Supporting employees' financial wellbeing, what can and should employers do?

Newsletter articles

20 Dec 2016

 HR Insight Issue 23

Catherine Rickard

Catherine Rickard, Senior Research Fellow

The need to support and protect the financial wellbeing of employees has grown in prominence in recent times, as sizeable groups of people are struggling with financial difficulties [1] driven by depressed wages [2], rising education and housing costs, and challenges in achieving adequate pension pots. There is a growing body of evidence that shows that poor employee financial wellbeing impacts on health in terms of poor psychological wellbeing, higher stress and anxiety levels [3], and lower levels of good health [4]. In turn, this affects productivity in terms of poorer job performance, short-term decisionmaking[5], reduced concentration, lower productivity and absenteeism [6].

Poor financial wellbeing can occur across all employee segments regardless of age, occupation or income level, and research shows that many employees are receptive to employer support and are interested in receiving guidance from their employers about financial issues. Some employers are wary of offering financial advice to their employees because of liability concerns and lack of understanding about when general forms of support become regulated advice, but there are many ways employers can provide support without legal exposure.

Throughout the year IES has been working with the Chartered Institute for Personnel and Development to develop resources for HR practitioners to help them support employees to make good decisions and improve their financial wellbeing. This will include evidence on the business case for supporting financial wellbeing, and practical guidance employers can use and adapt to create an effective approach to policy development and implementation.

To create the guidance, we drew on evidence gathered from the literature on financial wellbeing using insights from economics, individual/ organisational psychology, health and behavioural science literature and workshops conducted with experts in financial wellbeing. We have produced three reports which will be of interest to employers and HR professionals, but also to policy-makers, benefit advisers and providers, and money charities:

Employee financial wellbeing: why it’s important – introduces the concept of employee financial well-being and collates key information about the poor state of financial well-being in the UK working population.

Employee financial wellbeing: practical guidance – for practical advice on supporting employee financial wellbeing, including how to find out the type and scale of financial well-being 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 well-being.

These reports will be accessible via the IES and CIPD websites in the New Year.

[1] Fincap (2016), Financial Capability Survey, Financial Capability Strategy for the UK

[2] OECD (2015), OECD Economic Surveys, February 2015 Overview, OECD

[3] Neyber (2016), ‘The DNA of Financial WellbeingSummary Report 2016: NHS And Healthcare, Neyber

[4] Willis Towers Watson (2016), Global Benefit Attitudes Survey 2015/16, Willis Towers Watson

[5] Haushofer J, Fehr E (2014), ‘On the psychology of poverty’, Science, Vol. 344, pp. 862-867

[6] Neyber (2016), ‘The DNA of Financial Wellbeing’ Summary Report 2016: NHS And Healthcare, Neyber