Why employers should offer financial wellbeing education to staff

What role should an employer play in an employee’s financial wellbeing, and how can this be done? John Lowe of MoneyDoctors.ie investigates.

For most employers in these challenging times, it is difficult to see the wood from the trees. While they are strategising, the solution could very well be their own reinvigorated and motivated workforce to save their day and their bacon.

But the corollary of this can also be a workforce lacking in motivation. As an employer, have you noticed any change in mood with some of your staff? Are employees calling in sick on a regular basis? Are some of your employees absent for no reason at all and are you finding your staff turnover figures on the increase?

Consider all the above and add in the mix of salary reductions, scrapped bonuses, new levies applied, shorter working hours and even some redundancies and you can understand why stress is rearing its ugly head in the workforce and financial wellbeing the buzz words in the workplace.

Everyone suffers from stress at work – accountants Grant Thornton in a recent study found that 70% of that stress was financial. Addressing this area is crucial for your staff’s well being and mental health.

You can be sure employers in the main have no idea of the financial circumstances of their staff, but they do know everyone in their employment is feeling the economic pinch.

Absenteeism is one of the most persistent obstacles to productivity, profitability and competitiveness. It causes overtime, late deliveries, dissatisfied customers and a decline in employee morale amongst workers who are expected to cover for an absent employee. The indirect costs often exceed the direct costs of absenteeism. Scheduling based on time and a specific number of employees, in turn, becomes a guessing game.

Statistics show that larger companies have a higher incidence of absenteeism. The average absence rate of companies with 250 or more employees stood at 4.61 per cent as compared with 2.62 per cent for companies with less than 50 employees. Even high staff turnover rates can be a drain on company finances through:

• administration of the resignation
• recruitment costs
• selection costs
• cost of covering during the period in which there is a vacancy
• administration of the recruitment and selection process
• induction training for the new employee

Absenteeism and high staff turnover rates can be directly linked to stress and while most employee surveys have been carried out in America and the UK, Ireland’s employees could currently be even more affected than our overseas brethren.

Team building activities, workshops, inspirational quotes, and the power of positive experience should all be part of the refocus on employee motivation. Alignment of aims, purpose and values between staff and the company is the most fundamental aspect of motivation. The better the alignment, the better the platform for motivation.

Research suggests that a well-executed workplace financial education programme is likely to reap great rewards more than any other programme as it is:

• A practical and inexpensive way to help staff with one of their greatest worries: their personal finances
• A cost-effective way of boosting staff loyalty as it is fully tax-deductible
• Highly topical and demonstrates employers understand what is important to employees
• The corner stone of family friendly employment policy
• Helps to reduce absenteeism (€793 million lost per annum, 3.5% or eight working days per year – that’s 12 million days every year, according to the Small Firms Association. This study found that back pain/injury and stress were the principal reasons for being absent)
• Helps to reduce employee turnover rates (this can be calculated in monetary terms) Increases employee productivity and competitiveness
• Increases contributions to the company pension scheme

Bringing in the employer’s company’s financial connections though – local bank, preferred insurance company or tied financial adviser – may not reap the rewards for the staff that, as an employer, you may wish to see. Independence and a “tell not sell” approach should be the order of the day.

This is what your staff should hope to expect from such a programme:

• How to plan, set budgets and financial goals
• Coping with and managing debt quickly and easily
• Cutting down banking bills
• Savings and investments – how to save, where the best deals are and maximising the returns
• Life and health cover – what you should have and what you should drop
• Pensions – all you ever wanted to know but did not have the time to ask Insuring your possessions, the right way
• Fact sheets on cars, fuel and electricity/utilities, lifestyle, food, drink and household items

Helping your employees in such a positive way can reap rewards not just for the staff themselves but for your company and your own peace of mind.

For more information click on John Lowe’s profile above or on his website.

The views expressed here are those of the author and do not represent or reflect the views of RTÉ.