How firms can take a responsible business approach to financial wellbeing in the workforce

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Mental health and wellbeing are terms that businesses have become increasingly familiar with in recent years, but financial health is one which many employers are now seeking to advocate.

For most people, employment provides security, wellbeing and, most importantly, a route out of poverty, but for one in eight UK workers, this is not the case – and in turn, the overall reputation and productivity of a company can be negatively impacted.

That is why Business in the Community (BITC) has published a new toolkit to help employers support their workforce with financial wellbeing through tailored benefit schemes to meet their staff’s needs.

The toolkit, entitled Ensuring Everyone Benefits: Improving financial wellbeing through employee benefits that work for everyone, has been created in partnership with Salary Finance, an organisation which collaborates with firms to improve employee wellbeing.

Salary Finance’s research shows that the cost of productivity lost due to financial concerns equates to as much as 9 to 13 per cent of total salary costs for the employer. And while supporting a workforce with such a task may seem overwhelming, BITC’s toolkit – which was created thanks to a report by the Joseph Rowntree Foundation – makes the process straightforward.

Not only does it set out the business case for improving the financial wellbeing of employees, it also provides step-by-step guidance for businesses to establish benefits packages in order to do so.

Through research and a series of roundtable events with

25 companies, a key factor impacting employees’ financial and mental health wellbeing was identified as the rising rate of inflation.

Nicola Inge, BITC’s employment campaign manager, explains: “Wages have risen over the last years but not in line with inflation, which is one of the biggest drivers for in-work poverty.

“We know that increased living costs has the greatest negative impact on people with lower earnings because, for them, living costs represent a much bigger portion of their spend.

“If there are high levels of inflation around food, energy and housing, there is a much bigger impact on people with low incomes.

“That is part of the reason levels of in-work poverty have outstretched levels of out-of-work poverty.”

Another factor is unpredictability for those who work unsocial and irregular shifts, are on zero-hour contracts or who do not have job security. Sandy MacDonald, head of corporate sustainability for global investment company Standard Life Aberdeen – which took part in the roundtable events – and member of the Edinburgh Poverty Commission, says: “Through the Edinburgh Poverty Commission, we have seen some examples where parents have arranged childcare and transport only to show up [to work] and be told, ‘we aren’t as busy as we thought’, and so they are already out of pocket from arranging the childcare and transport.

“That is a net loss from work but on paper they are employed, it is just not good-quality employment.”

The toolkit, which draws on BITC’s Good Work for All campaign, states that 28 per cent of employees with work-related mental health problems reported feeling under-paid – and 69 per cent state they would likely stay with an employer that offered good benefits.

In order to create effective benefits packages, BITC’s guidelines include using case studies and national data to understand the issues within the workforce, data analysis on benefits take-up to identify greater opportunities for greater return on investment, and using the Minimum Income Standard as a guide.

One company that has recently successfully reviewed its employee benefits is the John Lewis Partnership. The company carried out data analysis, focus groups and consultations with its democratic bodies as it sought to think differently about the ways benefits are designed and delivered.

The company has since addressed issues around employees’ inability to take a week’s holiday – a symptom of poverty – established provision of financial education, and introduced reduced family days out for its staff – all of which make good business sense.

Inge emphasises: “We know that if people are coming into work with worries about their finances, they are not probably performing to the best of their abilities at work and that does have an impact on performance at work in terms of not just absenteeism but productivity.”

MacDonald, left, agrees: “You can use all the classic corporate business phrases such as engagement, productivity, wellbeing, loyalty, retention and advocacy, but there are human ways to explain what those impacts really are as well.

“You can create a culture in your business where people want to work hard, want to talk well about you and feel like they have a stake in the company’s success. All of which benefit the business.”

MacDonald points to the Living Wage Foundation, through which employers pay a wage that is calculated and rises to meet the cost of living.

Now four UK firms, Standard Life Aberdeen, Aviva, SSE and Richer Sounds, are going one step further by piloting “living hours” contracts.

They are designed to ensure a minimum of 16-hour contracts, should the employee wish for it, a shift notice period of four weeks and compensation paid for any short-notice changes.

But what is essential in improving and ensuring the financial wellbeing of any workforce is engagement.

In order to have engaged staff, companies must engage with their workforce to better understand how to benefit the needs of each individual and, as a result, improve their overall business.

Inge adds: “Everybody has financial health in the same way that everybody has mental health.

“We know that in the past, the best employee benefits have been reserved for those who are highest paid, but we think it is time for employers to look more comprehensively across the workforce and at the needs of those who might be struggling the most financially.

“There is much to do around tackling some of the cultural barriers of talking about money at work – and de-stigmatising discussion on finances – and enabling employees to have a more open conversation with their employers.

“A lot of that isn’t happening at the moment, so we do really need to see a step-change in the way employers address this issue.”

Wellness gaps

• Of the 14.3 million people living in poverty in the UK, the majority (60 per cent) live in households where at least one person works.

• Financial difficulties affect one in four UK workers with mental health problem symptoms.

• Employees with financial concerns are 14.6 times more likely to have sleepless nights and 12.4 times more likely not to finish daily tasks.

• One in four workers remain stuck in lowpaid work, while those who receive training are twice as likely to progress.

• Salary Finance has found that people earning £40-60,000 have the lowest levels of financial concerns. However, 29 per cent in this income bracket still experience them.

• One in five UK workers face precarious employment conditions which mean that they could suddenly lose their job.

Source: BITC’s Ensuring Everyone Benefits toolkit.

For more information, visit www.bitc.org.uk/toolkit

This article first appeared in The Scotsman’s winter 2019 edition of Vision. A digital version can be found here.