Financial wellbeing is becoming a growing focus within businesses both big and small.
We know money worries are a leading cause of stress and can have a significant impact on our physical and mental health. More than two in three employees (67%) say it also affects their work.
Financial stress also hurts companies as it can lead to staff taking more sick days, poor workplace culture and problems with staff retention as staff look for higher-paying jobs.
Our Workplace Today guide explores the financial health of UK workers and the impact it has on individuals and businesses, alike.
As part of our research, we spoke to Professor Sir Cary Cooper, 50th anniversary professor of organisational psychology and health at Manchester Business School and a world-leading expert on wellbeing in the workplace, about what makes the ideal financial wellbeing strategy, why it’s more important to introduce one now than ever before, and his one piece of advice for HR managers. To watch the video interview, click here.
Q: When did companies start considering the importance of their employees’ financial wellbeing?
A: I’d say a couple of years before the pandemic. That’s when, all of a sudden, organisations started saying ‘our people are going to have trouble, or they are having trouble, we should help them with their finances.’
So now, [financial wellbeing] is going to be big time. It’s part of the wellbeing agenda. It’s going to be big because we’re entering a major recession with the cost of living crisis, cost of energy and inflation at unbelievable rates.
And the people are going to suffer. Everybody’s going to suffer, particularly younger people because they perhaps don’t have the experience that older people have of trying to manage their finances over the years.
Q: What has prompted the rise in financial wellbeing across UK workplaces?
A: The driver for a lot of the wellbeing thing was really talent retention. How do we keep young people, how do we attract and keep millennials and Gen Zs. I think that’s been the driver.
That’s talent retention; how do we retain, how do we recruit people? We want to be a good employer, we want a good quality of working life and that means looking after people.
Looking after people means if they want flexible working we allow it. It means if they are having financial difficulties we help them and support them on that.
This is a different type of recession we’re having now, it’s not a financial crisis, it’s a cost of living crisis, which is different. It’s not the banks that have collapsed; it’s people’s living standards that are collapsing and their ability to afford things.
But you know, it’s hard. And now with mortgage rates rising - because interest rates are going up massively - it’s not going to be easy. So quite a lot of people are going to need help in this period of time because how else will they cope?
If the SMEs (small/medium sized businesses) want to keep their staff they better do something to help them.
It’s the stress levels, the worry about ‘should I be getting another job’, all of that is what is causing problems on staff performance, on a whole load of things. So I think you’re [Claro Wellbeing] right in the right place in the market.
Q: What makes the ideal financial wellbeing strategy?
A: It needs to be one-to-one. I don’t care how you do it - online or videoing like we’re doing now. I think it has to be done that way rather than just online, if you know what I mean. You need to build a relationship with the client.
Q: How would a financial wellbeing programme help staff and businesses?
A: Reducing staff stress levels. You’re not going to get performance out of someone who’s worried all the time. And think about this, 57% of all long-term sickness absence in the UK economy is due to stress, anxiety and depression. It’s the leading cause of sickness absence in the UK economy.
Reduce the stress levels and you make staff feel less stressed, less worried - so they’re not the walking worried. What you’re doing then is not only increasing performance and productivity, you’re going to increase retention and you’re going to make the culture better. People will be happier at work. So job satisfaction levels will increase, stress will decrease and labour turnover will decrease.
Q: How are different sized companies approaching financial wellbeing?
A: The larger ones will have the infrastructure and see this as part of a wellbeing strategy.
The smaller ones might need to be convinced a bit more but they’ll see it now because they know what we’re going into.
They wouldn’t have seen this maybe three years ago but they’d see it now as a problem - because they want to retain their staff and they know they’re going to be in a bit of trouble. They also may know they cannot afford to give this person a wage increase and they want to be able to help them manage their money.
Q: One piece of advice for HR managers now?
The advice I give is, think about this strategically; how you manage people, what they need and give them the support they need. For example, part of this could be financial wellbeing, another part may be to work flexibly if that’s what they want to do. In other words, develop a strategy on wellbeing.
One part of it would definitely, in the current crisis we’re in now, have to be financial wellbeing. To help people cope. That’s from young people all the way up to the older people who are pre-retirement.
Q: What did you find most worrying about Claro Wellbeing’s research?
Young people are suffering a lot and people didn’t think they would be. They’re down the totem pole, they get paid less money, they’re going to have a lot of financial worries.
Maybe they won’t have a mortgage but they will have rent and that will be expensive down the line. And if they do have a mortgage then the cost of living will go up dramatically because interest rates are going to rise.
And the fact that people, nearly 50% of people have barely enough to live on at the end of the month. They have a month’s outgoings saved. That’s it. That’s a worry in a cost of living crisis that’s not going away. It sounds like a doom and gloom situation - but that’s why financial wellbeing will still be up there.