The CIPD is calling on employers to recognise both the moral and business case for taking more responsibility for their employees’ financial wellbeing as research reveals that half of employers don’t have a financial wellbeing policy, despite financial impact of COVID-19.
Despite the financial hardship wrought by COVID-19, half of employers (49%) don’t have a financial wellbeing policy. This is according to the latest Reward Management Survey from the CIPD, the professional body for HR and people development.
A financial wellbeing policy acknowledges that, as income providers, organisations play a vital role in their workers’ financial wellbeing. It can be as simple as a commitment to signposting to independent money and debt guidance, offering access to low-interest loans and running pension workshops.
But that’s not to say that employers aren’t doing anything to help people who might be struggling financially. The CIPD’s survey (which 420 employers responded to) finds that:
- 12% of employers have introduced, or plan to introduce, a financial wellbeing policy in direct response to the pandemic (29% already had one)
- 19% are planning or considering becoming an accredited Living Wage Foundation employer (a further 18% of employers are already accredited and another 18% already pay the ‘Real Living Wage’ without being accredited)
- 24% of employers have explored how the pandemic has impacted their employees’ financial wellbeing, so they’re better able to identify the right kind of support. Another 18% plan to do so by the end of March 2021
- Nearly a third (30%) of employers say the pandemic and the economic crisis has prompted them to consider how fair their pay and benefits are. A quarter (25%) are taking corrective action or plan to do so.
As well as affecting an individual’s health and wellbeing, money and debt worries can impact people’s performance at work, which can have knock-on implications for their employer’s productivity and bottom line. However, the report suggests some employers don’t recognise the strong business case for having a financial wellbeing policy.
The most common reason given by employers for not having a financial wellbeing policy was that senior management don’t see it as a priority right now (49%). Other reasons given were:
- 27% said that senior management see the need for a financial wellbeing policy, but don’t have the time, money or expertise to create it
- 21% said they weren’t sure employees would want such a policy (this decreases to 11% for those who’ve asked their employees what impact the pandemic has had on their financial wellbeing)
- 20% aren’t sure it would contribute to employees’ wellbeing
- 19% don’t trust a policy would improve their organisation’s performance.
Charles Cotton, senior performance and reward adviser at the CIPD, said: “The pandemic has, unfortunately, hit many people’s finances hard, with many losing their jobs and others seeing their income fall. This has no doubt focused many employers’ minds on fairness and in-work poverty – and it’s good to see a number of them taking steps to protect people’s financial wellbeing during the pandemic.
“And whilst we fully acknowledge how tough it is for businesses right now, with many just focusing on surviving, we think there’s a strong case for employers to be doing more to support their people’s financial wellbeing. It may well be that even light-touch steps, such as signposting to independent money and debt advice, can start to make a difference.
“It should also be said that every employee stands to benefit from having better access to financial wellbeing support, particularly at key life stages, such as when they are starting out, becoming a parent or retiring.”
Further findings from the report include:
- A quarter of employers (25%) will have revised how much they have spent on employee pay (both fixed and variable) by March 2021. Of these, 50% will reduce pay and 25% will increase it.
- Only 7% of organisations are changing pay to reflect home working or have plans to do so. A quarter do not intend to do so, while 16% are keeping the issue under review.
- A quarter (26%) of organisations intend to change the amount spent on employee benefits this year. Of these, 44% are increasing spend and 40% are decreasing spend.
- A fifth of organisations (19%) are making changes to their reward practices in response to the Black Lives Matters protests that took place last summer. Those that are taking action are concentrated in the public and voluntary sectors.
The CIPD recommends that a financial wellbeing policy should include:
- Signposting to financial wellbeing advice, such as the resources available from the Money and Pensions Service (which small employers can do easily).
- Targeted financial education support at key moments in working lives, for example ahead of maternity leave
- Revising benefits packages to include finance-friendly initiatives, like giving employees the option to choose how often they’re paid
- Implementing flexible working policies so employees with caring responsibilities can balance working enough hours to comfortably pay their bills
- Giving people security over their hours and helping them to progress into higher-paid roles
- Committing, where possible, to paying all employees at least the Real Living Wage.
If you feel your organisation needs more help in supporting your employees then advo hr is here to help. Email email@example.com to start a conversation.
You can read the original CIPD press release in full here.