November 28 2022 | Simon Miller
November Highlight reel
This article is written by Simon Miller, who has over 20 years’ experience in financial journalism and is currently the Senior Financial Editor at nudge. US gives thanks for worsening data.
Enormous, evident and now exposed: poor financial wellbeing is the elephant in the room.
Introducing our latest report that looks at the changing perspectives of HR leaders and employees on financial wellbeing in the workplace.
The purpose of the report is to understand and address the damaging impact of poor financial wellbeing, worldwide. In doing so, we aim to help employers take action and put measures in place now to support employees through an incredibly stressful period of financial uncertainty, and hopefully beyond.
As the world crawls deeper into recession, many are experiencing more anxiety about money and businesses are feeling the knock-on effect – now it’s up to HR leaders and the c-suite to step-in. Four in 10 (41%) employers say that increased financial stress amongst employees has negatively impacted their business this year - almost three times the 15% who reported experiencing this challenge before 2020. And with eight in 10 (78%) concerned about the impact of this year's economic environment on employees' financial wellbeing, this problem is only set to grow to elephant-like proportions.
C-suite must see the elephant
Seven in 10 employers agree that employees' financial wellbeing has become more of a priority since COVID-19. But clearly more needs to be done, as two thirds (66%) of employees feel that their company provides little or no support for their financial wellbeing. In fact, only 8% feel like they can talk openly to their employer about money problems. Money worries, left unsaid, grow and weigh heavy on people’s minds, putting pressure on capacity and performance.
A lack of affirmative action from the top is hindering progress, to the detriment of business performance. While more than half (53%) of employers say that they would like to do more but don't know where to start, the majority (88%) believe their organisation`s board or upper management could better support them when it comes to promoting the financial wellbeing of their employees, primarily by providing HR with more autonomy to implement appropriate solutions (44%).
Jeremy Beament, our co-founder said: “This year’s events have had a huge impact on many aspects of people’s lives, including their financial wellbeing – and this is taking a toll on business performance and productivity.
There are powerful actions that employers can take right now to help employees feel more in control of their finances, from opening up the conversation about money within the workplace to helping them develop the right skills and knowledge.
Not only will this improve their general wellbeing, but it will also enable them to dedicate more time and attention to their job – boosting overall company performance. But these initiatives must be driven from the top. Leadership teams have a responsibility to empower every level of their business and ensure their teams feel supported as we navigate this uncertain period.”
Money worries hurt business
Half (53%) of the UK population worry about money at least once a week and almost one in five (18%) do so on a daily basis, financial stress is spilling into the workplace. 40% of employers say employees have lost concentration and made mistakes as a result of money worries, while 35% have noticed staff being unproductive at work. A quarter (26%) of employers believe that members of their team have called in sick due to money worries.
In fact, employers who report poor financial wellbeing amongst their teams are seven times more likely to have seen a drop in productivity this year, and eight times more likely to have seen a drop in performance, compared to those reporting good financial wellbeing.
A new level of urgency has emerged around this problem, as almost half (44%) of employers report a rise in mental health issues amongst their teams over the past six months. There is an undeniable link between financial wellbeing and mental health.
Susanne Jacobs, the founder of The Seven and expert in trust, psychological safety and intrinsic motivation, added:
“When we lack financial security, our brains switch us into threat mode. This diminishes our cognitive performance, increases our error rate and negatively impacts our wellbeing. All-consuming worry can play out in behaviours such as presenteeism, absenteeism, working longer hours and affected sleep and eating patterns.
With the pandemic amplifying financial concerns, employers need to act now and support their staff to avoid burnout. Practical tools that help employees improve their skills and knowledge and take better control of their money will pay dividends in health and performance.”
Money can’t buy you financial wellbeing - skills and knowledge can
When it comes to improving the financial wellbeing of employees, the good news is that businesses don’t have to boost financial rewards to do so. More people consider it to be important to have the skills and knowledge to manage their money (86%) and to feel in control of their finances (88%), when it comes to their financial wellbeing rather than earning as much as possible (65%) - with 88% suggesting they only need enough money to live comfortably.
Employers with a financial wellbeing solution in place believe it has a tangible impact on their business, with 43% stating that it helps with employee retention and makes employees happier. 37% suggested that it helps increase employee engagement and makes them look like a more responsible employer, while 34% said it makes employees more financially literate, which increases their effectiveness in their role.
It’s now no longer possible to ignore the elephant in the workplace. We say, expose the elephant and tackle poor financial wellbeing head-on. Our latest report will provide you with the evidence you need to drive real change. Download today and explore: