Financial support is the key to employee well-being

Close up of a woman

The term “working poverty” can be a handy football for politicians. But for employers, the impact of soaring fuel and food bills on the mental and physical health of staff is hurting results.

With the cost of absenteeism and presenteeism due to money worries rising to £ 1.56 billion per year, according to a recent Aegon report, helping staff pay off debts or fix the roof is become a top business priority.

For example, Anglian Water launched its Covid Hardship Fund in 2020, funded only by and for employees. He has already paid for funeral expenses as well as unforeseen medical and childcare costs. Anglian Water Managing Director Peter Simpson made a personal donation of £ 202,000.

With the ripple effects of layoffs, time off and reduced hours continuing to weigh on household incomes overall, Sally Purbrick, Anglian Water’s rewards manager, believes the fund will need to operate beyond next exercise.

Like others in HR, she was surprised at the number of employees in need of a financial lifeline – “after all, we pride ourselves on providing a fair salary structure” – and notes the lure of loans. and advances is by no means limited to low incomes.

“Whether it is someone who can no longer pay for private education for their children or a relationship break-up that reveals hidden debts contracted by a partner, as an employer, you never see that. one side of someone’s financial life, ”she said. “While it is tempting to assume that it is only people with low wages or in particular jobs who go into debt, this is clearly not the case.”

The Covid Fund adds to a financial wellness and education program that includes debt counseling and an Employee Assistance Program (EAP). The company also provides loans to employees with bad credit through the third party provider Salary Finance.

The stigma of poverty

Like Anglian Water, Yorkshire Building Society is not in an industry associated with low wages and zero hour contracts. However, the very real and universal stigma surrounding financial hardship is even more pronounced in financial services, says Michelle Elsworth, Head of Total Reward.

“Since we are experts at handling our clients’ money, our colleagues are often incredibly reluctant to admit that they themselves are suffering from financial hardship and loss of financial control,” she says. . “We are well aware that no matter what salary bracket you find yourself in, people over-commit and experience very real distress and ill health when they are desperate for money.”

Whether it’s someone who can no longer afford private education for their children or relationship breakdowns that reveal hidden debts incurred by a partner, as an employer you never see one side of someone’s financial life.

An interest-free financial hardship loan of up to £ 750 – which must be requested directly from the company – has already helped more than one YBS employee escape an emotionally and financially abusive partner and start a new life.

More mainstream, low-cost loans averaging £ 7,000 – arranged directly through Salary Finance and repaid at source – have allowed other staff to consolidate their borrowings and stay out of reach of lenders without scruples.

In 2017, one of the organization’s CEOs spoke publicly about his own financial woes, a move that Elsworth says helped foster a culture of openness.

“Having done so much work on mental and physical health since that time, we feel it is time to put the spotlight back on the entirely related issue of financial well-being.”

Return to well-being

The term ‘wellness agent’ has gone out of fashion for many years, says Charles Cotton, senior performance and reward adviser at the Chartered Institute of Personnel and Development (CIPD), but the fundamental need to maintain staff afloat this winter could mark a return to the concept, he believes.

“As providers of income, employers have a key role to play in financial well-being and we may well see new titles such as director of personnel and social protection emerge as more and more staff members. staff realize that they are unable to put food on the table. “

Cotton says all organizations need to consider the impact of low pay or capped hours policies and consider joining the 7,000 UK companies that have so far adopted the voluntary real living wage.

“Some companies don’t like to talk about in-work poverty because they feel guilty or fear appearing intrusive or even paternalistic, but in my opinion there is a moral obligation to think very seriously about these issues, especially in the economic environment, ”he says.

As the UK’s longest-standing employer financial welfare service provider, Close Brothers banking group is taking a different line.

“I don’t believe there is a moral obligation, but we certainly see financial well-being and resilience as a business imperative, especially since high-paid people are in trouble too,” says Jeanette Makings , responsible for financial education. “Those who are concerned that their employees may fall prey to ruthless lenders will certainly want to offer loans, but for other clients, it’s more about cutting gym membership to put more emphasis on ISAs, savings plans and EAPs. “

At BT, which has provided loans to 13,500 employees since 2018, the urge to help colleagues in debt – whether through gambling, addiction or even maintenance costs – is real, says Drew Matthews, director reward, employee relations, health safety and well-being. .

“BT is a kind and caring organization and we want to take care of people, but we don’t want a return to 1970s paternalism or Victorian attitudes towards debt management,” he says. “Co-workers are adults, so it’s up to them to make choices about their personal finances – the company’s role is to provide the products, tools and education to help them make informed decisions. “

We certainly see financial well-being and resilience as a business imperative, especially since high-paid people have issues too.

Companies must meet the basic needs of their employees, offer them a decent standard of living and an overall package that is fair, reasonable and sufficient, he says. “We are determined to do the right thing under difficult circumstances.”

As BT is now on the verge of getting real living wage certification, he adds: “I recognize that there is a moral subtext to the current debate on employee hardship and it may be uncomfortable for some. employers. “

Comments are closed.