Should HR Departments Help Employees Cope With Financial Strain?
By Natalie Wilson
November 16 2019 - Money is something which we all have to deal with in our daily lives, whether it be directly or indirectly. From paying household bills to buying food, for some people, keeping their heads above water when it comes to financial stability is something which can be a constant battle, particularly for those who are on a lower income.
New research has found that it may be even harder for people who are on low incomes to meet the minimum standard of living. It was found that, particularly during the 2010 recession, the areas where people are already struggling were amongst the worst hit. However, it is important to note that this isn't always down to an inability to manage money more effectively. Quite the opposite, as people who are on lower incomes are often more successful when it comes to budgeting and living within their means.Unsurprisingly, many reports tend to focus on the financial hardship and distress of those who are unemployed or on benefits, but those who have a stable job can suffer particularly hard from financial hardship. So, should HR departments and businesses be more considerate towards their employee's financial difficulties?
In today's current climate, many of us wouldn't believe that the number of employees who are suffering from financial hardship and money-related anxieties which are related to their personal finances is likely to be extremely high. Employees at all levels are under financial stress at present and research has warned that some employees may be neglecting their personal health because of financial concerns, whether it is returning to work after ill-health or taking time off sick.
Experiencing financial difficulties, such as struggling to make ends meet and dealing with any debt, can have a hugely negative effect on people's lives in many different ways, including their mental and physical health, family and work life. Being in debt, particularly when it is at a level which is too high for the individual to manage, has been linked to a decline in mental health and wellbeing. Whilst debt can be a cause and effect of ongoing mental health problems, it is suggested that one in four adults who suffer from mental health problems have reported being behind in their bills or debt repayments.
The links between financial distress, debt and mental health should be of high importance for employers. Mental health problems are one of the biggest causes of workplace absence in the UK and it has been reported that by the year 2030, mental health problems are likely to be more prevalent. However, it is common for an employer's awareness of mental health issues within the workplace to be very minimal. Many senior managers, in particular, greatly underestimate the scale of the issues, with most thinking it has no impact on their workplace.
In addition to workplace absence, there has also been evidence showing that personal financial worries at work can have hugely negative impacts on an employee's performance at work, often through loss of productivity due to their worries. If an employee comes in after taking time off when they are still not well, or not taking time off sick if they should, then this could account to one-and-a-half times more working time lost than if the employee stayed off sick.
Employees who have financial worries reportedly have a higher level of sickness absenteeism than those who aren't struggling financially and, given the links between sickness presence and low levels of performance, it is recommended that HR departments and employers should consider the support offered in the workplace when it comes to personal finances.
There is a growing case for employers and HR departments to provide some form of support for employees who are experiencing financial difficulties, considering the links which have previously been highlighted when it comes to financial anxiety, reduced mental wellbeing and reduced productivity. There has also been some evidence which suggests that by enhancing the health and wellbeing of employees by offering valued support can actually help to increase employee retention and engagement.
However, despite these findings, the ways in which employees can be supported, both in and outside the workplace, to support their financial and mental wellbeing and make the most of their income is still not well-understood. It still appears not to be on the agenda for many HR departments or employers.
The Levels Of Employee Support
Research has found that there is great variation in the extent which many employers go to in order to provide personal or financial advice or support to their employees, particularly those who are low-earning who are more likely to be employed by smaller businesses. The quality of the support which employers and HR departments offer also varies widely. Three of the main types of support which are frequently offered by employers include:
- Employee Assistance Programmes (EAPs): EAP programmes differ massively in both comprehensiveness and scope, but a number of workplaces offer counselling and advice when it comes to personal financial difficulties. These programmes may also offer further advice on popular financial "solutions", such as bridging loans or overdrafts.
- Information on benevolent charities: There is some evidence where some employers provide information for employees for relevant charities which are in line with their industry or occupation. But, the employers who provide this information and employee's awareness of these charities is still unclear.
- Workplace financial education: There are some employers who provide this and, although the length and scope of the education which these education programmes differ. There are plenty of free workshops run by banks, building societies and even The Financial Services Authority (FSA) which employers can utilise. Some of these workshops include information on company investments and pensions, depending on the size of your business.
Further research is needed when it comes to the right support offered by employers and HR departments to their employees who may be struggling financially. HR professionals should also be talking to their employees about the methods of support which are the most helpful.