With some staff understandably anxious about money, many businesses are feeling the knock-on effect as the recession hits – and it’s up to the c-suite to save them.
Four in 10 employers surveyed 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 concerned about the impact of this year’s economic environment on employees’ financial wellbeing, this problem is only set to grow.
That’s according to new research from financial wellbeing platform nudge, which is urging businesses to open up the conversation about money and help staff upskill and take control of their finances, to alleviate additional workplace stress and reduce business disruption.
Seven in 10 employers agree that employees’ financial wellbeing has become more of a priority to them since Covid-19. But more clearly needs to be done, as two thirds of employees surveyed feel that their company provides little or no support for their financial wellbeing. In fact, only 7% feel like they can talk openly to their employer about money problems.
A lack of commitment from the top may be hindering progress, to the detriment of business performance. While more than half of employers agree that they would like to do more but don’t know where to start, the majority believe their organisation`s board or upper management could better support them when it comes to promoting the financial wellbeing of their employees, within that by providing HR with more autonomy to implement appropriate solutions.
And with 75% of those surveyed agreeing they feel comfortable talking about an employee’s financial situation and wellbeing, businesses would also benefit from leadership teams promoting a more open culture that encourages people to communicate about money worries (42%) and leading by example by talking openly about money themselves.
Jeremy Beament, co-founder of nudge commented: “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, it will 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.”
With half of the UK’s workers surveyed worrying about money at least once a week and almost one in five (18%) doing so on a daily basis, financial stress is having a tangible impact on 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 of employers report a parallel rise in mental health issues amongst their teams over the past six months. With financial wellbeing closely linked to mental health – 25% of employees claim their mental health has suffered as a result of money worries – it’s important for employers to dial up support in this area now.
Susanne Jacobs, 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 a second epidemic of 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.”
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 employees consider it to be important to have the skills and knowledge to manage their money and to feel in control of their finances, when it comes to their financial wellbeing rather than earning as much as possible – with 87% 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. 33% agree that it increases employee productivity.