The importance of financial wellbeing

Assuming that the UK Government and other governments around the world actually 'do whatever it takes' to solve both the medical and economic emergencies, what can people professionals do in terms of their employer’s pay and benefit policies? The answer, I believe, is to focus on promoting good employee financial wellbeing. Which can be done in several ways.

CIPD research finds that two key components of workplace financial wellbeing are paying people enough and paying them fairly. Those low-paid employees who are on sick leave due to Covid-19 should receive as much of their normal pay as is possible. For instance, low waged workers who receive a considerable proportion of their earnings from variable pay, such as commission, should receive an element of this during the present emergency. This principle should also apply to those workers who are self-isolating (but who are not actually sick).

Similarly, where low-waged people receive a major part of their pay in variable pay are still working, such as from home, employers should either modify the factors used to calculate the actual bonus so that it is easier to get, or guarantee to pay an element of it during the current situation. Such an approach will help to ensure that these employees don’t see a sudden drop in their pay.

Where employers base pay increases on an assessment of employee's performance, if the process hasn't started yet, I wouldn't bother. That's not to say that I don’t believe in linking pay to contribution, it's just that at this moment in time I think attention could be usefully focused elsewhere and employers should simply give people an across-the-board salary rise.

Freezing or reducing rates of pay

Some pay rises may have to be deferred, while some wages and bonuses may have to be cut temporarily. If salaries are going to be frozen, communication is important – organisations should inform their workforce that they are going to defer any planned salary increase until there is a better understanding of the economic impact of the crisis.

If pay rates must be cut, then it is only fair that senior leaders should show the way and those on low pay should be shielded the most. Such drastic changes to terms and conditions will need employee consent. However, if the alternative is possible redundancies, workers may be prepared to take a temporary pay cut, particularly if senior leaders lead by example. Job losses should be a last resort and the Government’s scheme to pay the wages of those workers at threat should be considered.

Where there are proposals to freeze or cut pay, HR has an important role in communicating to employees and their representatives what is proposed, how it will be implemented and when it will be introduced. We should be prepared to answer questions with honesty and consider suggestions regarding how the proposals can be improved.

The wider package of financial benefits

People managers often complain that their employees don't value the financial benefits package on offer. However, I think that many employees are probably becoming very aware of the medical benefits that their employer offers, especially occupational sick pay. These perks may become more valued in the future by job seekers and existing staff.

This crisis is the time for people and reward professionals to highlight the benefits on offer to promote employee health and wellbeing so that people are aware of what’s being provided and how to access it. This will help to raise employee understanding of what’s being provided and appreciate what the employer is doing for them. Again, HR should think of the messages it needs to get across and the language and media it feels will be most appropriate for its people and the situation.

It is also a time for the organisation to review its existing health and wellbeing package and to identify and correct any problems, either in terms of coverage (who isn’t covered?) or implementation (how long is it taking to deliver the benefits to the people in need?).

Pensions

Some colleagues will be feeling anxious about the impact of the financial crisis on their pension savings. In terms of DC, HR should communicate with scheme members about what’s happened and what various options exist and what the consequence could be of certain actions. For instance, those who are young may not have witnessed something like the falls in the stock market before and will probably need reassurance to keep on investing.

HR should encourage those approaching retirement to review what the impact has been on their savings and what options exist, employees should already have been switched to less risky assets automatically, but some may have opted not to do this. Those people who are five years away from retirement may need information, advice or guidance about what the switch from risk involves and what the various options are, especially if they have lost a sizeable chunk of their pension fund due to the stock market slump.

Again, HR has an important role when talking to employees about the pension, such as not repeating the news but adding to it, using simple and engaging language and being brief and to-the-point. An awareness and education programme about saving, spending and investing money would be helpful to create financial resilience among employees, covering such issues as managing debt, saving for the future, getting the best energy deals, buying a home, how to spot and deal with a financial scam, creating an emergency fund, etc.

Non-financial benefits

When it comes to non-financial benefits, offering flexible working (such as working from home or part-time), online training and development courses, paid volunteering and secondment opportunities, will all be worthwhile exploring during the current crisis.

Overall, it's important that during this testing time that HR should focus on ensuring the financial wellbeing of its people to ensure that when the economy starts to recover that their organisation is able to take advantage of the growth in the economy. This involves exploring all the options and understanding the potential consequences.