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Risk Insights: Supporting Staff Through the Costof-Living Crisis

The UK’s cost-of-living increase has hit the country hard, with inflation levels at a 30-year high. Consumers are paying
more for essentials such as food, clothing and transport, leaving less money for recreational activities. Additionally, April’s
energy price cap review will see electricity and gas bills increase for most, an extra financial burden.

Workers across the country are being affected by price increases, with 37 per cent considering a job change in light of
rising living costs, according to a survey by Totaljobs. Financial concerns and struggles may also cause significant stress
in employees, affecting their performance at work. In fact, research by Aegon found workers’ poor financial well-being
costs UK employers £1.56 billion annually due to ill health-related absenteeism and presenteeism. Consequently, it’s wise
for employers to take steps to support affected employees. Consider these tips:

 

BE TRANSPARENT

Money worries are often considered a taboo subject. However, financial stress can negatively affect mental well-being,
which, in turn, may affect physical health. Therefore, it’s essential that employees feel able to discuss concerns.
Employers should display an ‘open door policy’, encouraging staff to speak confidentially about problems. If employees
feel uncomfortable talking to their employer, they can be directed to free, impartial support, such as the Money and
Pensions Service.

Being open and honest should apply across the organisation, including those leading the company. Employees won’t
appreciate being told there isn’t much in the pot for a pay rise if stakeholders are seen taking additional dividends.
Alongside paying a fair and liveable wage, organisations should be transparent about their financial health so employees
are properly informed.

 

OFFER FLEXIBILITY

One of the best ways for employers to support their workforce is to be flexible. Some employees may benefit from being
allowed to work from home more, therefore saving on travel costs. Others may prefer to work from the office, saving
money on home heating and utilities. As all employees’ finances will be impacted differently, organisations should offer
flexibility and consider employee requests on a case-by-case basis.

 

REVIEW THE EMPLOYEE BENEFITS SCHEME

Although employers can’t solve all money worries, they can help reduce certain employee costs by reviewing their current
benefits scheme.

While under stress, it’s vital for employees to have easy access to medical appointments in case of ill health, so many
schemes include medical and dental plans. Additionally, employers could consider including other benefits to bolster the
support available, such as:

  • Transport costs—With transport costs increasing, offering commuters an interest-free loan on annual travel tickets
    could be a lifesaver. Employers may wish to purchase an annual ticket for staff, deducting a monthly amount from
    wages until it’s paid for. Usually, an annual travel pass is hundreds of pounds cheaper than paying a daily rate.
    Further, employers could join and promote the government’s cycle to work scheme.
  • Salary sacrifice—At its most basic, salary sacrifice entails employees giving up part of their salary for a non-cash
    benefit. This reduces the amount of tax and national insurance they have to pay. Salary sacrifice arrangements
    include car parking, home computers, gym memberships and personal learning.
  • Discount vouchers—With disposable income lower than usual, employers could consider joining a staff discount
    scheme, giving employees reduced prices on shopping, holidays and days out.

Before tweaking any employee benefits scheme, organisations may profit from speaking to employees first-hand to see
what they would benefit from most.

 

PROVIDE FINANCIAL EDUCATION

Among employers with health and well-being strategies, only 11 per cent actively focus on financial well-being, according
to the Chartered Institute of Personnel and Development. This number is compared to 57 per cent who actively focus on
mental well-being. But, poor financial well-being can lead to poor mental health. Therefore, as financial and mental wellbeing go hand-in-hand, now is the time to add financial education to a holistic well-being strategy.

There are many ways to include financial education, depending on the available budget. Small steps include directing staff
to useful tools like financial calculators and budgeting templates. Alternatively, employers could utilise online courses,
which cover topics as varied as budget making and keeping, managing debt, establishing an emergency fund and buying a
home. In larger organisations, employers may consider engaging a financial adviser to run group sessions. If possible,
investing in 1-2-1 sessions would allow struggling employees to receive bespoke financial advice.

It’s important for financial education to include advice for the long term, such as retirement planning. Often, people pick up
financial information as and when they need it. However, this can create a tendency towards making emergency decisions
rather than long-term financial plans. Financial education should include both short- and long-term measures.

 

SUMMARY

Organisations risk an unengaged and distracted workforce if they are unable to help alleviate cost-of-living concerns.
However, through taking steps to look after the financial well-being of employees, organisations can help staff bolster their
financial resilience, both now and for the future. And, through being supported, employees are more likely to be motivated,
productive and loyal.

For more information on employee benefits and well-being, contact us today.