The November 2017 UK budget promised a rise of 4.4 per cent in the National Living Wage to ?7.83 per hour from April 2018. Yet, millions of households will continue to face financial pressures in 2018.
Money worries are in the top three causes of stress, according to research from the CIPD, which identified financial pressures (22 per cent), the nature of their job, such as concern of working hours (22 per cent), and family and relationship issues (20 per cent) as the three major factors causing stress.
Clearly, social, financial and environmental factors all have an impact on health and wellbeing, but financial pressures are significant, costing UK organisations around £120.7bn every year.
Financial pressures not just for low paid
Financial pressures are probably more of a distraction from work than many employers give it credit for, and it does not only affect those on the lowest wages. In fact, one in five employees on salaries ranging from £40,000 to ?60,000 have money worries.
A pay rise is not necessarily the answer; research shows that salary increases do not increase engagement.
Part of the problem can be that employees are not managing their income effectively. As their income rises, lifestyle inflation the bigger house, the nicer car soon takes care of any increase in income.
Businesses can support employees in getting a better understanding of budgeting to maximise their income and reduce the impact of financial pressures on their working lives. Many people are starting to use consumer banking apps such as OnTrees and Cleo to help track spending and motivate themselves to improve their spending patterns.
Early in the New Year, as employees recover from Christmas holiday spending, the time is right for businesses to tap into employee desire for financial wellbeing.
There are five easy steps SMEs can take to help employee salaries go just that little bit further
(1) Consider hiring a financial adviser to come in for a couple of days and meet employees one-to-one or carry out presentations, with the aim of helping employees get full visibility of and a better grip on their monthly outgoings.
(2) Offer performance-related pay, which can be entirely cost neutral. As the business grows, introduce performance-related incentives to grow the business further. This need not necessarily be restricted to sales teams: performance-related incentives might also recognise customer service or customer retention achievement.
(3) Centralise benefits such as salary sacrifice and discount schemes on a single portal to make it easier for employees to stretch their salaries further. Salary sacrifice schemes offer tax and national insurance savings, for both employees and employers, while discounts on everyday shopping and the annual holiday can soon amount to hundreds of pounds a year.
Discount schemes can also help employees with budgeting, as they decide how much money to preload on to a card to gain the discount on their monthly supermarket shop, and how much to preload on to another card to spend on the high street, for example.
(4) Communicate salary and benefits clearly to employees. Bigger businesses commonly send out total reward statements once a year so that employees can see the full value of their remuneration package, incorporating salary and benefits such as pension contribution matching and company car.
That might also include the ancillary benefits they have received from childcare vouchers, the bike to work scheme and any discount schemes on offer. It is vital to ensure that employees are fully aware of the total value of the benefits on offer to them and it is a good idea to communicate that to them more than once a year.
It is a particularly good idea to remind employees more regularly about benefits such as employee assistance helplines that may be available to them in case of health or financial stress.
(5) Tailor your benefit schemes closely to individuals for maximum effectiveness. In a smaller workforce, you will know which employee has just had a baby and might welcome childcare support with childcare costs. You will be aware that a group of employees enjoy cycling and you could offer them a cycle to work scheme.
It is important not to make any sweeping assumptions and offer people a choice of the discounts and benefits available. Small businesses are in a good position to drive a high uptake of benefit schemes and see the results in terms of greater engagement, higher productivity and better rates of retention leading to reduced recruitment costs.
SME employee benefits schemes
Benefit schemes may be associated with big businesses but in fact they are not out of the reach of small and medium-size businesses and may be entirely cost neutral.
There is a wide range of service providers offering off-the-shelf, templated employee benefits systems, providing big business benefits for an SME budget. Prices vary massively, so it is a good idea to shop around.
Templated systems do not offer a fully branded employee benefits platform, but for smaller businesses that is not an issue. Because of the smaller size of the employee base, SMEs can do so much more to bring to life benefit schemes and personalise both the communications and the benefits on offer to individual employees.
Wellbeing is a real and growing issue in business. SMEs can make a real difference when it comes to helping employees tackle financial pressures alongside addressing mental and physical wellbeing, while at the same time creating a robust workforce that will support the growth and success of the business.
Adam Whatling is global engagement and technology lead at Love2shop Business Services, the corporate division of Park Group
CFO Research and Prudential Financial have found that FDs view the financial wellbeing of staff as an important component of corporate performance.