“The Year of the Squeeze”
Unless you’ve been living under a rock for the past few months, the looming financial crisis dominating the headlines will not have escaped your notice. Many of us are already feeling the pinch as energy prices continue to rise, the weekly shop creeps up, and the inflation rate sits at its highest in 30 years. To add to this, interest rates have increased and UK credit card borrowing is at its highest since records began. This dramatic rise in the cost of living has led to 2022 being dubbed “The Year of the Squeeze”.
At T-Cup, our Community data is showing a distinct correlation between high stress levels and financial wellbeing.
The pandemic has already pushed many UK employees’ financial resilience to the limit with a perfect storm of reduced income, savings depletion and redundancies. Now we’re faced with a rise in the cost of living which will stretch many of us even further. Last month StepChange Debt Charity reported that millions of people expect to fall into a debt problem this year and 47% expect to use up their savings.
Staff may have concerns relating to mortgage repayments, debt or financially supporting dependants and these worries are understandably going to have an impact on stress levels and employee productivity. If there was ever a time for organisations to consider their role in helping employees take control of their finances and strengthen staff retention and engagement, then it is now.
The Money Taboo
For many, money is a touchy subject and because it’s such a taboo it can perpetuate ignorance leading to low levels of financial literacy which could result in money mismanagement and mistakes. What’s more, people tend to feel shame and embarrassment when they’re faced with financial difficulty meaning they are less likely to open up about their situation. This vicious cycle reinforces the taboo and cuts people off from crucial pathways that could help address the anxieties and pressures of financial struggles. Great strides have been made in recent years to eliminate the stigma surrounding mental health issues but it’s evident that we have a long way to go when it comes to talking about financial health.
According to recent research, 44% of employees would feel comfortable talking to their employer about their mental health but only 29% would feel comfortable talking about their financial wellbeing.
Encouraging employer/employee conversations around money is crucial in reducing stigma and could help establish the workplace as an important facilitator in improving financial health. T-Cup’s CheckUp solution is a completely anonymous process which asks employees to answer a series of questions about the issues affecting them without risk of exposure. CheckUp can create a snapshot of your organisation’s wellbeing through guided self-reflection in less than sixty seconds and critically, it can provide employers with honest data. A recent CheckUp undertaken by one of our clients highlighted Financial Wellbeing as a particular area of concern across multiple departments which prompted them to bring in a Financial Advisor who ran a series of workshops with the staff. Without clear processes to provide valuable insight into specific staff issues, organisations are simply shooting in the dark where wellbeing initiatives are concerned.
How can we help?
Whilst education is the key to ensuring good money management, there is little financial literacy education in schools and this is where employers have the power to plug the gap.
With more and more people experiencing financial stress, empowering a financially savvy workforce can help to reduce the adverse effects of money worries on productivity and workers are less likely to seek employment elsewhere which would add to recruitment and training costs.
According to Wagestream’s State of Financial Wellbeing research report based on surveys of 5000 UK employees and 600 senior HR leaders, the forms of financial support wanted the most were savings products, financial coaching and financial education. After pinpointing the areas which require attention, T-Cup has identified some approaches which organisations can take to improve their employee’s financial health and get the conversation started. We believe that wellbeing is the key to success and we are committed to sharing best practice initiatives to improve outcomes for the wider community.
One of our clients has committed to sending regular reminders to employees on policy changes affecting financial wellbeing and is packaging financial guidance/information within their existing health and wellbeing strategy.
Consult staff before looking to provide access to flexible and voluntary benefits. Employee consultation tools are key to getting the ball rolling here. T-Cup’s SpeakUp solution gives employees an anonymised voice, allowing them to rate the organisation and leave feedback.Organisations collect data on nine key areas of wellbeing and the tenth question can be configured to address specific issues such as which forms of financial wellbeing initiatives would be well received.
Offering clearly signposted third-party solutions is a good way to help alleviate the stress of direct HR involvement and allows employees to talk frankly about the pressures they are facing. We recommend the following external sources of free help and guidance: Step Change, The Money Advice Service, and Citizens Advice.
Waiting to be reimbursed by an employer can lead to unnecessary financial stress and budgeting issues. Since junior staff members are often responsible for running errands and making payments, it makes sense to ensure that they are protected from this financial burden.Some of our clients are using smart company cards to manage team expenses which are an excellent way to simplify this process.
Whilst this is still considered somewhat controversial it’s been gaining traction in recent years as more and more companies reveal salary ranges for each role. This can lead to a better sense of fairness amongst employees, eliminate unequal pay issues and encourage greater diversity in the workforce.
Recognising the importance of financial wellbeing in the context of a holistic wellbeing strategy is vital in fostering a culture of support and encouragement. Employers may also be feeling the pinch at a business level which could give cause to open up the dialogue surrounding financial health and break down communication barriers associated with money matters. Finally, HR teams who prioritise the creation of a financial wellbeing framework to mitigate the fallout of the impending financial crisis are more likely to shore up staff engagement and retention and facilitate a people-led culture.