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Why an employer needs to consider the financial wellbeing of their employees

By Angela Knox | Jan 11, 2021

Why an employer needs to consider the financial wellbeing of their employees

As an employer, it can be difficult to tick every box and keep employees happy and satisfied in their positions.

The satisfaction that employees feel in their roles is often overlooked, but it is an aspect which is of paramount importance, and financial considerations are key drivers of employee happiness.

The way decision-makers approach employee welfare and wellbeing can be a determining factor in the success of the company.

Without proper and careful consideration and constant review, employee morale can quickly plummet and productivity can suffer as a result of this.

Many employers fail to recognise their responsibility when it comes to the financial wellbeing of their employees. By taking this attitude, a company essentially shows a lack of consideration and appreciation for its workforce.

This can understandably have an impact on employee morale as a whole as well as the company image and employer brand; both are issues that can be easily avoided by addressing the facts that surround them and implementing changes.

What is meant by financial wellbeing?

It is important to recognise that financial wellbeing doesn't focus solely on what an employee earns.

For example, an individual on an annual salary of £18,000 may feel less concern surrounding their financial wellbeing than someone with an annual salary of £30,000. The individual on the higher salary may have more outgoing expenses than the one earning £18,000 P/A and therefore more strain on their disposable income.

Additionally, the higher earner may have less understanding of budgeting and managing their money, while the lower earner may have always managed their finances well.

This is why the financial wellbeing of all employees, regardless of their earnings, should be considered.

Financial wellbeing is the feeling of security around income and expenses, meaning employees feel that they can cover their expenses comfortably without worries. Additionally, it also means being able to manage the unexpected.

A Close Brothers report found that 42% of UK employees had lost sleep over worries about money.

This is a shocking figure and highlights the need for employers to take more action. Their studies also revealed that 35% of employers didn't agree that the responsibility of employee financial wellbeing should be shared between both the employee and their employer. This suggests that there is a need for further education surrounding the issue for both employees and employers.

The impact of ignoring employee financial wellbeing

Employers that choose not to take any responsibility for the financial wellbeing of their workforce are at risk.

Many employees who have money worries take time off work, and those that don't admit that their worries affect their performance.

The Money and Pensions Service (MAPS) estimate that 80% of those with money worries bring them to work, which in turn, impacts their performance.

However, concerns shouldn't simply be about performance, employers should also note the impact on a personal level for employees that do have these issues.

For employers that make a conscious effort to be accommodating of those with mental health issues, the impact of financial instability on mental health is substantial.

Research from Close Brothers found that 45% of 18-24-year-olds surveyed suffered mental health problems as a result of money worries. 

The need for change

Employers that ignore these problems not only face moral questions but also potentially financial obstacles for the company.

Making changes isn't difficult and it doesn't mean simply increasing salaries is the answer.

Although all employers should be paying their employees a fair salary for their contribution to the company, the issue is greater than this.

Financial management isn't a skill that comes naturally to most people, regardless of their earnings. In a world where living costs are rising, it can be easy to get caught off guard. Effective money management is a discipline that must be learned, and it's one that can have a positive impact on financial wellbeing overall.

Without the right resources and advice, personal financial management isn't easy.

MAPS understand the impact of not taking action when it comes to employee financial wellbeing. Their research highlights the need for businesses to recognise the impact their employees' money worries are having on their business.

In 2014, Barclays stated that firms were adding approximately 4% to payroll costs as a result of lower productivity relating to employee financial distress and absences that occurred for the same reason.

Integrating financial wellbeing into the workplace is critical to employers, which is why we have built a financial wellbeing module into our platform. Providing employees with the right resources to help them with their finances can result in both happier employees and employers. 

Angela Knox

Angela Knox

I am a co-founder and director of Keep Fit Eat Fit Wellbeing Ltd and have come from a business and marketing background over many years, with a particular interest in everything to do with health, fitness and overall wellbeing. Having worked in offices for decades, I know the pitfalls of too much sitting at a desk, the challenges of fitting the gym around other commitments, and all the issues addressed within our website. The personal experiences of me and my partner Mark were the original inspiration for the concept of this website. Enjoy!