Member News

A fifth of workers say personal financial problems affect their job

A fifth of workers say personal financial problems affect their job

A fifth of workers say personal financial problems affect their job

A new report into the financial health of today’s employees reveals that the key to increasing an individual’s financial wellbeing is improving their financial capability and encouraging savings. The Barclays report, entitled Financial Well-being: The Last Taboo in the Workplace? challenges the widely-held belief within organisations that financial health is determined by level of income. The research, conducted with over 2,000 employees across Britain finds that the size of an individual’s ‘savings buffer’ – a pot of money set aside for unforeseen outgoings – and contributing regularly to savings, have a far greater impact on financial wellbeing.

The financial wellbeing of survey respondents was determined by their level of agreement with a series of statements relating to their current financial situation, including its impact on their sleep, work and relationships as well as their optimism about their finances in the future. The amount of time one’s savings pot will last in the event of stopping working emerged as the strongest predictor of financial wellbeing and was more important than individual or household income.

Across all income levels, over half (55%) of respondents with a savings pot that would last less than two weeks were found to be experiencing financial distress or discomfort. Among those respondents with a savings pot that would last for at least three months, the percentage reporting such financial discomfort dropped to 8%.

For those with a savings buffer of at least three months and a more modest annual income of less than £20,000, only 11% of respondents reported suffering these same problems with their finances – underlining the importance of a savings buffer over the level of income.

The research was commissioned by Barclays Corporate & Employer Solutions and Barclays Workplace Banking to highlight the crucial but often overlooked area of financial wellbeing in the workplace. The report calls for employers to tackle the taboo of talking about finances in the workplace and urges them to consider how they can help their employees become more financially savvy and better equipped to manage their personal finances.

Katharine Photiou, Head of Workplace Savings at Barclays Corporate & Employer Solutions, said: “Our research has shown that people – like computers – cannot function properly if they are loaded up with too many demands on their attention or bandwidth. When financial problems affect how employees think and operate, this can lead to a significant impact on their concentration and productivity in the workplace.

It is clear that simply providing someone with a steady salary does not ensure good financial wellbeing. Employers need to broaden their role by helping to improve employees’ capacity and capability to manage their personal finances, through education and guidance, by enabling employees more easily to manage their finances at work and through specific solutions provided in the workplace.”

The report also includes insight from research conducted with over 100 employers and reveals a clear disconnect in the workplace between the views of employers and employees when it comes to financial wellbeing. In particular, conflicting views were identified in relation to whether employers are concerned about their employees’ financial health and about whether it was acceptable for employees to manage their finances during working hours.

Employee respondents also expressed a desire for help and guidance from their employer in relation to better managing their finances but a minority were satisfied with their employer’s efforts in this area.

The research analysis in the Barclays report applied a financial health segmentation to survey respondents and found that a significant number of employees would benefit from greater employer support to manage their day-to-day finances as well as education about the benefits of a savings buffer. The four financial health categories are: Comfortable, Coasting, Balancing and Slipping. Based on this segmentation, the report finds that almost two thirds (59%) of today’s employees are in the ‘balancing’ category, focusing on managing their current financial situation rather than saving for the future. More than one in ten (11%) respondents fall into the ‘slipping’ category – they have no savings and are regularly spending more than they earn.

Further findings of the report include:

The ‘Sandwiched’ Generation

Employees in Generation X, many of whom are at their earning peak but are feeling the strain of being ‘sandwiched’ between supporting their children and elderly parents, are no more financially secure or savvy than the younger Generation Y employees – only 15% of Generation X respondents have a savings buffer of six months or more.

Employer-employee disconnect

  • 69% of employers believe that employees feel that their organisation is concerned about their financial wellbeing, when in reality only one in 10 (10%) employees actually believe this
  • Almost one in five employees (17%) said they would value more guidance from their employer with managing their finances

Greater education and workplace support is required

  • 59% of employees fall into the ‘balancing’ financial health category, focusing on managing their current financial situation rather than saving for the future
  • More than one in ten (11%) employees are in the ‘slipping’ category – they have no savings and regularly spend more than they earn.

Impact on the workplace

  • Almost half (46%) of employees said they worry about their finances and just 35% feel optimistic about their financial future
  • 18% of employees said they often lose sleep worrying about their finances
  • 20% said that financial problems often interfere with their work.

Katharine Photiou continues: “Whilst much work has been done in the physical and health wellbeing space in the last decade, our research reveals that employers are missing out a vital element in their strategies – financial wellbeing. In terms of financial health, our survey found that one in ten employees are in the slipping category.  If the same proportion of employees had a serious health issue, it would be viewed as an epidemic and the employer would apply urgent medical attention in the workplace.  The same approach should be applied to addressing the critical issue of financial wellbeing.

“Talking about money is often seen as a taboo subject, not just in the workplace but in society in general, however our research shows there is a clear desire from employees for help with managing finances from their employers. It is imperative that organisations tackle this taboo head on and put tailored solutions in place to ensure their workforce is financially healthy and secure, today and for the future.”

The research highlights that ignoring employees’ finances can have a significant impact on the bottom line, explaining that lost productivity caused by employees worrying about their financial situation could cost organisations 4% of their payroll.

Lesley Uren, talent management expert at PA Consulting Group, which was commissioned to produce the report: “Our research suggests that most employers would like to be doing more to help their employees with their financial wellbeing. And yet, while 60% say they want to do something to help, very few are actually doing anything about it now despite the impact on both organisation productivity and risk. An even smaller number have made financial wellbeing part of their employee value proposition. This really needs to change, especially when you consider the focus given to other aspects of employee wellbeing, such as physical health. What companies need to do is bring this subject out of the shadows, take stock of what they currently offer and begin to invest in products and services that can help employees build their long-term financial wellbeing.”

Petaurum Solutions Comment

We have long advocated the benefits of supporting employees’ financial wellbeing and our Benefits Programmes have been specifically designed to offer a range of products and services that will not only enhance an employee’s physical wellbeing but also their mental and financial wellbeing too.  It stands to reason that if employees are not carrying these problems or issues with them into the workplace, they are much better equipped to give their best in terms of productivity and performance, therefore having a direct impact on bottom line.  Focusing on all employees’ wellbeing should therefore be seen as an investment in business performance, not just a “nice thing to do”!

To find out how we can design a benefits package that will make a real difference to your employees and your business, simply contact us - we would love to work with you.

This information is intended as a general overview and discussion of the subjects dealt with. The information provided here was accurate as of the day it was posted; however, the law may have changed since that date. This information is not intended to be, and should not be used as, a substitute for taking legal, HR or benefits advice in any specific situation. Petaurum Solutions is not responsible for any actions taken or not taken on the basis of this information. Please refer to the full terms and conditions on our website.

Petaurum Local
Article by Petaurum Local

We provide confidence for all types of business to make the right HR decisions.

 

With over 90 years of collective experience, we are experts in providing clear and well thought through straightforward HR advice and support. This allows business owners and managers to act with clarity and purpose in decision making and in taking actions. 

 

Whether you are starting out, growing or facing change, we can support you.

 

For more information please visit our website at www.straightforwardhr.co.uk or contact us on 01728 726501