Debi O’Donovan
Director, Reward & Employee Benefits Association (REBA)
The cost of living crisis has put financial wellbeing at work centre stage. Whether employers believe they are responsible for personal living costs, they are facing the fallout of ever-rising inflation.
From demands for the highest pay increases in decades to employees facing genuine financial distress, few bosses can avoid reacting.
Supporting employees’ financial needs
Financial wellbeing has tended to be the slightly ignored cost-heavy sibling in the employee wellbeing family, which includes physical, mental and social wellbeing. This is because, historically, almost all financial wellbeing investment by employers has gone on the pension contributions budget, usually managed separately by a pensions specialist. This siloed approach has been fairly successful at getting millions of UK employees into the habit of saving for retirement, but it risks limiting other forms of financial wellbeing strategies which could be of benefit to both employees and employers.
At REBA, we are seeing a handful of forward-thinking employers reappraise approaches to better fit with business goals and employees’ financial needs. Before reacting in a knee-jerk way to the cost of living crisis, they are using this change opportunity to put in longer-term sustainable thinking.
Employee wellbeing got us through the Covid-19 pandemic, financial wellbeing strategies will get us through the cost of living crisis and beyond.
Financial wellbeing should be a priority
In mid-October, the Reward & Employee Benefits Association will publish a major study, Financial Wellbeing Research 2022, in partnership with WEALTH at work. It clearly shows employers want to shift long-term paternalistic support off their plates, and rather, skill up individual employees to take greater responsibility for their own financial outcomes.
Seven-in-ten research respondents told REBA that increasing financial capability among their workforce is a priority over the coming two years. This has been building for years as thousands of employers moved away from financial salary pension schemes. But now, wider economic, political and societal transformations are speeding this shift along. From the flexibility in how, where and when we work and the increasing number of careers we’ll each have (meaning shorter stays with each employer) through to changing age profiles and diversities of workforces, employers are thinking differently about what a future workforce looks like.
Re-accessing business strategies
While our research shows that well over 80% of larger employers currently see financial wellbeing benefits as primarily aimed at improving overall employee wellbeing, retention and engagement, there is a smaller, but growing cohort which are aligning financial benefits at work to drive behaviours linked to managing an ageing workforce, workforce planning and meeting the business purpose of their leadership. Employee wellbeing got us through the Covid-19 pandemic, financial wellbeing strategies will get us through the cost of living crisis and beyond.
