stress can be very personal and employers need to take a sensitive approach for employees to feel they can open up. A workshop environment might not have the desired effect or take-up rate because there is not that level of privacy. It can be more effective to run general financial education workshops and seminars and then point employees to sources of information.
Businesses need to signpost the options available for those whose financial position is already impacting their mental health. This could be by an employee assistance programme (EAP), debt counselling or a workplace loan scheme.
Financially-focused employee benefits
Many companies offer financially-focused employee benefits, like Income Protection, Critical Illness and Life Insurance, which provide a financial safety net should a worker encounter the unexpected. These should be considered the foundations in financial benefits for employees.
Beyond this, some organisations meet diverse needs of today’s workforce by providing a tailored suite of benefits, enabling staff to take advantage of those that make sense for them.
For example, research from PricewaterhouseCooper’s 2016 Employee Financial Wellness Survey showed 64 per cent of millennials were laden with financial stress. To help support these rising financial concerns businesses could provide student loan repayment assistance as part of the benefits programme. Financial services company Fidelity already provides eligible employees a subsidy of $10,000 toward repayment of their student loans.
Another example of tailoring financial wellness initiatives could be supporting employees who want to become parents, beyond traditional parental leave. Facebook not only offers four months of paid leave to new parents but also gives them $4,000 in cash to help offset the costs of having a child.
Getting the balance right
Subsidised memberships, annual leave buy-back schemes and childcare vouchers can offer real-time financial assistance. Pairing these with benefits that provide long-term financial protection, like workplace savings schemes and life insurance, can offer a great balance to help employees financial security.
A study by the Social Market Foundation and Neyber discovered 48 per cent of workers are not putting money aside for anything beyond their regular bills and almost one-third have no savings or investments at all. A workplace savings plan, such as a corporate ISA, could be a solution to help employees build a savings safety net.
Employers can consider offering more than the minimum pension contributions and encourage staff to make additional contributions through matching payments. Individuals with robust pension savings are far less likely to suffer anxiety about their financial position in the future.
Fintech to the rescue
Developments in financial technology mean employees can start to access a variety of tools and apps to improve their financial position and quantify how much they’re likely to need for situations, such as retirement.
Some of these tools provide education on what specific actions can close savings gaps and have positive impacts on long-term savings. Hellowallet has created an app giving high-level recommendations on coverage types, amounts and how to build personalised spending plans, which helps individuals learn to spend less than they earn.
Business experts in the US are beginning to promote employer-sponsored savings accounts which let employees automatically divert a portion of their pay checks into easily accessible savings accounts to help build emergency funds – a trend which UK companies could also follow.
Prioritising financial wellness benefits both employers and employees. Companies supporting employees’ financial well-being demonstrate they care about their workforce in both a professional and personal capacity. Employees with better financial and emotional support will, in turn, feel more engaged with their workplace and free to excel without the distraction of financial pressures.
Liz Walker is HR director of Unum UK