Ensuring that employees are financially secure and are equipped to manage their finances is key to enhancing productivity and happiness, so why is it a taboo in the workplace?
The way the workplace operates in relation to reward and engagement is changing beyond all recognition. Fixed perks moving towards flexible benefits, defined benefit pension schemes have evolved to the defined contribution model and the increasingly mobile workforce have all led to a shift in attitude for both employers and employees.
In the case of employees, we have seen them needing to take greater responsibility for their own financial decisions and as a result, employees are increasingly wanting to see their employer taking on a far more collaborative approach to helping guide them in making financial decisions.
Employee benefits play a big role in these financial decisions. Ensuring the benefits each employee receives are sustainable, competitive and relevant is now essential to attract and retain key talent. These benefits will also need to be tailored to the individual – no mean feat as, for the first time ever, there are now up to five generations in the workplace, each with very different needs and expectations.
However there is also an arguably lesser-known issue that needs to be addressed in the workplace: the financial health of employees.
As the recent Barclays report Financial Well-being: The Last Taboo in the Workplace shows, employees worrying about their finances can have a significant impact on the productivity of the business; in terms of financial health, the research shows that more than one in ten employees fall into the ‘financially slipping’ category – they have little or no savings and often resort to more expensive types of borrowing. Furthermore, one in five employees is losing sleep because they are so worried about their finances.
Holding open discussions about what would help and improve employees’ financial well-being to be should be a priority for employers in order to tackle this taboo topic. Being financially secure is not just about the salary an individual receives; more important is the savings buffer that an individual has, especially in terms of retirement and being able to recover from any of life’s ‘surprises’.
However, organisations must be mindful that levels of financial well-being will vary greatly from employee to employee, depending on the life stage they are at, and attitudes to money management are just as diverse. For Maturists (born pre-1945), saving before buying was the order of the day. With increased life expectancy, Baby Boomers (born 1945 – 1960), who have put money aside during their working lives, are worried that their savings will be consumed by care in later life. Generation X (born 1961 – 1980) looks forward to a long retirement but is not sure whether their pensions will be adequate. Attitudes to debt and risk have changed and, for Generation Y (born 1981 – 1995), leaving university with tens of thousand pounds of debt, is commonly expected. Generation Z (born after 1995) has been brought up in a world of invisible spending, where items are often bought electronically and paid for later.
It should be noted that financial well-being also tends to improve with age; older workers have had longer to build their savings and pay off a mortgage. However, this premise looks to be stalling with members of Generation X, who are increasingly dealing with the financial challenges of children and parents, as well as their own. People are living longer but may have not fully realised the financial implications of this. Generation Y holds the leaders of the future, yet they have more financial uncertainty than Generation X at their age – and many haven’t even realised the consequences of being unprepared.
Employers must understand that individuals in their organisations have vastly divergent financial situations and aspirations and that the HR function is the catalyst to bring financial well-being onto the agenda. Some actions employers can take are likely to have universal appeal and will benefit most employees. For example, better explanation of current benefits, education on pensions and retirement, implementation of savings schemes and access to information and services on wider financial matters. Employees tend to be receptive to guidance so long as their privacy is respected.
Perhaps most importantly, by being attentive to the different needs of the multi-generational workforce, employers will be able to recruit and retain the essential talent their business needs.
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