Affordable steps employers can take to increase financial wellbeing

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Article by Rebecca Dixon is Head of HR Consultancy at Progeny

‘In-work poverty’ is sadly a phrase we are increasingly hearing more frequently and refers to when an individual or family’s income from work is insufficient to meet their needs.

Soaring energy, food, housing and transport costs, expensive childcare and low pay can all trap people in poverty despite being in work. Whilst the annual increase to the national living wage that came into effect in April 2022 was the largest ever, the Institute of Public Policy and Research found that the chance of being pulled into poverty has doubled for households with two people in full-time work, which will only be compounded by inflation hitting a 40 year high.

This of course also impacts employers, with few able to automatically offer inflation-beating pay rises. However, there are many affordable steps that companies can take to help increase the money that ends up in employees’ pockets and break down barriers to maintaining a liveable income.

Recent research from Aegon UK shows that over 2.5 million private sector workers have taken time off in the last 12 months due to poor financial wellbeing at an overall cost to employers of approximately £2.5billion a year, or an average of £192 for each day lost due to financial distress.

Any investment that supports financial wellbeing and resilience should to be looked at against this backdrop therefore and can end up being cost-neutral, when offset by reduced absence and productivity and increased retention.

Flex your benefits

Employee benefit schemes help people’s incomes go further and there are plenty of steps that companies can take, without incurring significant costs.

Firstly, employers would be advised to conduct some internal research, to establish what benefits would be the most meaningful for their employees. Understanding where the pinch points are and which benefits would have the greatest impact is a great starting point and avoids investment in less valued areas.

Secondly, if your company already offers some form of benefits package, ensure that it’s sufficiently signposted so people know how to access what’s on offer.

Schemes that provide employees with access to discounts on products and services fall outside of the traditional definition of employer-provided benefits such as pensions, holiday and medical insurance, but can make a positive difference to employees’ outgoings. These can either be run via a third-party supplier, with a cost per person, or companies can look at operating this in-house, by negotiating directly with local retailers and businesses.

Salary sacrifice schemes have also grown in popularity as an efficient and cost-effective method of paying for employee benefits, with seven out of ten UK pension schemes using it as the default method of making contributions (Aon Benefits & Trends Survey). Childcare schemes, low emission car schemes and the Government’s Cycle to Work schemes are further examples, with tax and national insurance savings available. Interest-free loans for things such as travel season tickets are a further way that companies can help employees reduce large outgoings in the current climate.

Firms will need to understand the tax and reporting implications for all of these options of course, seeking professional advice where necessary.

Normalise money talk

Creating a safe place to talk about financial worries and wellbeing can also make a big difference to people’s lives. Wagestream’s new State of Financial Wellbeing 2022 research shows that the number of employees worrying every day about money has risen to 24% from 16% in one year, yet 68% of those with money worries said they would not tell their employer about their worries due to shame and embarrassment. An Employee Assistance Programme, offering services such as a confidential helpline and telephone counselling can typically cost as little as £5 to £15 per head per year, depending on what’s included, according to the UK Employee Assistance Professionals Association. Companies can also consider training mental health first aiders via an accredited course provider or simply providing in-house support and guidance for managers around identifying signs of workplace or financial stress.

The overarching aim is to create a culture that normalises talking about money and where employees feel confident to reach out to managers or HR personnel.

Offer financial education

There are a wealth of free resources, such as guidance platforms like Money Helper, that companies can signpost employees to, in addition to using internal communications channels to regularly discuss money issues and highlight support.

Employers can also consider providing financial education programmes – these can either draw on in-house resource or via an external provider and could target key moments in working lives –such as ahead of maternity leave, the purchase of a new home or preparing for retirement.

During the pandemic, many companies offered an additional day’s holiday packaged as a wellbeing day, so another idea is offering a financial wellbeing day, giving employees some dedicated time and support resources to review their finances and make positive changes.

Support in-work progression

Supporting in-work progression is key to helping employees maximise their earning potential. This can be via formal exams, learning and development programmes and measures to help boost confidence and ambition.

Professional examinations can often be expensive and companies paying exam fees, with the understanding that if the employee moves on within a certain time period this amount must be repaid, is common practice.

Embedding structured learning and development into the workplace is something that can be tailored to all budgets and there is plenty of free content via sites like YouTube or Business Balls, or pay-as-you learn courses via Udemy. ‘Share and learn’, where one team member is tasked with creating a learning session for their colleagues can be powerful in developing subject knowledge and mentoring and work shadowing also take advantage of a company’s existing experience and help expose employees to different roles and opportunities.

Summary

Whilst paying a liveable wage will always be at the heart of this issue, current conditions do make it challenging for businesses to keep pace. As we’ve outlined however, there’s a whole host of good employment practices that can help people maintain a liveable income.

About the author

As Head of HR Consultancy at Progeny, Rebecca manages the day-to-day operations of the HR team, to ensure clients receive the best possible service.

CIPD-qualified for over 20 years, she has a breadth of experience across a wide range of businesses operating in various sectors. Spending the first 15 years of her career working at a number of different businesses in internal HR roles, she then moved to offer advice and support on an outsourced basis to SMEs without their own in-house team.

Rebecca uses her extensive knowledge and expertise gained from both internal and external positions to find bespoke solutions for clients, offering a comprehensive HR consultancy service to managers and business owners. Her greatest strengths are attention to detail and focus on providing a high-quality professional experience for all clients.

Rebecca Dixon

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