Organisations are losing £380 per employee per annum. Here how you can stem that loss

CEOs and their teams are searching for productivity gains, growth, competitiveness and performance improvements in the toughest of environments.

Yet there is an extraordinary source of value already sitting inside businesses, often unwittingly under supported, which with the best of intentions is rarely given high enough focus at Board level.

It is the Financial Wellbeing of their people.

The business case alone justifies Board priority from a financial, strategic and reputational perspective. It would be well served to include as a key metric and business lever.

What is happening on the ground

Across every sector, employee financial stress has become the UK’s most serious and least discussed economic constraint.

·       51% of adults were struggling to meet their monthly living costs in Winter 2024 compared to 39% in Winter 2022 (Chartered Institute for Personnel and Development -IPD Good Work Survey 2024 UK average)

·       One in five people in the UK live in relative poverty

·       At least 56% of people in poverty live in households where at least one person works.

·       Four million households are in a negative budget, which means there is not enough income to cover living essentials (Citizens Advice)

·       41% of employees say financial pressure is their biggest stressor (Mental Health First Aid England)

Data capture missing

The impact of poor financial wellbeing on organisations is often hidden and being misreported for other ailments, including work related stress, infections, tummy bugs, fatigue and personal problems

A financially stressed workforce becomes:

• more distracted and less productive whilst working (3.5 working days a year lost per worker worrying about money while at work, CIPD)

• more absent (10% of the workforce lose 4.9 days a year because of financial worries, CIPD)

• more likley to seek work elsewhere; 76% of employees would move to an organisation they perceive cares about their financial wellbeing

• costly to replace (average recruitment cost £6,125, CIPD)

• less capable of sustaining quality and being innovative (a 13 point drop in IQ because of thinking about paying bills)

  
  

Myth busted

Just about every employee is affected, to varying degrees people are experiencing a poorer quality and more stressful life.

Even for the higher paid a £100,000 salary today would get the equivalent of £80,100 compared to November 2021. After accounting for inflation just about every employee is no better off than they were in 2021 pre- cost of living crisis.

Over 20 million people are in need or at risk of needing specialist debt advice (Money and Pensions Service). This is 39% of the population.

Ready to burst

Centre for Economics and Business Research estimates employers lose £10.3bn annually from absence and presenteeism linked to financial stress, while wider estimates put the total productivity drag closer to £120bn.

Financial wellbeing remains the least developed area of workplace wellbeing — despite being one of the most economically damaging and having the biggest impact on people’s mental health.

PayFit revealed one in five employees has requested a pay advance to get through to payday. This is not an isolated money management issue, it is a sign of systemic financial instability across the workforce.

The cost of not taking action

Modelling shows that poor financial wellbeing costs businesses realistically £900 per employee per year; once absenteeism, presenteeism, turnover, cognitive drag and replacement costs are included

The minimum cost is £380 per employee per year based on absenteeism and presenteeism alone.

Unspoken truth

Best intentioned support systems inside many organisations are not as effective as they could be. Often fragmented or poorly communicated. They lack an accountable top- down driven approach which is missing opportunities to engage and empower their people.

Line managers as reported by the CIPD, lack the training or confidence to support employees facing money-related stress. Yet increasingly, their time is spent firefighting and supporting the best they can with limited resources. Similarly, this applies to other staff supporting roles including HR, payroll and mental health first aiders.

The human, personal element is essential to supporting workplace financial wellbeing, with an infrastructure aside it, which includes financial education, literacy and inclusion with access to expert services.

Exclude the human touch and take up of well-intentioned support mainly through remote and online sources is unsurprisingly low. For example, do you know what the uptake of employee benefit services is and is it what you had hoped for?

Business leaders’ ambitions are impossible to unlock if employees are operating under constant financial strain. You cannot build a high-performance culture on top of financial instability.

When they support employees with a financial wellbeing policy, strategy and an approach that is driven from the top-down, built from the bottom- up, communicated and normalised, one that has people on the ground with the financial wellbeing skills, knowledge and tools to support their colleagues at their time of need the results are tangible and measurable:

·       Fewer sick days

·       Stronger retention

·       Fewer performance issues and grievances

·       Higher engagement, workplace satisfaction and retention

·       ROI that has been shown to reach 4 x, even within a year

Survival of the fittest

Poor financial wellbeing is the key driver of poor mental health; it keeps people in survival mode. If not addressed, leading to chronic stress, depression and even suicide. No amount of team away days, fruit in the kitchen and work socials will work over the long term.

People need and are looking to their employers to provide, compassionate tangible and timely support.

When employees are financially well, they don’t just survive — they have room to thrive. And when they thrive it is good for businesses financially, strategically and reputationally, as well as personally rewarding.

Click on here and find out how having your own Financial Wellbeing First Aiders provide the human touch which has proven to empower people and improve their financial wellbeing.