Hello PPMA Members
Our guest blog post has been written by our excellent new sponsors Salary Finance. They partner with employers to provide financial products and services that help employees lead a happier, healthier financial life. Below they share how to assess and ensure the financial fitness of your employees and how they can help to implement a financial benefits scheme.
Financial wellbeing: it doesn’t need to be painful
The last 18 months have been tough to navigate for most people, with new challenges and unwelcome changes causing widespread uncertainty for working people. The disruption caused by the pandemic has forced UK businesses into a watershed moment, bringing a new understanding of workplace culture and its impact on employee wellbeing.
Whether employers had to move all their staff to remote working or change the physical working environment to protect them, the impact of Covid-19 has given a new understanding of the pressures they may be under.
Zoom and Teams calls showed employee’s real lives and helped employers see the juggling they may have to do with their family life and households. But as their employer, how much do you really know about their lives and the stress they may experience as a result of the pandemic?
The worst off are getting worse
The most obvious fact is that the pandemic has hit those worst-off the hardest. Covid-19 has inevitably affected those who had poor financial wellbeing before the crisis, as they have built less resilience to deal with sudden changes.
A recent CIPD survey showed that more than half of the employee population felt that the pandemic has had a negative (or very negative) effect on their finances across all industries.
Although you may not have had to furlough your staff, a massive nine million people were part of the government-assisted scheme in the UK for the majority of 2020. Those whose incomes were reduced may have struggled to cope financially or become worse off over time. A reduction in income for any household member can put a great strain on the financial wellbeing of others. So, even if your employee is still secure and in a fully paid role, their family life will more than likely have been impacted by the lockdown measures, and their own income could now be stretched.
It’s important to remember that an employee’s financial wellbeing is not always determined by their income but more so by their attitude, habits, and behaviours. In contrast to popular opinion, employees in high-level, well-paid positions are equally as susceptible to low financial wellbeing. Our report, The Employer’s Guide to Financial Wellbeing 2020-21, shows that those that earn between £10-30k per annum have almost the same level of financial worries as those earning over £90k per annum (27% vs 24%).
Assessing ‘financial fitness’
The impact of Covid-19 is likely to be more significant on those with lower financial fitness, as they have less resilience to deal with sudden changes. Employers need to consider all the factors that could influence someone to suffer from increased anxiety during a time of crisis and factor them into a wellbeing programme.
That’s where we can help.
In 2018 we came up with the concept of the Financial Fitness Score, based on a set of behavioural questions related to spending, saving and borrowing habits. From these questions, we derived five Financial Fitness Scores ranging from one to five: the higher someone’s Financial Fitness Score, the greater their financial wellbeing.
We know that most employees fall into either having low levels of financial fitness (Copers) or having a higher level of financial fitness (Planners).
- Copers have a ‘spend first, save what’s left over’ attitude.
- Planners are naturally inclined to save first and spend what is left over.
Once you have assessed and understand the needs of the Copers and Planners in your business, you can build a package of financial benefits that can have a meaningful impact on their daily lives.
Implementing a financial benefits scheme
With the ‘pandemic effect’, employees are more focused than ever on managing their finances, making it the perfect time for employers to better support their employees’ financial health. Having a financial wellbeing strategy is a clear signal of your intent as an employer and allows your staff to take control and improve their own finances.
Yet, despite the financial hardship created by the pandemic, half of UK employers (49%) don’t have a financial wellbeing policy, according to the CIPD study. Considering that many financial wellbeing benefits are implemented at zero cost to the employer, this statistic seems like madness.
An employer can be put off because launching a new benefit can be complicated and can take a long time, but the truth is it doesn’t need to be that way.
At salary finance, we partner with employers to help their people take control of their money, rather than have it control them. Our growing portfolio of benefits includes payroll-linked savings, loans, salary advances, protection insurance and financial education, with most implementations taking only 6 weeks from start to finish.
Given the gains you can experience, both in the improvement you can bring for employee mental health and subsequently the impact on their performance, 6 weeks isn’t a lot to give up!
It can be done
With Covid-19 bringing so many pressures for hardworking UK employees, we have been busy throughout the past 18 months helping employers to implement new or extend existing programmes to meet their changing needs.
For example, Essex County Council launched Salary Finance borrow and learn products for staff last year and since launch we have saved employees over £130K as they have started to shift high-cost debt and begin their debt to savings journeys. Dr Sabrina Robinson, their Wellbeing Lead said:
‘We launched Salary Finance during the Covid-19 pandemic. Despite the challenges that the pandemic posed for us as a project team, and internally, we knew that mental health issues often stem from money worries, and we wanted to be able to address the root cause and support our colleagues. Despite resource constraints and the usual challenges, we were able to get this launched in a couple of months, and so far, we’ve seen good engagement and really positive feedback from our people.”
Need help getting started?
If you’re ready to talk through how to create an effective, holistic programme that works for your people, our dedicated team can help you identify the best financial benefits for your business.
Luke is also a collaborative partner of the #letsimproveworkplacewellbeing initiative where he focuses on financial wellbeing alongside representatives from StepChange, Money and Pensions Service and others. This includes an impartial series of webinars discussing all aspects of financial wellbeing in the workplace from pay and benefits, to lending, to guidance and debt advice. The initiative has a growing number of councils signed up and brings together the best of public and private sectors to learn from one another. You can find out more here.