Evaluation Scotland Wales
The UK Strategy for Financial Wellbeing is taking forward the work of the Financial Capability Strategy Opens in a new window

23 million working-age adults do not feel confident planning for their financial future

How can we improve financial wellbeing in the workplace?

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.

Why should employers provide financial wellbeing support for their staff?

The need to support employees to develop their financial wellbeing is well-evidenced, with recent research showing that:

  • One in four workers have lost sleep over money worries;
  • 59% of employees say that current financial worries prevent them from performing at their best;
  • poor financial wellbeing can cost employers the equivalent of up to 17% of salary costs;
  • 46% of employees say that financial pressure affects their relationship with their manager.

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.

How should workplace financial wellbeing programmes be designed?

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:

Make the case

Build support for the proposed activity at all levels of the organisation, and create a business case that includes:

  • Administration costs;
  • Opportunity costs of employee and management time to manage and deliver these interventions;
  • Direct personnel costs involved in additional activity required to design an effective strategy; and
  • Proposed impact metrics to provide feedback on programme effectiveness, as well as cost benefit analysis.

Understand employee needs

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.

Explore the most appropriate provision approach

  • Decide when and how to use external providers.

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.

  • Consider the most suitable mode of delivery.

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.

  • Make provision accessible.

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.

  • Think about a suitable style for the programme.

Ensure material is clear, timely, practical and includes case-studies that will enable programme participants to apply guidance directly to their circumstances.

  • Consider the potential use of behavioural science.

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.

  • Target teachable moments.

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.

Where should future research focus?

  • What combination of interventions work best in different types and sizes of employer, and for different workforce compositions?
  • How can employers measure and understand the effectiveness of their programme?
  • How can employers better target guidance to employees, using data they already hold and common points of interaction (e.g. enquiring about parental leave)?
  • Whether and how a wider range of behavioural science-informed interventions could be integrated into workplace programmes?

What next?

Did you find this review helpful? We would like to know what you think. Please contact us at whatworks@fincap.org.uk with your feedback, and any suggestions for further research or evaluation that should be included in future updates.

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.