Prioritising employees’ financial wellbeing makes perfect business sense. When employees feel financially secure, it has a positive effect on engagement, performance and productivity. However, ensuring the financial wellbeing of employees requires careful attention to the pay versus benefits ratio.
There’s no doubt that a fit-for-purpose compensation structure is essential in helping employees manage day-to-day living expenses. The current inflationary environment has made that challenge considerably tougher and in response, some employers might be tempted to target the financial wellbeing of their staff through salary alone.
However, a pay rise isn’t the silver bullet it might appear to be, according to Stacey Lowman, head of employee wellbeing at Claro Wellbeing.
“Increases in pay can offer a quick financial fix and offer a short-term boost in motivation, and where possible pay rises should be given as they are important,” Lowman concedes. But, she argues, offering it alongside a financial wellbeing support package that is designed to help staff manage their money and achieve their specific goals will be “more suitable and sustainable”.
Educating the workforce
What’s more, providing some form of financial education will ensure that these efforts are more effective, as employees will be able to make the most of their pay rise or payment by enhancing their money management skills. “This strikes a balance between providing some monetary support and improving employee financial wellbeing,” Lowman explains.
Such efforts needn’t be expensive to the employer, according to Ed Watling, senior employee benefits consultant at Mattioli Woods.
“It isn’t costly or time consuming to deliver a programme of financial webinars or seminars aimed at taking control of finances and employee benefits to create better outcomes, without large pay rises!” he observes. These sessions should be tailored to match the demographics of the workforce to ensure they are relevant and useful, Watling advises.
In fact, demographics are a key consideration when targeting any kind of benefit at financial wellbeing. Watling recommends a flexible approach. “Giving employees choice will help them tailor and adapt their benefits to their current and future needs,” he says.
Courtney Marsh of health insurer BHSF agrees, pointing out that diverse workforces with diverse characteristics – and therefore diverse requirements – dictate that a one-size-fits-all approach to benefits rarely works.
“We are finding that many millennials are looking for a total package that offers them not only financial remuneration but, and often more importantly, a support package that is crafted to meet their needs,” he says.
Chris Ronald, VP B2B EMEA at Blackhawk Network, points out that the generation just entering work is more likely to be interested in benefits that help them pay off student loans and save for a down payment on a house. For those in the prime of their careers, the current financial climate might mean that “tapping into tech schemes or the option of childcare vouchers and grocery subsidies would be helpful”.
However, Ronald warns that there is a disparity between the workplace benefits employers think their staff want versus what their employees are actually looking for. For example, Blackhawk Network’s research found that only a quarter of organisations have considered reviewing their package in response to rising inflation. Furthermore, a quarter said they have no plans to change or expand their benefits this year.
“But by listening to what their employees want and need right now, they can massively help alleviate a lot of the pressure they are currently facing,” Ronald insists.
Liz Walker, COO at Unum UK, suggests sending out a survey to employees to find out what they want, and then matching any recurring themes. “Employers need a broad mix of benefits to cover a diverse range of employees, with a focus on flexibility and choice,” she advises. “This might involve allowing staff to opt in or out depending on what’s relevant to them based on their circumstances, or benefits that can be personalised and adjusted based on what each employee needs or most values at the time.”
Creating inclusive benefits for financial wellbeing is also about “flexing and adapting as the needs of your workforce evolves”, says Walker. “Regularly monitoring your workers’ demographic profile will enable you to look for ways that individual needs and preferences can continue to be fulfilled.”
Digital recruiter Futureheads is an example of an employer tailoring its benefit package to support people in reducing their outgoings and allowing their money to go further, according to Caroline Waylen, head of people. “Whilst we pride ourselves in our market-leading commission schemes, we always want to ensure we are offering a range of benefits for people,” she says.
One of the ways Futureheads has addressed financial wellbeing is through the introduction of Nous, a platform designed to help employees keep on top of household bills by tracking providers and services for better deals and preferential tariffs. This, says Waylen, has enabled the company to help employees save on their utility bills at a time when costs are rising.
“Nous has been a really well-received and tangible benefit where many staff have realised substantial cost savings,” says Waylen. “Our teams are often sharing wins on the savings they’re making using the platform.”
Other Futureheads benefits aimed at employees’ pockets are free lunch on the last week of the month before payday, free lunch on birthdays and a healthcare support package. “For us at Futureheads it has always been about balancing profit and purpose and putting this at the heart of our strategy,” says Waylen.
So while rising business costs mean inflation-busting pay rises are simply not an option for many employers, benefits directly aimed at financial wellbeing can help maintain the right balance and ensure that both profit and purpose remain intact.