By Charles Cotton, CIPD Senior Adviser for Performance and Reward
The 13th of November marks the start of Financial Capability Week, the purpose of which is to celebrate, showcase and amplify existing financial capability initiatives and ultimately improve financial well-being.
To mark this, the CIPD has polled HR professionals to ask if employee financial well-being is part of their organisation’s people management strategy. Among the 313 who have responded, most (64%) say that it is not. By comparison, just a fifth 20% say that it is part of their people strategy, with a further 8% saying that there are plans to incorporate it.
Why do so many report that employee financial wellness is not part of their people management strategy? One explanation is that in some organisations, there is probably no formal HR strategy to which employee financial well-being can be aligned. However, I believe that the most likely explanation is that while there is a people strategy, employee financial well-being is not part of it. In many cases this may be due to the concept of employee wellness being relatively new and a lack of awareness about the important place it holds in a wider people management strategy.
Also, despite an understanding of the importance of bringing your whole self to work and getting a good balance between work and life, the focus of many organisation’s well-being initiatives remains only focused on an employee’s ‘working life’, rather than life out of the office. The fact that employee financial well-being helps to tackle both elements in a holistic way, recognising that money worries can have an impact on an employee’s mental health, may explain why it is sometimes omitted, as employers may not see it as their responsibility.
Employers need to take note of the impact that poor financial well-being can have on the productivity, engagement and health of their employees, and take action. For example, research by the CIPD and Close Brothers has found that one if four employees reported that money worries had impacted on their ability to do their job, so employers should take note. This is an overall figure, and for younger staff and those living and working in London the proportions are even higher.
Further research carried out on our behalf by IES reveals evidence of a link between poor employee financial well-being and employee health in terms of higher stress and anxiety levels and lower levels of good health. They also find that this impacts on employee productivity through absenteeism, poorer job performance and narrower decision making.
The IES study also suggests that employee financial well-being could get worse if we don’t see concerted action. If we are to avoid a bleak future, then all parties need to get involved, namely the Government, the financial service industry, employees and employees.
Our report highlights a number of things that all those involved can do to improve financial well-being levels. However, focusing on what HR can do, we have produced a guide to help people professionals design and deliver a financial well-being programme, informed from insights from behavioural science.
The four main steps to create a well-being model are:1. Find out the type and scale of financial well-being problems in your organisation2. Build a business case to gain support from managers and colleagues to take action3. Identify action areas, tailored by common organisational contexts, needs and priorities4. Measure and evaluate whether your actions are making a difference
As our research shows, poor financial well-being is a clear and present danger for employees, employers, the economy and society, and it may only get worse unless we take action. However, the potential opportunities from improved financial well-being are significant and HR has a key role to play in ensuring that their employers are able to build on this improvement through higher engagement, creativity and productivity.
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