Money worries in the workplace
Being in financial difficulty is not just about being out of work
As a money advice sector, we are typically funded to provide support in a crisis – such as redundancy or illness. It’s crucial we understand that being unable to work – whatever the reason – carries very real mental health risks and a need to access advice. There’s no doubt that such services save lives.
But what about when I’m earning what looks like reasonable money? Will that always have a positive impact on my mental health and my work? We don’t think so. In fact, we see growing evidence that financial distress and related mental health problems can have a significant impact on employees and their capacity to function well.
Financial stress harms employees and their employers
According to an independent study, of 760 UK employees aged from 18 to 64 across all social classes commissioned by Sodexo and undertaken by Elton, 22 per cent said that their financial situation not only causes them stress, but also impacts negatively on their work productivity. This number jumped to 36 per cent for employees aged between 18 and 34.
A survey, carried out by the Society for Human Resource Management in 2012 found that 22 percent of respondents said that employees’ personal financial challenges have a large impact on their work performance and a further 61 per cent thought that financial problems have some impact on performance.
Research by AXA, the insurance multinational, found that five per cent of individuals admit to having taken time off work in the past 12 months as a result of money worries, and 70 percent say that they have spent time at work worrying about their finances. Overall, 35 percent of respondents believe that financial concerns are preventing them from performing their best at work.
Lost productivity costs money. The Centre for Mental Health has found that the overall cost to British employers of stress, anxiety and depression amounts to £1,035 per employee per year. Of this total, £335 (32.4 percent) is due to absenteeism, £605 (58.4 percent) is due to ‘presenteeism’ and £95 to staff turnover (9.2 percent), or £15.1 billion in total. That amounts to £737 per employee. Barclays, in their report Financial Well-being: The Last Taboo in the Workplace, estimated that poor financial wellbeing was costing employers four per cent of their payroll – which included issues relating to mental health.
A clear business – and social – case for investing in employees’ financial health
According to Dame Carol Black’s DWP review of the health of Britain’s working-age population in 2008, the most commonly mentioned benefits of investing in employee wellbeing were: increased productivity; reduced number of sickness absences; reduced staff turnover and increased retention of skills; and improved staff morale. Also cited were: reduced recruitment and training costs; improved company reputation as a ‘good employer’; and improved financial performance and competitiveness.
Other research by the Institute for Social and Economic Research (ISER) at the University of Essex, looking at the impact of financial capability on psychological well-being based on data taken from the British Household Panel Survey, found that improving financial capability increases general health questionnaire (GHQ) scores for both men and women by a far higher percentage, regardless of income level, than giving them an extra £1,000 a month income. Therefore in the workplace focusing on wellbeing rather than pay increases could actually have more impact.
What can we do?
We can’t afford to continue focusing on crisis management alone. We need instead a strategic, preventative approach that combines a variety of different agencies, including employers, to help people manage their complex and changing circumstances on an ongoing basis. That way, we help more people have better lives overall, as well as avoiding crises.
But the problem is that, while many employers know they need to do something, knowing exactly where to turn, which organisations to consult with, and how interventionist they can be without prying, is more challenging.
Toynbee Hall, through frontline services in London and our national Financial Health Exchange strategic programmes, is exploring a range of ways to enable employers support better financial health for their employees. Crucially, we don’t believe that this needs to be a huge additional burden on employers who are already coping with pension auto-enrollment. Creating a culture where it’s ok to seek support, knowing where to signpost employees to access good advice, and recognising that financial stress is usually a temporary state requiring support, rather than a negative sign about an employee’s character, can be enough to make a significant difference. National initiatives – such as the Financial Capability Strategy, integrating financial capability into debt advice commissioning, and proposals by the Financial Inclusion Commission and others to tackle financial exclusion and increase access to advice pre-crisis – can all help shape and promote this agenda.
So what’s the financial stress culture and support offer in your workplace? How do you want it to change? We want to work with you – and Money and Mental Health and others across the sector – to ensure every workplace helps employees avoid financial crisis and experience better mental health as a result.
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