With workers across all salary bands relying on high cost credit at a cost to business productivity, James Herbert, CEO and co-founder of Hastee Pay,
With workers across all salary bands relying on high cost credit at a cost to business productivity, James Herbert, CEO and co-founder of Hastee Pay, outlines how financial wellbeing can become part of your company culture
Do you know how many of your workers are struggling with debt? The signs might be difficult to recognise but research has revealed a direct link between financial stress and workplace performance. When your workers are struggling financially your business may begin to suffer.
The Future of Pay 2018 report by Hastee Pay reveals 78 percent of workers use finance options to source money quickly between pay days, including 75 percent of high earners in senior positions who regularly rely on credit cards. Borrowing isn’t just limited to those on lower salaries.
The research highlights the wider impact of worker debt on businesses with one in four people in the UK saying they struggle to concentrate at work when thinking about their finances. One in five say they have wasted working hours dealing with repayments.
Debt burden isn’t going to ease up anytime soon. Between June 2017 and June 2018 UK consumer credit grew debt by £12.2 billion according to The Money Charity. With borrowing ballooning, employers need to carefully consider how they can support the workforce as the problem continues to grow.
The Office for Budget Responsibility’s March 2018 forecast shows that household debt is predicted to reach £2.296 trillion by Q1 in 2022, making the average household debt £84,412. With additional funds easily accessible through high cost credit options including credit cards, overdrafts and payday loans, workers who are laden with debt and already struggling between pay days are left with little choice but to borrow more just to get by.
Last month total credit card debt reached £72.1bn in the UK. That’s £2,650 per household and for a credit card on an average interest amount, this debt would take 26 years and 6 months to clear if you made only the minimum repayment each month. That’s a long time to be burdened with financial stress and just won’t work for businesses with diminished performance from those struggling.
Financial Wellbeing at Work
Financial wellbeing should factor into both the HR strategy and the CSR (corporate social responsibility) of your business. Not only is it within the interests of your business to protect retention, engagement and productivity within the workforce – there is an opportunity to instigate real social change by positively impacting the way workers manage their own personal finances. A well-crafted financial wellbeing strategy should positively impact attraction too.
Maximising awareness of financial support already on offer (pension schemes and season ticket loans, for example) is a good place to start, but workers will really benefit from a holistic education of money management. Whether this financial education takes the form through consultant-led drop-in sessions, online learning activities or a podcast to listen to there are specific areas that must be covered.
Education around planning and budgeting can help workers avoid debt but given the likelihood that a significant percentage of your workforce are already struggling with repayments, debt management is another key area to focus on. Planning for retirement, managing savings and investments and understanding tax efficiency will also be beneficial areas to explore.
Easing the Burden
Beyond educating the workforce, there are actions you can take to help the ease the financial burden. This should start with pay reviews, ensuring workers are receiving fair pay but also ensuring they understand how their salary is calculated on a case by case basis with a clear picture of if, how and when they can expect to see their salaries rise. Greater clarity on what they are and can expect to be earning based on their defined objectives will contribute to smarter financial planning.
Reviewing which benefits the workforce currently values and would value will also prove beneficial. With a raft of HR technologies emerging, businesses have the opportunity to quickly, easily and affordably implement technologies that benefit both the worker and the business.
From flexible payment apps that enable workers to withdraw earned wages before payday to automation technologies that take control of menial tasks providing greater job satisfaction, there are promising opportunities for employers striving to maximise wellbeing in the workforce. However, employers must make financial wellbeing a priority in their overall strategies.
The Hastee Pay research found only 12 percent of employers offer face to face financial advice and as few as 16 percent have introduced a financial wellbeing programme despite the growing personal debt problem. Employers shouldn’t view a financial wellbeing strategy as a superfluous perk – financial awareness needs to become part of every company and employee culture.