3 ways to improve the financial resilience of your employees

Financial resilience has been defined as “the ability to cope financially when faced with a sudden fall in income or unavoidable rise in expenditure”. The current virus outbreak has been an opportune moment for all of us to assess our financial resilience, as many individuals across the country have been coming to terms with an unexpected knock to their finances.

These days, HR leaders are acutely aware of the difficulty of maintaining distance between them and their employee’s personal finances but also taking some responsibility as an employer for the financial resilience of their workforce.

With this in mind, here are three ways that employers can help their employees toughen up their finances.

Make it easier for them to save

With more pressing demands on the minds of your employees, saving for the unexpected might not factor into their list of priorities. Pre-pandemic, the UK Household Saving Ratio was just over 6%, and averaged just 9.2% of disposable income over the last 54 years.

So, how do these figures really help us determine financial resilience? Employees who only save small amounts of disposable income may have more trouble paying for things that go awry in their day to day life. Things like unexpected vehicle repairs, boiler breakdowns or paying yet again for a new pair of school shoes for your child. Although saving did soar over lockdown, these figures show that in ‘normal times’ at least, financial resilience could be an issue for the majority of individuals in the UK.

Payroll savings vehicles are being used more often by employers who are seeing them as an essential offering as part of a portfolio of benefits. There are a number of workplace saving schemes on the market, but the most commonly offered are: Workplace ISAs, Save As You Earn, or Share Incentive Plans.

As these savings come straight out of payroll into your employees’ nominated accounts, this option can make it easier for your employees to save what they need, and well worth a look if your data shows that your employees find it difficult to save by themselves.

Help with the present

It’s all very well providing financial help for the future through saving schemes and workplace pensions, but what if your employees are struggling in the present? After months of furlough and reduced wages, your staff need tools to help them assess their present personal finances and plan for their future.

Provide budgeting tools and signpost key resources to help them do just that. Tools with payment reminders for recurring bills can also be useful to help colleagues understand where their money is going, and when it will be withdrawn from their account.

Many pension providers are now also offering complete financial wellbeing packages to help your employees make more confident financial decisions. Well worth a look.

Mental health

Business in the Community’s 2019 Mental Health at Work report found that nearly a quarter (24%) of employees who experience poor mental health symptoms, that are unrelated to work, cite financial difficulties as a cause. And more than one-third (34%) reported that their financial situation negatively affects their mental health.

As well as mental health struggles causing distress to your employees, they could also be impacting your organisation’s bottom line. As worries about money are a major cause of stress and anxiety, this can lead to increased presenteeism, absenteeism and a drop in productivity at work.

By offering benefits that allow your employees to take control of their finances through debt management tools, savings schemes or financial education, you can mitigate the negative impact that these factors could have on your workforce. But addressing mental health directly can have a big impact too.

Ensure that your employees are aware of the benefits they receive through their Employee Assistance Program, as many offer easy-access therapy tools, step-by-step online programmes and many resources to help your employees feel supported. Alternatively, look into whether the Health Cash Plan you provide to your workforce offers a limited amount of counselling sessions. All these factors can help individuals to know who to turn to if they’re feeling particularly vulnerable.