When considering financial education at work, we aren’t going to get far without mentioning the cost-of-living crisis. So here you go: there is currently a cost-of-living crisis, it is unavoidable, it is everywhere and it is all anyone can talk about at the moment. But businesses are under a lot of pressure to do everything they can to assist employees, and they absolutely should.
However, not every business has the resources to take the impact of huge pay rises. There are small businesses all over the world where pay rises that beat, match, or even underperform inflation may have severe impacts to the business.
Well, I am here to tell you that there is a very important step that businesses can take to assist and which won’t break the bank. But this isn’t just for those smaller businesses; in fact, it is equally important for the larger ones as well. Financial education for employees is essential to provide them with the skills they need to make good financial decisions.
Let’s start with something that we can all appreciate – the payslip. This is a key piece of consolidated information, given to employees each time they are paid, however, for a lot of people it can be extremely confusing. Having a clear understanding of the items on a payslip will enable individuals to plan more effectively. As payroll or reward professionals, this is an area we often take for granted as it is second nature to us.
Payslips also have the capacity to be expanded on, messages added, clarity given and generally made more exciting. After all, when your pay packet is so exciting, why is the payslip so dull? But, with so many different items on the payslip, it can be hugely beneficial to provide assistance and signposting to additional resources. Speaking as a payroll professional, this additional effort up front can reduce queries further down the line.
Take salary sacrifice as an example, educating employees on the benefits can save them tax and National Insurance (NI), which in turn also saves the employers NI. That’s a win-win situation, and the initial effort to promote such a scheme is relatively low.
After an employee is paid and has their net pay, your job is done, right? Wrong. It’s easy to assume this is the end of an employer’s responsibility, but there is still plenty to be done. But from a company’s point of view, financially unstable staff can have a negative impact.
Financial worries can be a huge cause of stress, and stress in the workplace is anything but productive. This can lead to absenteeism, where employees call in sick to avoid work, or presenteeism, where employees will come to work, but will be actively disengaged. Neither seems very good for a business.
Additionally, good benefits and financial help can be a huge factor in staff retention. Great benefits can define a company’s culture and outside perceptions of how it treats staff. Helping companies attract the best talent, grow it and keep it.
This is all focussed on how financial wellbeing can impact and help a business, because I realised that this is how buy-in happens from the decision makers at the top. However, it’s not just about that, there is a human element to consider and a real impact on people’s lives. Trying to make their workplace work for them.
There have been a couple of examples throughout for things to focus on or implement, but the best advice I can give is to speak to your employees. Find out what they want, what they don’t want and see what can have the biggest impact. What you don’t want to happen is to dedicate time and effort on a benefit or offering that gets neglected because your staff weren’t interested in the first place. I can’t tell you what is a good fit for your company, culture and staff, every business is different.
Once you know what offerings people want then you can assess the resource, time and cost involved. Then you can focus on the areas with the biggest impact and make your workforce more financially competent and stable.
Mathew Akrigg is policy and research officer at the CIPP