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Piggy bank being held by people

Why is financial wellbeing growing and what are employers doing?

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19th Jul 2017
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Jamie Lawrence, Editor, HRZone: Why are so many organisations focusing on financial wellbeing now? What's the imperative?

Tom O'Byrne, CEO, Great Place to Work: There are a number of factors driving it – social, economic, political, cultural.

For example, many younger people coming into the workforce have little financial education or experience around things like budgeting, interest rates, etc. and find themselves having to cope with paying rent and bills, etc. And of course some parts of the country are very expensive to live in so that has an impact on recruitment and retention, so if employers can support people more directly through schemes such as loans for buying a home, that benefits them.

It also ties in with the recognition that employees often want more flexible ways of being rewarded so rather than just an increase in salary employers often provide that financial benefit in other, more practical and direct ways such as private health or loans to support key life events such as getting married or starting a family.

Financial pressures such as living independently for the first time can drive some people to debt which then affects their mental wellbeing which can escalate and become serious, so again this is something that responsible employers are increasingly recognising and wanting to provide support for.

And of course pensions is another factor – what with younger people having to work longer, and no way of knowing what kind of state pension they’ll get – if any – and what kind of money they need to put away to provide a decent standard of living in the future makes financial knowledge even more critical.

Financial pressures such as living independently for the first time can drive some people to debt which then affects their mental wellbeing

Planning is important but of course long-term planning and making sacrifices today for tomorrow competes with the culture of wanting everything now, so many employers are increasingly building financial awareness and education, and practical financial support, into their wellbeing programmes.

And of course wellbeing is a key driver of engagement which also drives productivity, so anything that helps reduce stress and improve employees’ wellbeing is going to benefit the business in the long term.  

Jamie Lawrence, Editor, HRZone: What are the entry points into financial wellbeing for organisations?

Tom O'Byrne, CEO, Great Place to Work: Employers often start off by offering fairly standard financial support such as a basic pension which then grows in response to feedback, need, competitive pressures or legislation. Feedback, either directly or through surveys, can often indicate that a one-size-fits all approach may not be the best way so the next stage is to provide a range of financial benefits to meet the differing needs of employees and which may also offer choices.

For example, take up of a particular benefit such as private health may be low – this could be through lack of awareness or an employee preferring a different kind of financial benefit such as help in buying a home. Financial advice might initially be provided generally to all staff, but the next phase may be to offer one-to-one, tailored financial advice. One communications agency has a monthly financial clinic which is so popular their advisors have a queue of people at the door.

Changes in legislation can also prompt an escalation in what employers provide – for example one major IT company has introduced a corporate ISA for employees who are over the Lifetime Allowance.

They are also planning on responding to tax changes for the Annual Allowance and plan to extend the ISA to employees who would be at a disadvantage tax-wise because of changes in pension legislation.

The more innovative organisations are constantly monitoring changes in legislation such as pensions and savings, looking at how they might respond and then building them into their programmes.

Pensions provide another opportunity to escalate what employers provide; with so many far-reaching changes in legislation many employers are providing educational and awareness opportunities to make sure employees know about and understand the proposed changes, how they may affect them and of course how the company is or can support them.

Jamie Lawrence, Editor, HRZone: What are the more innovative organisations doing with regard to financial wellbeing now?

Tom O'Byrne, CEO, Great Place to Work: The more innovative organisations are recognising that there are really no areas of an employee’s life that cannot be supported through financial wellbeing – birth, marriage, death, divorce, debt – all can and are being supported by caring employers, recognising that financial wellness is just as important as physical and mental and something they should take some responsibility for.

It is a growing area and needs to be incorporated into their overall wellbeing strategies. So whether it’s advice about budgeting, buying a cheap holiday, writing a will, divorce or PPI, many companies have it covered.

The more innovative organisations are constantly monitoring changes in legislation such as pensions and savings, looking at how they might respond and then building them into their programmes.

The range of innovative initiatives we see include offering loans at low or zero rates to discourage people from resorting to high-cost, payday style loans, a route many people turn to in times of desperation and hardship which can end up exacerbating the problem.

Some employers give management the opportunity to take up training so that they can provide professional financial advice to employees.

One major high street retailer has added an additional innovative layer to their loan scheme: part of the monthly repayment is used to create a savings account so as well as being a cheaper loan, it provides savings at the end of the loan period.

Share option schemes are becoming increasingly popular, giving employees a greater stake in the business and a share in its success.

As well as bringing in third parties to provide financial advice and products, some employers give management the opportunity to take up training so that they can provide professional financial advice to employees.

Jamie Lawrence, Editor, HRZone: How do best-performing organisations engage staff with financial wellbeing initiatives?

Tom O'Byrne, CEO, Great Place to Work: Communication, communication and communication - both top down and bottom up.

The key is to understand what employees want, how they perceive the current offering and what the gaps are. It’s important also to constantly monitor, ask for feedback, check that what is being provided still meets employees’ needs, and that employees know what’s on offer, how it benefits them, how it works, where to go for help or find out more, etc.

Employees’ views can be gathered formally through general or specific surveys, focus groups, workshops, etc.

It should be a continuous, virtuous cycle of ask, assess, take action, then ask, assess again and keep taking action.

Communication before, during and after implemenation of any initiative is also critical, firstly telling employees in advance about what’s coming up and always making sure that a variety of communication channels are used depending on the size of the organisation and the nature of the initiative – e.g. staff meetings, ‘town halls’, intranets, newsletters, social media, pod/video casts, workshops or roadshows for large organisations with multi sites.

Post-launch, check that the information has landed as intended, following up responses, proactively seeking feedback and ensuring that the initiative is built into the organisation’s training and communication points – e.g. intranets, induction packs  - so that all employees are fully aware of it, and consider when to run refreshers to ensure the initiative does not go stale or disappears under the radar.

It should be a continuous, virtuous cycle of ask, assess, take action, then ask, assess again and keep taking action.

It goes without saying how important it is to act on employee feedback where possible – of course when it comes to financial support not everything is or can be acted on – but if it’s not, it’s important to let employees know, and why. It’s also important to remember the sensitive nature of some of the information that employees may be sharing with them, and a trusting environment will certainly help ensure this is handled with due care and consideration.

This will encourage greater involvement by employees and help reinforce the culture of trust in the organisation.

Best workplaces will also continue to recognise employees’ lives outside work such as birth, marriage, death, buying and moving homes, looking after elderly parents, getting into debt.

Alternatively, building a partnership with an independent and well-known financial advisor is one way of ensuring complete anonymity and confidence which may otherwise deter some employees from seeking the advice or help they need.

Jamie Lawrence, Editor, HRZone: What's next for financial wellbeing? How will the best workplaces continue to innovate?

Tom O'Byrne, CEO, Great Place to Work: We think we’ll see the best employers continue to support an increasing part of their employees’ financial lives – not just practical solutions such as pensions, loans, etc. but education on their options so they are more informed and better able to manage their financial lives themselves – e.g. we’re seeing a lot more around things like will writing and retirement planning.

Technology will continue to be a great enabler – for example, the increasing use of HR data to help employers understand at a more granular level the impact their various initiatives are having; it can even help predict what the outcome would be if they invested xxx in a particular initative or reduced investment in another.

And we’ll see more tailoring of financial support to match employees’ needs and life stages – e.g. advice on student loans for younger employees, and pension plannng for older employees.

Best workplaces will also continue to recognise employees’ lives outside work such as birth, marriage, death, buying and moving homes, looking after elderly parents, getting into debt.

All these affect an employee’s health and mental wellbeing and impacts on sickness levels, productivity - sometimes even the morale of colleagues around them. If employers can support employees through these times, the business is likely to benefit.

Take up of a particular benefit such as private health may be low – this could be through lack of awareness or an employee preferring a different kind of financial benefit such as help in buying a home.

Yes there is often a cost and you might say why should employers step in if an employee gets into financial difficulties, or be responsible for their financial wellbeing, but we know of many instances where employers have given specific support to an employee at a difficult time in their life, and have been rewarded with loyalty and increased engagement, so there is often ultimately a benefit – a financial benefit – for the employer.

There was one instance when an employee lost everything in a house fire and the organisation rallied round to support them financially.

This obviously had a tremendous impact emotionally on the employee who was overwhelmed by the organisation’s care and generosity which helped them focus on the practicalities they had to deal with.

With the increase in the more negative aspects of life such as debt and divorce, support such as hardship loans and debt resolution services have become more common over the last 12 months or so.

But not all initiatives have a cost. Many of the schemes we see are self-financing so they don’t acutally cost the business anything but provide a valuable service to employees and to some extent society in general as employers are increasingly filling an educational gap left by schools or families.

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