Research by Neyber estimates that money worries cost the UK economy £120bn and 17.5 million lost hours of work. Most employers now recognise a link between financial wellbeing and productivity, with nine out of ten saying that financial concerns impact upon staff performance.
However, there is only patchy evidence about what works to design and deliver effective financial wellbeing programmes in the workplace, and few examples of evaluations to help employers decide how best to measure the impact of their programmes.
This review examines the evidence for why employers should develop their employees’ financial wellbeing and sets out key design principles for employee wellbeing programmes. The accompanying paper ‘Measuring Financial Wellbeing Programmes in the Workplace’ lists some evaluation approaches that have been applied in the workplace, with case studies to show how these work in practice.
The need to support employees to develop their financial wellbeing is well-evidenced, with recent research showing that:
Furthermore, most employees believe there is a role for their employers in supporting their personal financial wellbeing and only one in five are satisfied with the efforts their employers have made so far to help them manage their finances.
Finally, employers are uniquely positioned to deliver money guidance at the moments when their employees most need help. They are often engaged with many of their employees’ key life events, including starting work, changing jobs, becoming parents and retiring. As such, employers are well-placed to offer structured guidance and timely signposting to their staff.
Tackling poor financial wellbeing is not simply a question of remuneration; research shows that money worries can affect employees regardless of their level of pay. The RBS ‘Young Workers’ study found that financial capability support was effective across the pay spectrum and Salary Finance’s ‘Employer’s Guide to Financial Wellbeing 2018-19’ reported that the two employee groups found to have the most money worries were those earning £10,000 to £14,000 and those earning more than £100,000.
There are a wide range of services and types of support that employers can build into a financial wellbeing programme, with varying costs and resource requirements. Access to financial education and guidance is often at the core of workplace financial wellbeing programmes and there is a clear need for this support. Research by CIPD for example estimates that 30% of employees do not use information or advice when making financial decisions. Employers can also support their staff’s financial wellbeing by providing a range of other types of support e.g. access to regulated advice; financial products and services (e.g. payrolls savings); cost reduction schemes (e.g. travelcard loans, discounted memberships) and low-cost loans or grants to manage short term money emergencies.
The right combination of support is dependent on the employee base, levels of need across different types of employee, and what is feasible for the employer to deliver. Employers may also position financial wellbeing within a wider holistic programme – acknowledging the link between financial wellbeing and other aspects of mental and physical health.
When designing a financial wellbeing programme, the evidence suggests that applying the following principles may help employers develop the right package of support:
Build support for the proposed activity at all levels of the organisation, and create a business case that includes:
Surveying employees provides insight about how to target and prioritise different elements of the programme. This can also be effective in securing employees’ buy-in to the scheme.
For generic advice, internal provision may be effective, where employers can draw on staff with relevant personal and professional experience. However, external specialists may be necessary to support employees with more specialist needs and to deliver regulated advice.
While some employees may request, and benefit most from, personalised support, group work and peer-to-peer support can also be effective, as can online self-learning. The mode of delivery for different programme elements should therefore vary, according to particular employee needs, and to ensure it benefits as many employees as possible.
While online provision has a role in enabling employees to access material remotely, many employee types do not have internet access at work and evidence from large scale workplace financial wellbeing programmes suggests that employees engage well with interventions delivered on-site and in work.
Ensure material is clear, timely, practical and includes case-studies that will enable programme participants to apply guidance directly to their circumstances.
Insights from behavioural sciences can help employers to understand the hooks and biases which effect engagement and prompt behaviour change. Auto-enrolment, auto-escalation and defaults have been shown to be effective in increasing savings and pension contributions in the workplace. CIPD’s Behavioural Insights report provides many examples of behaviourally informed interventions which can be applied in the workplace, but require further testing, including: giving employees the choice to opt-out, rather than opt-in, to financial wellbeing programmes; asking employees to commit to saving a proportion of future pay rises; and showing people a digitally aged selfie to increase their propensity to save.
Guidance should be offered at times when employees are most in need of support, most likely to be receptive to it, and most able to act upon it. These “teachable moments” could include: pension planning when changing employment, reassessing insurance provision when marrying, forming a civil partnership, or growing a family. Existing systems and processes (particularly the HR system) can be used to suitably target guidance according to employee’s life-stage.
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This Thematic Review was produced in collaboration with the Centre on Household Assets and Savings Management (CHASM) at Birmingham University, the University of Edinburgh Business School, Toynbee Hall and Ecorys UK.