‘Deadline to the breadline’: low savings worries affect workplace performance

Employees in the UK are in danger of not only losing their home if they are suddenly not able to bring money into their household, but will lose their entire lifestyle. UK employees have just over one month’s savings to maintain their lifestyle if their income suddenly stopped, according to a recent survey of 2,000 people by Legal & General.

As a general rule, advisers would suggest people have at least three months of salary saved in case of emergencies. But the research discovered that, on average, savings would last for just 32 days. Out of the people surveyed, around 1/5 said they’d less than £500 in savings, with over 1/4 said their savings would run out in a week or less, and a similar figure had nothing at all to fall back on.

Research by the CIPD in association with Close Brothers earlier this year looked at employee financial wellbeing and what affect that has on workplace performance. One of the main findings was that one in four workers’ money worries affect their ability to do their job, with this being especially true for younger workers.

Low financial well-being is associated with higher employee absence and stress, and poorer employee mental health, performance, and decision-making and focus. So considering the 2 pieces of research together, there is action to be taken in the workplace to alleviate money worries which in turn can lead to improved productivity and a happier workforce. Boost financial well-being and we can boost performance!

What can be done?

There are several things employers can do to help employees create a greater financial safety net for themselves. Here are some of the ideas taken from CIPD/Close Brothers report:

• Employers should be offering a level of pay that meets people’s basic needs. Paying a living wage or more is an important component in employee financial well-being.
• Employees who believe that pay decisions aren’t made in a fair and consistent manner are more at risk of poor financial well-being. Employers should review their existing reward practices to see that they support employer and staff needs in a fair and consistent manner, as well as look at how these decisions are communicated throughout the organisation.
• Employers may offer workplace savings products (such as Lifetime Individual Savings Accounts) and it is now compulsory to offer a workplace pension in certain circumstances.
• Employers can help staff to become financially savvy and responsible by helping employees make more informed choices and therefore preventing debt from becoming unmanageable for some workers – rather than having to deal with the consequences, such as through hardship loans.
• Employees are more likely to discuss money issues with people they like or who are close to them. They are also more likely to seek guidance at the workplace when they feel they can trust their organisation to help, rather than judge. Employers should offer financial education as part of their well-being programmes, and tailor it according to the different demographics and stages of life of their employees, as well as look to build trust with their workforce.

If you would like the HR180 superheroes to take a look at your people issues including pay and benefits please get in touch and we will fly in to give you a free assessment of your needs – details below.