Financial well-being: the employee view

• Context
• The study
• Key findings
• Points to consider
• Full report

Context

The survey explores employees’ views on financial wellbeing. Stress caused by pay levels, lack of financial awareness or absence of employee benefits can affect work performance. In addition, the perception that their contributions are not being acknowledged can have an impact on employee self-esteem, health and productivity.

The study follows the previous Chartered Institute of Personnel and Development (CIPD) report ‘Growing the Health and Well-being Agenda: From first steps to full potential’ which showed that an integrated approach to health and well-being can increase levels of employee engagement while fostering a workforce where people are committed to achieving organisational success.

Findings from this study inform the CIPD’s report ‘Employee Financial Well-being: Why it’s important’ and supports the CIPD’s Employee Financial Well-being: Practical guidance, which helps HR professionals implement a financial well-being strategy for employees in their own organisations.

The study

A survey of 1,817 working adults across all industrial sectors, was carried out online by YouGov for CIPD. It was undertaken between 12 and 22 September 2016 and is representative of the UK workforce in relation to sector, size and industry type. The survey asked employees how money worries and financial wellbeing affected their ability to do their job.

Results are primarily analysed by sector, organisational size, managerial position and pay. In some cases, net scores have been used to display results: these are calculated by subtracting the percentage of respondents who say something positive from the percentage who say something negative, measuring the strength of the direction of feeling rather than simple agreement scores.

Key findings

Lost output caused by money worries:

• One in four workers reported money worries affected their ability to do their job, rising to one third for those aged between 25 and 34, those based in London and those working in the public sector. It does not just affect low earners. The most common impacts are: fatigue caused by loss of sleep and lack of concentration.

Financial well-being and how it can be improved:

• Most respondents state that money is the most important element of financial well-being, with three-quarters (75%) saying that earning enough income is of particular importance to them.
• Over half (55%) state that being able to save for the future is important.
• Over half (54%) state that being rewarded in a fair and consistent manner is important.
• Just under half (45%) state that being able to pay off existing debts comfortably is important (this rose to 55% among Welsh workers).

Financial decision-making:

• Employees most frequently use financial comparison websites (40% of respondents) and talk to their family and friends (30%) when making saving, spending and borrowing decisions.

Seeking financial advice or help:

• Almost three in five (58%) of employees are comfortable in seeking help or advice about their financial situation from a comparison website while 11% would not, with the remainder either being neither comfortable nor uncomfortable (23%) or unable to express an opinion (8%).
• Almost three in five (56%) are comfortable and relaxed talking about their money with family and friends.
• Over half (53%) are comfortable about seeking help from an independent financial adviser, although far fewer actually do so.
• Employees are least comfortable discussing their financial situation with colleagues (17%), line management (12%), HR or the payroll department (10%).

Barriers to financial well-being:

• Nearly three in five workers report that they are facing obstacles in managing their financial situation as well as they would like.
• Young workers are more likely to claim they face barriers in managing their financial situation, with over seven in ten 18–24-year-olds reporting this, as do two-thirds of public sector staff and more than three in five female employees.
• The most common obstacle faced by just under three in ten workers (29%) is earning only enough money to get by each month.
• Other barriers include: the amount of hassle involved in saving money (for example, switching energy supplier or bank accounts; (16%) and lack of time (13%).
• Those more likely to face this hurdle are: those with less than six months’ service (44%); aged 18–24 (42%); earning less than £24,999 (41%); and female (36%). It is suggested that any financial well-being programme should therefore consider the plight of young employees earning less than £25,000 who have recently started employment.

The findings in this report show that poor financial well-being is a clear and present issue for employees, employers, the economy and society. The findings are translated into implications for employers aiming to have a financial wellbeing strategy in place including a key role for HR.

Points to consider

Methodological limitations:

• The report states that the sample is representative of the UK workforce in relation to sector, size and industry type.
• No confidence limits are given so it is difficult to assess the extent of differences reported.

Relevance:

• The report provides timely information including some comparisons e.g. by geography, age, industry sector.
• It is of interest to those working in employee well-being.

Full report

Financial well-being: the employee view - full report