A business case for financial wellbeing in the workplace.
Financial education in the workplace - a business case for financial wellbeing
With financial education in schools still patchy or sadly lacking in many cases, should employers step up and fill the needs of their staff by providing general financial well-being programmes?
Research undertaken by Secondsight found that just one third of the working population have received some financial education from their employers. However only 20% of employees had a coherent financial plan and a third claimed to have only a vague idea about money management. Yet 50% of employers surveyed said that their staff had asked for help with financial education.
It seems clear therefore that there is a financial education gap which needs addressing – but should this be the responsibility of employers and their HR functions?
Taking as an example the roll-out of auto-enrolment workplace pensions, by 2018 all employers will have responsibility to offer access to pension schemes. Perhaps this was a missed opportunity to provide some guidance on the schemes offered and on the need for employees to supplement their state pensions – particularly with the state pension age moving higher for both men and women. Indeed, the recent court case and subsequent publicity around raising the retirement age for women is largely hinged upon perhaps a lack of communication and support offered.
Enhancing pension provision with things like workplace savings schemes is perhaps a logical further development for employers to consider. Additionally, the process of providing guidance on pensions and savings feeds through to other aspects of financial education in the workplace. Assessing how much income is needed in retirement requires budgeting skills and an understanding of taxation. For many, pensions guidance can be a steppingstone to wider financial education.
Providing help is clearly good corporate citizenship but it makes good business sense too. Money worries are one of the most common causes of stress, leading to lack of sleep, relationship troubles and general dis-ease. A basic level of financial competence reduces the risk of getting into money problems and is therefore conducive to greater productivity by reducing employee stress levels. Research by the University of Warwick shows that happy employees are 12% more productive than the ‘average’ employee.
A major study released in 2015 highlighted that sickness absence was an average of 2.8% of working time per annum, or 6.5 days per employee. This costs employers an average of £16 billion, or a median cost of £11 billion.XpertHR sickness absence rates survey 2015
There are other potential benefits. Providing financial education in the workplace is perceived as an employee benefit and may help with employee retention. Additionally, assisting with pension planning will help the transition to retirement of older employees. This could help with succession planning, by providing further options for younger employees that might otherwise not be available given that the compulsory retirement age has been abolished.
Admittedly, most employers do not have the resources or skills to provide financial education in house there are services to help provide support. The Money Advice Service and Age UK provide simple and free to use on-line financial tools.
The cost of a well ran half day training session will not be prohibitive for the majority of businesses, especially when considered against the potential benefits in terms of productivity and days saved through illness or absenteeism. Other options include online courses or book discussion groups.
Such approaches don’t just help develop employees’ confidence in financial matters, they are good for business – and for that reason, should be firmly on the HR radar.
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