At this moment in time, employees find themselves amid a crippling cost-of-living crisis that has caused the greatest decline in living standards for over 50 years. With inflation hitting double figures (10.1%) again in September, energy bills remaining at an elevated level and interest rates rising rapidly, such a gloomy economic climate will be harming the financial wellbeing of many workforces across the country.
Mintago’s most recent research found that employees have raised more concerns about their finances than usual this year, according to 66% of 762 managers in UK businesses.
Evidently, employers need to respond because negative financial wellbeing can lead to higher stress levels and ill-health. With 36% of millennials saying that their job performance is negatively affected by financial stress, failure to provide adequate support could harm their workforce and businesses.
As such, to maintain a healthy and productive workforce, it’s clear that employers need to provide their employees with the support they need to navigate the turbulent economic climate and maintain their financial wellbeing.
However, financial wellbeing support cannot be treated as a box-ticking exercise. To actually make a difference to an employee’s financial wellbeing, employers have to offer personalised and flexible support that matches the needs of the individual because what works for one employee might not work for another. Therefore, employers need to refrain from a one size fits all approach – but how?
First, employers must avoid assumptions about their employees’ financial wellbeing. Indeed, many people’s life choices and ambitions correlate with age, but this is not always the case, so employers can’t provide support based on rudimentary ‘life stages’. For example, a well-paid employee in their 50s might suffer an unforeseen financial setback, whilst an employee in their 20s might be financially better off than would normally be assumed. As such, the support that each employee would need might differ from similarly aged employees within the business. Therefore, support must be based on individual circumstances rather than broad brush assumptions.
With this in mind, to begin building an effective financial wellbeing support strategy, employers must first understand each employee’s unique needs and situations. Thus, employers could consider asking their employees to have one-on-one meetings with their HR manager to gain a more detailed insight into their staff’s financial lives.
Research shows that just talking about one’s finances can alleviate a significant amount of financial stress. Indeed, such conversations can be daunting, so it is vitally important that employers break the money taboo and normalise conversations about one’s financial health in the workplace. Alternatively, if some staff members are too uncomfortable to discuss their financial situation with their colleagues, employers could ask them to take an anonymous online quiz to determine which aspects of their financial lives need the most support.
By determining their employees’ unique needs, goals and situations, employers will be better placed to funnel their staff into the support systems that are most relevant to them. For example, if an employee is buying a house, they could receive educational materials about managing their mortgage repayments.
Without determining their individual situations, some employees struggling to meet this month’s rent, for example, might receive support about saving for retirement, which could seem irrelevant; this would likely cause further stress. Therefore, employees will feel supported to a greater extent by ensuring that the financial wellbeing support available to them meets their immediate needs. This should increase engagement with the support strategy and improve the workforce’s financial wellbeing.
Improving financial education
Similarly, these one-on-one meetings or online quizzes could reveal some knowledge and financial literacy gaps within the workforce. At many schools in the UK, financial education is not a priority, so employers need to step in to ensure that their staff have the knowledge they need to take control of their finances and navigate the cost-of-living crisis.
Again, by determining any individual gaps in knowledge – whether it be about pensions or debt – employers can provide their employees with educational materials that will allow them to better understand their financial situation themselves. With such knowledge in mind, they’ll be able to make better-informed decisions about their money, which should translate to improved financial wellbeing.
Online wellbeing platforms can help
To encourage staff to take control of their finances further, employers need to provide their employees with as many tools as possible to take control of their finances, keep track of their short-term obligations and plan for the future. With this in mind, they could consider implementing a financial wellbeing platform in their business, such as Mintago.
These platforms offer employees access to educational materials, savings benefits and pension tracking services, which could significantly improve their financial wellbeing.
Similarly, if employees can access a dashboard that allows them to see their savings and investments in one place, they can get a much clearer picture of their financial lives. Consequently, employees can confidently make decisions about their money when short-term challenges with long-term effects (like the cost-of-living crisis) arise since they will have a better understanding of their financial situation.
Indeed, these platforms can also connect employees with financial advisers and coaches to discuss the different issues they’re facing in their financial lives. The opportunity to build a personal relationship with a trusted expert about challenges they can’t meet alone would be invaluable to an employee. Providing such resources would also help to personalise the support on offer for employees because they’d be able to discuss more specific issues in their financial lives than they might otherwise be able to with a one size fits all approach.
To briefly conclude, when the economic landscape is as difficult to navigate as it currently is, employers must do everything they can to ensure that their staff remain financially well. Indeed, employers who can personalise their financial wellbeing support will achieve this more successfully than most others.
By Chieu Cao, CEO of Mintago, an inclusive and unbiased financial wellbeing solution helping businesses adapt and support their employees in these changing economic conditions.