It is pretty safe to say that money matters, to you, us and probably most people. It is not so much money itself, but the standard of living it can bring. Whether we like it or not, money makes the world go round and to avoid financial catastrophes, such as deep debt and bankruptcy, we need to understand the A, B, C of finance, to make it work for us. This can be summed up in the term ‘financial awareness’. Financial awareness can drive employee engagement.
Unfortunately, if your employees are lacking in basic financial awareness, it can have a profound impact on their financial wellbeing and a knock-on effect on their engagement in the workplace. So, here, we look at how financial awareness can drive employee engagement and what you can do to help your workers become more financially savvy, and thus more productive.
What is financial awareness?
Basically, financial awareness concerns being able to effectively manage money, and involves confidently understanding concepts such as:
- Budgeting
- Debt management
- Saving
- Investing
- Insurance
Financial awareness is a vital element of all our lives – employer and employee alike – as it helps us to make informed decisions about our money and keep us financially stable. Whether you are an entrepreneur, trying to make your business work, by balancing your budget, or a worker trying to stretch your pay packet to the next payday, financial awareness is fundamental to your overall wellbeing.
Financial awareness is also intrinsically linked with financial literacy, as the Organisation for Economic Co-operation and Development (OECD) defines financial literacy as: “A combination of financial awareness, knowledge, skills, attitudes and behaviours necessary to make sound financial decisions and ultimately achieve financial well-being.”
However, a recent study has found that nearly three quarters of Brits struggle with financial literacy, with only 27% of UK participants actually passing a money literacy test. This worrying statistic highlights the pressing need for something to be done to improve the situation, and employers can play a major role in this. Not only will promoting greater financial awareness in your employees directly benefit them, but by helping them to avoid serious financial issues, there will be significant benefits to your business, when you ease the stress on them.
How financial awareness can drive employee engagement
So, if you are wondering how financial awareness can drive employee engagement, well if your employees lack basic understanding of financial matters, then not only could they get into hot water with their own finances, but this could seriously affect their ability to engage fully in the workplace. According to PwC’s 2023 Employee Financial Wellness Survey, financially stressed employees tend to be far less engaged in their work, more distracted and more likely to seek another job.
Indeed, one in three full-time employees stated that money worries had negatively impacted their productivity at work and financially stressed employees were nearly five times more likely to admit personal finance issues had been a distraction at work. In fact, it was found that among such employees, 56% spent three or more hours a week dealing with or thinking about issues related to their personal finances, and 36% were likely to be looking for a new job, as opposed to only 18% of non-financially stressed employees.
Furthermore, research has also found that absenteeism and loss of productivity as a result of employee financial pressures is becoming a big issue, with as many as 13 million working days lost per year to financial stress and 90% of employers agree that financial worries harm workplace performance. However, this said, what exactly can you do to ensure your employees have the support they need to gain greater financial know-how and achieve better financial wellbeing?
Getting started
While you may be able to see how financial awareness can drive employee engagement, knowing just where to start, to improve your workers’ financial knowledge and skills can seem daunting. Well, initially, it is a good idea to assess and diagnose your employees’ needs, so you can provide the specific support required. Perhaps the most logical approach is to ask your employees about their financial wellbeing, but research by The Chartered Institute of Personnel and Development (CIPD) found that only 20% of companies actually do this at least once a year.
You can do this by sending out an anonymised employee survey to determine their financial wellbeing needs and to help identify any issues that might be affecting them. However, it is vital that you explain to your employees why you are carrying out such a survey and emphasise that responses will be completely anonymous and treated confidentially. You should also share a summary of the findings with them and make a commitment to help address any needs identified, to gain support and trust.
Alternatively, if a survey is not possible, you might be able to use existing employee data (ensuring you adhere to GDPR requirements) to gain general insights on potential financial needs. For example, your payroll department may be able to advise you on the nature of financial enquiries they regularly receive, and a straightforward analysis of the demographics of your workforce could give you an indication of the likely financial issues individuals are facing. Once you have a clearer idea of the challenges that need to be addressed, you can then assess what wellbeing strategies you currently have in place and introduce new measures to fill any gaps.
Boosting financial awareness and beating taboos
Bearing in mind how financial awareness can drive employee engagement, whatever measures you implement to improve employee financial wellbeing, it is important that you provide financial education programmes and resources. This is increasingly seen as a necessity, not a ‘nice to have’, with research by Gartner revealing that six in 10 (60%) of employers now offer financial education classes to their employees. This can help your workers gain greater financial awareness and help them build their financial literacy, to avoid, or manage, the pitfalls which can affect their engagement in the workplace.
It is also vital that you cultivate a supportive work culture, where employees are encouraged to talk about their finances. Although discussing financial matters at work has traditionally been seen as a taboo, it is important that you overcome this, to ensure you can provide help where needed. This may not be easy, as a Mintago survey revealed that only two fifths of UK adults surveyed had spoken to their friends, family or colleagues about their money worries in 2022, despite the cost-of-living crisis causing serious financial issues for many.
However, you can achieve this by providing a safe, comfortable and confidential environment for your employees to talk to you, being reassuring and pointing them in the right direction for any practical assistance or resources you offer. In addition, endeavour to be relatable and share any relevant experiences you have had, so they know you are not immune to such issues.
Making assistance accessible
Once you have gathered data on the financial support needs of your workforce, you can tailor your employee benefits package to suit your team’s requirements. You might want to consider providing access to services such as budgeting guidance, to help them set realistic financial goals, debt management advice and retirement planning help. It would also be helpful to offer access to qualified financial advisers, who can supply specific guidance geared towards your employees’ individual needs.
Whatever assistance you provide, it is important to ensure that it is easily accessible. You therefore need to make sure that your financial wellbeing benefits are clearly signposted to your employees. One straightforward way to supply a wide range of financial assistance, in a highly accessible way, is to offer access to confidential advice and support, via an online financial wellbeing portal. This can deliver a wide range of financial education resources, guidance and invaluable advice, so employees have all the tools they need, at their fingertips, to improve their financial awareness and get their finances under control. In this way, you can rest assured that your workforce’s financial wellbeing needs are met and you have a more fully engaged team.