The impact of poor employee financial wellbeing: why and how employers can help
11 Jan 2017
Poor employee financial wellbeing affects employee health and productivity, in terms of poorer overall job performance; loss of concentration; short-term decision-making; and absenteeism, according to three new reports authored by the Institute for Employment Studies (IES) on behalf of the Chartered Institute of Personnel and Development (CIPD).
As the reports demonstrate, there is plenty that employers can and should do to help.
Poor financial wellbeing can impact on employee health, including higher stress and anxiety levels and lower levels of good health. These reports outline how this poor health in turn affects employee productivity. They make a clear case for employers to take action and develop their employees’ financial wellbeing.
The reports not only show ‘why’ but also ‘how’ employers can support financial wellbeing. They offer guidance and tools to employers, policy-makers, HR practitioners and other key stakeholders on both the need to support employee financial wellbeing and on how to develop this capacity and help their employees in the workplace.
Financial wellbeing is a growing problem, driven by rising costs of pensions, housing and education, combined with increased longevity. Financial worries are a key cause of stress in the workplace and this new research illustrates how organisations can safely offer staff access and signposts to sources of help so that their employees make better financial choices.
Catherine Rickard, Senior Research Fellow at IES and lead-author of the report Employee financial well-being: practical guidance, said:
‘It is clear from the evidence that a tripartite approach is required in tackling the risks of financial wellbeing and filling the financial education gap. Employers cannot just leave it to government to solve, or assume it is the personal responsibility of employees to address on their own. There is also an ethical argument that we should take action in this area because it is the right thing to do.’
Duncan Brown, Head of HR Consultancy at IES, commented:
‘With the removal of defined-benefit pension plans and the spread of flexible benefits, many employers have left their employees to fend for themselves in terms of their financial security and wellbeing. Insecurity, stress and lack of understanding and appreciation of their total rewards package are common results. Yet as our tools and case examples show, there can be many benefits to them in terms of higher employee engagement and performance from providing their employees with more help and support in this area.’
Notes to editor
For interviews or further information, please contact Mark Jack: 01273 763 435 or firstname.lastname@example.org
Catherine Rickard, Senior Research Fellow at IES, is available for interview and comment.
The reports are informed by a literature review on financial wellbeing which aimed to bring together the wide breadth of academic and policy work in the area, and workshops which were conducted with HR practitioners, policy-makers and behavioural science experts.
The three reports are available to download for free from the CIPD website: https://www.cipd.co.uk/knowledge/culture/well-being/employee-financial-well-being
Employee financial well-being: why it’s important – introduces the concept of employee financial wellbeing and collates key information about the poor state of financial wellbeing in the UK working population.
Employee financial well-being: practical guidance – for practical advice on supporting employee financial wellbeing, including how to find out the type and scale of financial wellbeing problems in an organisation; building the business case to gain support from managers and colleagues to take action; possible action areas, tailored by common organisational contexts, needs and priorities; and how to measure and evaluate whether actions are making a difference.
Employee financial well-being: behavioural insights – for advice drawn from behavioural insights on how to engage with different sections of the workforce concerning financial wellbeing.
The Institute for Employment Studies
The Institute for Employment Studies is the UK’s leading independent, not-for-profit centre for research and evidence-based consultancy on employment, the labour market, and HR policy and practice.
IES tweets from @EmploymtStudies