When it comes to our finances, January is typically the month when our chickens come home to roost. Christmas has resulted in a frenzy of consumerism and credit cards have taken the hit, but in January those bills land on the doormat. Add to that the current economic woes of rising interest rates, exorbitant energy costs and pending tax increases to help pay for the UK’s Covid response, and it’s easy to see how the financial hangover from this year’s festive season is going to cause anxiety for many.
Even in a good year the CIPD reckons that nearly half of the UK workforce experience financial difficulty of some sort. It can easily be caused by overspending or poor household budgeting, but it might also arise from a contentious divorce, insufficient pension funds, illness, a family rift, a poor investment. There are many potential reasons. Yet when the CIPD conducted a survey recently they found that although 57% of the UK employers consulted were actively focussed on the mental wellbeing of their staff, only 11% were looking at financial wellbeing.
Some might argue that when a person experiences financial difficulty then it’s a matter for the individual and no business of the employer. But if people are sufficiently worried about their finances then they are likely to suffer from stress, anxiety and insecurity, often accompanied by a sense of embarrassment, shame or failure. We might say that they are financially distressed. And then it is the business of the employer as we shall see.
When someone is financially distressed they are more likely to find it difficult to focus on work and their performance and behaviour can be negatively impacted. Even their physical health might be affected. This has obvious knock-on consequences for employers ranging from absenteeism, additional management resource, falling morale, and ultimately, less productivity. It is therefore important that financial wellness should be recognised by HR departments and included as an essential component of any mental wellbeing strategy.
But, in practical terms, what can be done?
There’s a fine line to be drawn between an employer not caring and being too inquisitive and prying. Still, managers and colleagues can learn to recognise the symptoms of financial distress in others as well as themselves They can nurture a supportive environment where employees understand that it’s alright to discuss their financial problems and that they will receive a sympathetic hearing. HR managers can provide access to debt councillors and other areas of financial expertise. Employers can be flexible with pay structures, being sensitive to different age groups. For example, supporting young people with student debt is going to be different to supporting more financially literate older people with pension planning.
As we said at the beginning of this article, employees are more likely to benefit from discussion on financial wellness in January than at any other time of the year. Now is the time for caring employers to start the conversation and to provide the necessary support structure.
The Gallantium Team