January is traditionally a time when we tighten our belts after absorbing extra costs over the festive season. But some employees struggle with poor financial wellbeing year-round, and any unexpected bills can push them into financial crisis. 

Looming cost of living crisis?

The Bank of England is warning that inflation is likely to soar in early 2022, hitting a high of 5% in the spring when the Ofgem cap on retail energy prices is next adjusted.

High energy bills, surging costs in the shops and big rises in council tax bills all mean that employees face a significant rise in the cost of living, which could be devastating for those on lower incomes. 

Employers who are concerned about levels of financial wellness in their organisation should be on the lookout for signs that their workforce is struggling to cope.

Why should employers get involved?

Presenteeism - where employees are at work but aren’t functioning at 100% because of health or other issues – is a widespread problem. Furthermore, financial stress is a key cause of this productivity drop, with one in four UK workers reporting to the CIPD that money worries have affected their ability to do their job.*

As financial stress can affect both employees’ work and personal lives, employers are fully justified in offering support with financial wellness. Far from treating employees’ finances as a purely private matter, employers are waking up to the fact that they can and should offer greater support. We’ve started to see this with benefits packages and stakeholder pensions – financial wellbeing is the logical next step.

The warning signs

Employees may come to their line manager or HR to disclose money worries, but feelings of shame can prevent many from seeking help. Here are some key signs that affect employee wellbeing: 

Changes in performance 

Money worries increase stress, meaning employees aren’t working to their full potential — regardless of how determined they are to do their jobs well.

Employees suffering from stress are more likely to make mistakes, get distracted at work, and complete tasks to a lower standard than their colleagues. Prolonged stress can lead to cognitive changes like irritability, ‘brain fog’, and indecisiveness, which should be cause for concern to line managers and colleagues. 

Absenteeism and increased sickness rates

The mental and physical effects of prolonged stress are wide-ranging. Sleepless nights can exacerbate all the mental health effects listed above. Other symptoms which are more obvious to outsiders include changes to eating habits or using alcohol, cigarettes or drugs as a coping mechanism. 

Employees suffering with money worries may be more likely to ascribe physical symptoms of stress to illness and take time off accordingly. But common complaints like headaches, stomach problems, and chest pain can actually be a physiological response to stress, so consistently taking time off for these issues may warrant a follow-up chat with line mangers specifically around mental wellbeing.

The case for early intervention 

With financial worries intrinsically linked to mental health and subsequent employee performance, employers can play a critical role in helping their employees to talk about, overcome or even prevent some of their financial worries.

It’s in employers’ interests to support people so they can continue performing at their best, by offering help before money problems become unmanageable.

This early intervention approach is key to financial wellness. By pursuing a strategic rather than reactive approach, you are giving your workforce the best chance of remaining healthy and productive, even in exceptional circumstances.

To find out more about how Personal Group can help support you in 2022, call 01908 605000 or email letschat@personalgroup.com. 

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*https://www.cipd.co.uk/Images/financial-well-being-employee-view-report_tcm18-17439.pdf