When people are worried about their ability to manage their money – either on a day-to-day basis or through major events such as redundancy, bereavement and divorce – not only can their mental and physical health suffer, but also their ability to make sound decisions and to perform productively at work. During Financial Capability Week, from 14-20 November, hundreds of organisations across the UK are involved in raising awareness of the importance of financial capability. At the CIPD, we’re playing our part by highlighting the important role of employers.

Charles Cotton, the CIPD’s Performance and Reward Adviser, explains that a number of factors contribute to a person’s financial capability and well-being: ‘First and foremost, it’s difficult to be financially capable if you don’t earn enough to live on. We encourage all employers in the UK who can afford it to consider paying their staff the Living Wage, which is calculated independently according to the real cost of living in the UK. But employers’ responsibilities don’t begin and end there. It’s also important to contribute to a sense of fairness and control amongst employees by recognising and rewarding people’s contributions fairly and consistently.’

Once the basics are in place to ensure that people are paid fairly for the work they do, there’s a number of things employers can do to contribute to their workforce’s financial well-being. ‘Even if an organisation feels it can’t afford to offer benefits such as critical health insurance or death in service payments, you can contribute to your employees’ financial security in other ways,’ continued Cotton. ‘Take a look at your pension provisions – are you doing everything you can to ensure employees are saving enough for their retirement, and taking advantage of tax benefits such as salary sacrifice schemes? Are people in your organisation taking full advantage of all the benefits you already offer? If not, what can you do raise awareness of how these benefits could help them?’

No matter how big your organisation, or what level of benefits you can afford to offer, communication and education is key. Different segments of your workforce are likely to face unique challenges and pressures at different stages in their careers, so communication should be simple, tailored and regular. By signposting tools and advice that can help with financial decision-making, you could make all the difference to your staff’s ability to sleep at night and perform well at work.

Next steps

The CIPD is sponsoring the Institute of Employment Studies to carry out research on financial well-being – findings will be launched in January 2017.

Financial well-being at the CIPD

We believe that helping people to navigate their financial well-being means that financial concerns are kept to a minimum and employees can focus on the work that brings them personal fulfilment. Alongside a physical well-being strategy, the CIPD has implemented the following financial initiatives:

• Being a living wage employer.
• Offering a generous pensions scheme with robust governance (PQM plus accredited). Twenty-eight percent of staff are paying 8% or more to get the maximum employer contribution of 12% to help save for retirement and pre-retirement courses so that they’re prepared.
• Life assurance and critical illness cover in case the worst happens.
• Free financial advice from independent financial advisers, including one-to-one sessions and investment workshops.
• Interest-free loans for season tickets and bike purchases so staff don’t have to rely on credit to come to work.
• Discounts, both locally and nationally, to make employees' money go further.
• Flexible working, dependents- and sick-leave policies that mean staff don’t suffer income shock when life throws up the unexpected.