Shelter from the storm

All employers want happy and healthy employees. 

We live in a time where families need to make tough decisions to pay their bills. Everyone is feeling the squeeze. It is now more important than ever to give employees that extra bit of support. 

Happy and healthy staff are more productive and engaged, which in turn, increases output and ultimately benefits the company bottom line. 

With such a strong link between financial wellbeing and mental health, we need to make sure that employees feel supported.  

Not all companies can offer a pay rise, but they can implement financial wellbeing policies. 

Staff might not always be upfront about their wellbeing, so ask yourself if employees might feel more stressed out than usual. More often than not, this stress will be linked to their financial situation. 

According to the CIPD’s autumn 2022 Labour Market Outlook 72% of the 2,000 employers surveyed expected their workers’ financial situation to have worsened by autumn 2023. Unsurprisingly, 51% of them said their senior managers had been discussing this risk more frequently. 

In addition, 42% of respondents were already worried about the financial wellbeing of their employees, a proportion that’s likely increased as the cost of living peaked towards the end of last year. For example, in December 2022, the annual growth in UK food prices hit 13.3%, according to the British Retail Consortium.  

At the same time, however, 65% of our employers reported that the jump in energy costs over the past year would have a negative impact on their finances, possibly limiting how much support they would be able to give to their staff in 2023. 

Among our respondents the most common ways they’ve been helping their staff with the cost-of-living crisis have been to increase wages (36%), introduce more flexible working (29%), communicating to people how the employee benefits package can help them with rising prices (23%), and highlighting sources of impartial financial information and guidance (23%). 

Looking ahead to 2023, 30% of employers said they had plans to lift wage rates, while 20% said that they would highlight financial information and guidance. Meanwhile, 18% intended to highlight how their benefits package could help employees with inflation. 

It makes sense for employers to help their staff with inflation because the proportion of the workforce with financial-related mental health issues is growing, negatively affecting their wellbeing and their job performance. Also, employees not only need, but expect financial wellbeing support from their employer. 

So what can employers do in practical terms to help their employees?  

To support HR professionals develop an effective policy for supporting employee financial wellbeing, the CIPD has revised its guidance. We’ve done this not just because of the cost-of-living crisis, but also because it’s likely that the UK will soon enter a recession, which some predict could be the worst in a generation. To develop an effective employee financial wellbeing policy, our guidance takes HR teams through a five-step process. 

Some tips from the first step, Building support and setting strategic direction, include creating support among your organisation’s key stakeholders, such as senior managers, customers, and investors of the need for a policy. It also involves creating a common understanding across the whole organisation of the various aspects of financial wellbeing. 

The next stage is Assessing and diagnosing. This includes assessing employee needs to identify which groups are experiencing financial distress and are at most risk or are in most need of support. It also requires engagement with staff and proactively identifying issues that may affect different groups, as well as collecting and using business and workplace data. 

The Action and design stage. Your actions will depend on numerous factors, such as the profile and needs of your workforce, the level of priority and resources available, and your existing approach to health and wellbeing. If necessary, rather than implementing whole workforce interventions, action can be taken to address the specific needs of just one work group, such as your lowest paid. 

The next stage is Implement and embed. Here you should have a robust implementation plan, developed at the outset of this stage as you embed your initiatives. Also, ensure senior leadership, line managers and employee representatives are actively engaged, capable and confident in supporting the strategy. 

The Evaluate and evolve stage includes assessing the effectiveness of your financial wellbeing activities to understand what’s working, what’s not and why, ensuring any investment is generating value and impact, ensuring staff want and value the support that’s in place, and building a robust case for continuing and extending the support. 

Inflation and recession will have a negative financial impact for many employees in 2023, with implications for the economy, society, and employers. The CIPD believes that all workplaces, regardless of their size and sector, should have a financial wellbeing policy in place that has three core elements: payment of a least a fair and liveable wage; support for in-work progression; and financial wellbeing support and education.