The UK’s cost-of-living increase has hit the country hard, with inflation levels at a 30-year high. Consumers are paying more for essentials such as food, clothing and transport, leaving less money for recreational activities. Additionally, the recent energy price cap review has seen electricity and gas bills increase for most, an extra financial burden.
Workers across the country are being affected by price increases, with 37 per cent considering a job change in light of rising living costs, according to a survey by Totaljobs. Financial concerns and struggles may also cause significant stress in employees, affecting their performance at work. In fact, research by Aegon found workers’ poor financial well-being costs UK employers £1.56 billion annually due to ill health-related absenteeism and presenteeism. Consequently, it’s wise for employers to take steps to support affected employees. Consider these tips:
Money worries are often considered a taboo subject. However, financial stress can negatively affect mental well-being, which, in turn, may affect physical health. Therefore, it’s essential that employees feel able to discuss concerns. Employers should display an ‘open door policy’, encouraging staff to speak confidentially about problems. If employees feel uncomfortable talking to their employer, they can be directed to free, impartial support, such as the Money and Pensions Service.
Being open and honest should apply across the organisation, including those leading the company. Employees won’t appreciate being told there isn’t much in the pot for a pay rise if stakeholders are seen taking additional dividends. Alongside paying a fair and liveable wage, organisations should be transparent about their financial health so employees are properly informed.
One of the best ways for employers to support their workforce is to be flexible. Some employees may benefit from being allowed to work from home more, therefore saving on travel costs. Others may prefer to work from the office, saving money on home heating and utilities. As all employees’ finances will be impacted differently, organisations should offer flexibility and consider employee requests on a case-by-case basis.
Review the employee benefits scheme
Although employers can’t solve all money worries, they can help reduce certain employee costs by reviewing their current benefits scheme.
While under stress, it’s vital for employees to have easy access to medical appointments in case of ill health, so many schemes include medical and dental plans. Additionally, employers could consider including other benefits to bolster the support available, such as:
- Transport costs—With transport costs increasing, offering commuters an interest-free loan on annual travel tickets could be a lifesaver. Employers may wish to purchase an annual ticket for staff, deducting a monthly amount from wages until it’s paid for. Usually, an annual travel pass is hundreds of pounds cheaper than paying a daily rate. Further, employers could join and promote the government’s cycle to work scheme.
- Salary sacrifice—At its most basic, salary sacrifice entails employees giving up part of their salary for a non-cash benefit. This reduces the amount of tax and national insurance they have to pay. Salary sacrifice arrangements include car parking, home computers, gym memberships and personal learning.
- Discount vouchers—With disposable income lower than usual, employers could consider joining a staff discount scheme, giving employees reduced prices on shopping, holidays and days out.
Before tweaking any employee benefits scheme, organisations may profit from speaking to employees first-hand to see what they would benefit from most
Provide financial education
Among employers with health and well-being strategies, only 11 per cent actively focus on financial well-being, according to the Chartered Institute of Personnel and Development. This number is compared to 57 per cent who actively focus on mental well-being. But, poor financial well-being can lead to poor mental health. Therefore, as financial and mental well-being go hand-in-hand, now is the time to add financial education to a holistic well-being strategy.
There are many ways to include financial education, depending on the available budget. Small steps include directing staff to useful tools like financial calculators and budgeting templates. Alternatively, employers could utilise online courses, which cover topics as varied as budget making and keeping, managing debt, establishing an emergency fund and buying a home. In larger organisations, employers may consider engaging a financial adviser to run group sessions. If possible, investing in 1-2-1 sessions would allow struggling employees to receive bespoke financial advice.
It’s important for financial education to include advice for the long term, such as retirement planning. Often, people pick up financial information as and when they need it. However, this can create a tendency towards making emergency decisions rather than long-term financial plans. Financial education should include both short- and long-term measures.
Organisations risk an unengaged and distracted workforce if they are unable to help alleviate cost-of-living concerns. However, through taking steps to look after the financial well-being of employees, organisations can help staff bolster their financial resilience, both now and for the future. And, through being supported, employees are more likely to be motivated, productive and loyal.
For more information on employee benefits and well-being, contact us today on +44 (0) 3300 940177.
Read more on reducing your people risk with the right wellbeing strategy.