(aka Financial wellbeing 2020: Why employers should offer financial education, now)
For the past decade, people like Gethin Nedin, Director, Employee Wellbeing, at Benefex, have alerted employers that employees’ money worries are having a significant effect on their work and wellbeing. His recent article prompted me to examine the situation in Australia, leading me to believe 2020 should be the year of financial wellbeing in the workplace. Here’s why.
Increased absence and presenteeism, reduced productivity and engagement, and an increase in mental health issues can all be linked to financial concerns. According to the Society of Human Resource Managment, 83% of HR professionals reported that financial stress in employees negatively impacted work performance. One in three Australian workers say their finances are a major cause of stress. Money worries don’t only affect financial health; as one of the single biggest causes of stress it can impact mental health and physical health too, if left unchecked.
Employees are already under financial strain, and without remedy, this situation will only worsen. Employers need to realise the benefits of offering financial education to their employees, to improve their financial wellbeing, now.
Rachel Beavans of the Healthy Brand Company has reported that anecdotally 2019 came to a tipping point where wellbeing has moved beyond the innovators and early adopters to mainstream. One of the most significant moves was in May, when PM Jacinda Ahern launched New Zealand’s Wellbeing Budget. Wellbeing in the workplace has also been a focus with the World Health Organisation officially redefining burnout as “resulting from chronic workplace stress”. These developments have significant implications on employer brand, employee experience and culture. There is also a recognition that financial wellbeing initiatives can create long-term value for all stakeholders of an organisation.
Financial education works
Employers have contributed huge amounts of money to compulsory Superannuation accounts over the years. Yet without the right financial education, your team will reach retirement with less than they may be comfortable to retire on, and without an understanding of their options.
There is very strong evidence that financial education works. A meta-analysis of 126 evaluation studies found that financial education significantly impacts financial behaviour and, to a larger extent, financial literacy. Financial education also helps employees to avoid making costly mistakes.
With little support elsewhere, all eyes are turning to the employer to be the source of financial education.
Financial education must happen at work
“As most of us didn’t receive financial education in school, there is an opportunity for employers to support the development of much needed financial knowledge, skills and behaviours among working-age adults that will have a positive impact on their financial wellbeing,” says Erik Porter, CEO of The Money Charity. This is particularly relevant in Australia, following the fallout of the recent Royal Commission, which has eroded our trust in financial institutions.
Whilst organisations do understand that their employees worry about money, they significantly overestimate their employee’s levels of financial wellbeing.
As the start of a new decade is upon us, it’s time employers really started to take the financial concerns of their employees seriously.
Employers need to do more in 2020
According to a recent survey by Schroders, half of employees admit to spending more time deciding on what biscuit they want than planning their financial future (Schroders Personal Wealth Survey, August 2019). Yes, this survey was undertaken in the UK where they are very particular about their biscuits, but this shocks me.
Despite the vast and compelling evidence that employees bring their money worries to work, not enough employers are acting. New research by Zellis reveals that if offered, 63% of employees said workplace financial education would make them feel more looked after, with a massive 88% saying it would have a positive impact on their personal situation.
As Financial Coach and Consultant Alisa Barcan explained, “It would be naïve to expect someone who is sleep deprived, worried and anxious to leave that at the door when going into work. Financial stress manifests in the form of low levels of concentration, lack of motivation and general tiredness which can lead to lower performance, irritable or inappropriate behaviour and increased absenteeism. Every employer looking to improve productivity and decrease the number of stress-induced sick leave can do so by prioritising financial wellbeing within their workforce.”
Employer sponsored financial wellbeing programs help alleviate these conditions. As EY acknowledged in their Understanding the ROI of Employee Financial Wellness report, those organisations offering financial wellbeing programs saw a direct correlation to increased employee wellbeing (50%), retention (56%) and productivity (45%). “It’s important to not just offer a program but provide a roadmap that will enhance their knowledge about a broad range of financial topics, and empower them to take the necessary steps towards financial wellness.”
With a new decade upon us, it’s time for Australian employers realise the benefits to their organisation if they do more to help their team understand money.
What are your organisational plans for financial wellbeing in 2020?
With thanks to Gethin Nedin, Director, Employee Wellbeing, at Benefex for this inspiring article https://www.hrzone.com/lead/change/financial-wellbeing-why-2020-should-be-the-year-that-employers-offer-financial-education
Money101 have been delivering product-free, jargon-free online financial education since 2004. Our Financial Wellbeing program is designed to empower Australians to make better financial decisions, a workplace solution delivered online, anytime on any device.