The Importance of Pay in a Financial Wellbeing Strategy
On first reading, you might think the question of the importance of pay as a part of a financial wellbeing strategy is a silly one.
After all, what can be more important to financial wellbeing at work than someone’s salary?
Undoubtedly, monthly income and financial wellbeing are inextricably linked—the more you earn the more money you have to pay the bills—but there’s more to an effective financial wellbeing strategy than salary, and failing to address these additional opportunities to support employee wellbeing will impact your business in a multitude of ways.
How do employee financial concerns affect your business?
No employer should be apathetic to the financial concerns of their workforce, but did you know it can also significantly affect the performance of the organisation?
In their 2019-20 Employer’s Guide to Financial Wellbeing, Salary Finance state that employees tend to fall into one of two groups:
- ‘Planners’ (40%) - people who find it relatively easy to save first and spend later.
- ‘Copers’ (28%) - people who typically spend first and worry about saving money later, although they’re rarely able to do so.
The rest are made up of ‘Strugglers’ (9%), ‘Builders’ (16%) and ‘Prosperers’ (8%).
Relationships, career and health are all a source of stress for everyone at some point, but your employees are more worried about money than anything else. While women worry more about money than men (41% versus 32%), it’s clearly ahead of those other areas.
Does this impact their job performance?
When your employees worry about their finances they’re 14.6x more likely to suffer from sleepless nights and 7.7x more likely to have troubled relationships with colleagues. Unsurprisingly, this has a significant impact on their job performance.
Salary Finance’s research found that these employees were 12.4x less likely to finish their daily tasks, with almost 3 hours per week lost because of money worries. Poor financial wellbeing at work also contributes to an extra sick day per employee.
Ultimately, this equates to 20-29 productive days lost annually.
Does this impact staff retention?
When an employee feels as though their company cares about their wellbeing it breeds loyalty and improves talent retention. By contrast, an employee struggling with money worries is 1.5x more likely to be looking for a new job.
Employees themselves also acknowledge that worrying about finances affects their performance at work. Of the employees surveyed for Close Brothers’ 2019 Financial Wellbeing Index, 94% reported worrying about money, while 28% were unhappy with the state of their finances. Crucially, three quarters (77%) admitted that it impacted them at work.
Inevitably, this higher staff churn leads to increased recruitment costs and additional training costs, leading to a 9-13% increase to the organisation’s salary burden.
How important is a financial wellbeing strategy?
When you take into account all the negative effects of money concerns on both the employee and employer, it’s clear that implementing a robust financial wellbeing strategy is essential in 2022.
As we’ve discussed in this article, it makes commercial sense for an organisation to support their employees’ financial wellbeing.
What’s more, employer’s play a unique role in the financial health of their workers because of the ‘salary link’.This salary link means employers are best placed to support financial wellbeing at work both in the short term, but also the long term.
What’s more, according to Aon’s Benefits and Trends Survey 2022, 82% of companies list ‘Better awareness and handling of mental wellbeing’ as a benefit their employees now expect—and this is clearly linked to financial wellbeing.
How do rewards, benefits and discounts fit into your financial wellbeing strategy?
A competitive salary is essential for attracting your industry’s top talent, and it’s relation to employee finances is clear, but your financial wellbeing strategy needs to go further.
By offering a wide range of employee discounts to your entire team you’ll help their wages go further. This might include anything from money off everyday household essentials to discounts on the latest tech and family holidays.
One of the aims of implementing a financial wellbeing strategy is to improve productivity and performance, so recognising success and positive behaviours is a key element of that.
Employee rewards, including recognition prepaid cards, eVouchers or gift cards, incentivises your employees to excel, improves workplace engagement and contributes to a great company culture—but they can also support financial wellbeing.
Salary sacrifice schemes
Similar to employee discounts in that they help your workforce’s money go further, salary sacrifice schemes have been a popular method with organisations looking to support financial wellbeing for a long time.
They work by allowing an employee to use funds directly from their salaries to pay for a range of products, including new cars, travel season tickets or the latest tech.
This allows them to spread the cost, meaning the purchase is more affordable without having to take out an expensive line of credit.
As an added benefit, both the employee and the organisation can make substantial savings on National Insurance Contributions.
Want to boost your financial wellbeing strategy?
At Sodexo Engage we don’t just offer a shopping list of employee benefits and rewards. We’ll work with you to build a financial wellbeing strategy that works for your organisation and the specific needs of your workforce.
We’ve got over 60 years’ experience working with some of the UK’s biggest brands to support every aspect of their employees’ wellbeing, meaning we’re best placed to help you ease the money worries of your staff and reap the productivity and employee engagement benefits that come with it.
Ready to get started?
Contact the Sodexo Engage team today and take the first step towards implementing a competitive and effective financial wellbeing strategy.