We need to talk about money

By Charles Cotton, Senior Reward Advisor at the CIPD.

This week is Talk Money Week, an annual awareness-raising campaign, organised by the Money and Pension Service(MaPS), to get people talking about money.  Money issues are often considered a taboo subject – particularly at work – meaning too many people don’t get the help they need to ease their financial worries. But there’s a whole host of reasons why employers should play an active role in breaking down this taboo, especially in the current context 

COVID-19 and employee financial wellbeing  

Perhaps unsurprisingly, four in five employers surveyed in September 2020, for the CIPD’s forthcoming Reward Management Survey, reported that COVID-19 and the first lockdown of the economy has had a negative impact on their finances. 

However, it’s not just organisations feeling the pinch. The same survey found almost seven in ten organisations reporting that their employees financial wellbeing has worsened. finding supported by our research into the impact of COVID-19 on working livesIt finds many workers reporting a fall in their financial security, especially those whove been on furlough.  

Non-CIPD research, such as that published by the ONS, finds that median pay across all jobs has fallenwith the young and those working in roles such as hospitality, beauty and construction hit the hardest. While the media report on firms that have been forced to make redundanciesthe latest CIPD Labour Market Outlook also finds that half of all private sector employers predict that pay rates will be frozen until autumn 2021All this was reported before the second wave of coronavirus and the current national lockdowns and restrictions kicked in. 

 

Why should employers care about their staff’s money worries? 

There are many consequences to this fall in financial wellnesssuch as the increased demand reported by foodbanks or the campaign by Marcus Rashford to extend free school meals through the holidays. 

But what are the consequences for the workplace? As my previous blog post highlightedCIPD research finds that money worries can result in: 

  • employee fatigue due to lack of sleep 
  • difficulty in concentrating at work  
  • time spent dealing with financial problems (during and outside of working hours 
  • poor mental and physical wellbeing.  

This research also foundthat one in four employees admit that anxiety about money had affected their ability to do their job, a figure that may well now be higher because of the pandemic. For employers, poor employee wellbeing has implications for workplace productivity, customer service, innovation, and ultimately the bottom line. 

In addition, workers suffering from financial stress may find it difficult to make appropriate financial decisions. Hence the concern about the increased risk of fraud and the warning from the trade association for the UK banking about how to spot money scams and from the Money Advice Service on how to identify pension fraudResearch also reveals that as well as an increase in forms of domestic abuse related to the lockdown and money pressures, there has also been a rise in the incidence of economic or financial abuse. 

 

How have employers been responding? 

Around a quarter of employers responding to the 2020 Reward Management Survey say theyve been exploring how their people have been impacted financially by COVID-19 and the economic crisis, such as through surveys or exit interviews, while another fifth plan to do this by March 2021. 

In addition, more than one in ten have either introduced a formal employee financial wellbeing policyare implementing one, or have made plans to do so in the next six monthsThis is on top of the one in four that already have a formal policy in place. Howevermore than half of our respondents still have no policy, nor any plans to introduce one.  

When asked why their employer doesn’t have an employee financial well-being strategy in place, the four most common explanations are that senior management 

  • don’t see creating one as a priority right now  
  • sees the need, but the organisation just doesn't have the time, money or expertise to create a policy 
  • is not sure if employees want this 
  • isn’t convinced that having one will help with employees’ wellbeing. 

 

What can HR teams do to support their workforces? 

Money worries can have negative consequences both for the workforce and the workplace, so people professionals should highlight the benefits to senior management of helping employees deal with their money challenges. 

A good place to start would be to take the opportunity this week, to share the MaPS ‘Talk Money’ resources with colleagues, especially the Money Navigator Tool. As MaPS says: Research shows that people who talk about money make better and less risky financial decisions; have stronger personal relationships; help their children form good lifetime money habits; and feel less stress or anxious and more in control”. 

Coincidently, this year Talk Money Week (or Wythnos Siarad Arian in Welsh) coincides with the Living Wage Foundation’s Living Wage Week. People professionals should use this opportunity to explore with their employers whether employees are being paid enough to enjoy a reasonable standard of living.  As I mentioned in my previous blog post, paying a liveable wage has cost implications. However, these can be offset by higher employee productivity through job, work and organisational redesign. 

And there are business benefits. Among the 2020 Reward Management Survey respondents who are accredited living wage employers the most common advantages of becoming one are that: 

  • it supports the employer brand 
  • it improves employee engagement 
  • it supports the customer brand 
  • it’s reduces employee turnover 
  • it helps when bidding for work 

As well as paying people enough and paying them fairly, other important aspects of employee financial wellbeing are being able to save for the future, being able to pay down debt, having benefits that help with illness or redundancycareer progression opportunities, and understanding the best way to borrow, spend and save moneySo, HR professionals should examine what gaps exist in their organisation’s provision. Our forthcoming reward survey finds that COVID-19 has been acting as a prompt for many employers to enhance the benefit package, such as improved occupational sick pay or staff alerts about financial scams. 

Both Living Wage Week and Talk Money Week coincides with the CIPD’s annual conference, where many aspects of employee financial wellbeing, such as reward fairness, are being discussed. The next CIPD webinar will also explore this issue. The full findings of the Reward Management survey are due to be published in February 2021.  

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Anonymous
  • Employers can facilitate access to credit unions via payroll deductions.  this is a great way to support employees financial resilience as it encourages savings and gives access to affordable credit.