UK workers’ mental health is being undermined by poor management of their own financial affairs, according to new research from financial service firm Close Brothers Asset Management.
Its findings – which coincide with the release of Business in the Community's Mental Health at Work survey [1] – reveal that financial insecurity is having a negative impact upon staff morale in the workplace. Indeed, the firm found that:
- one third of employers say that staff with insufficient savings suffer from higher stress levels;
- a quarter have seen an increase in their employees’ health issues as a result of money worries, and
- less than one in five (17%) of organisations think that poor financial management by their staff has no impact on their business.
Yet almost half of UK firms (47%) offer no financial education at all to their staff – and are not planning to do so, either. Encouragingly, change is in the air: 36% of employers that do not currently offer financial education are planning to start doing so in the next three years. This applies in particular to SMEs with between 11 and 60 staff.
Close Brothers head of financial education Jeanette Makings said: “It’s clear that employees are not saving enough, nor are they saving in the most effective way. This is true for both short and longer term financial planning including pensions. Employers are perfectly placed to help their workforce become more confident and competent in financial decision making, in turn having a direct impact on their financial, physical, and emotional wellbeing.”
She added: “Those who receive financial education find it useful in guiding their immediate, medium, and long-term saving decisions. This then frees up employees at work to be happier, healthier, and more productive.”
Moreover, Makings notes, a comprehensive financial education strategy “could even go some way towards solving the UK’s productivity puzzle.”
With all that in mind, should business leaders across every sector help their staff to manage their finances?
The Institute of Leadership & Management's head of research, policy and standards Kate Cooper says: “As leaders, we are becoming increasingly of the impact that debt has upon people’s lives. The related worries are many and various, but include such factors as: how, as a purely logistical exercise, to go about repaying the debt; the calls that tend to emerge from creditors’ offices during standard working hours – and the gradual shortening of the time period before which creditors pass cases on to debt-collection agencies. Line managers are well placed to pick up on whether any of their employees are suffering the effects of those factors, because those individuals will be exhibiting higher levels of distraction.”
Cooper explains: “there can be little doubt that the country as a whole has issues with saving, particularly amid the pressures of consumer society. In a week where it has emerged that even if young people have saved 10% house deposits, they are still not necessarily able to buy their own homes, [2] the gulf between what people are doing to save and what certain markets expect of them seems to be widening. So if we look at the question, ‘Should organisations offer their staff financial advice?’ I would say yes. If we’re providing employees with advice about their health and nutrition through workplace healthcare initiatives, and if we are arranging bike-to-work schemes and gym subsidies, financial advice is a logical, next step.”
She notes: “the consequences of failing to look after your financial health are undoubtedly serious – so any advice should be welcomed. And once employees are engaged in the process of being advised, their enthusiasm and curiosity flourish. At a business event I attended a couple of years ago, an organisation explained what happened when it began to offer financial advice to its staff. Stereotypically, it assumed that its younger workers would gravitate to seminars on saving, while the older ones would attend talks on pensions.
“However, it found that there was quite a lot of generational cross-pollination between the two: younger staff attended pensions classes – perhaps with a view to helping their parents, or to prepare themselves for the future – while older staff went to savings discussions to think about how to provide, say, university funding for their children or grandchildren.”
Cooper adds: “such workshops provide evidence, as per many wellbeing initiatives, that you are interested in the Whole Employee – and, in the final analysis, there are not enough of them around. We are often told by government departments to eat specific amounts of fresh fruit of veg every day, and to walk a certain number of steps. But in the field of financial advice, we are mostly left to find our own way. With that in mind, there’s even a strong case to be made for financial advice to be offered in schools, so that finance becomes more of a second language to people at a younger age – and, therefore, much less intimidating.”
For further thoughts on the healthy workplace, check out these learning resources from the Institute