FEATURE TOPIC
How important is education versus monetary reward when it comes to helping employees achieve financial well-being? VG: Many organisations won’t be able to award pay increases in line with inflation during the current cost-of-living crisis, so education is incredibly important when it comes to achieving financial well-being. Education or financial awareness training can support employees in understanding how to get the most from their money and make it go further. Understanding of pension schemes and saving for retirement is a good example of this, and something which payroll professionals can support employees in understanding. If we consider that 35% of the adult population in the UK claim that they don’t have a pension, and that 45% say they don’t know how much money they’ll need in retirement, this will lead to financial uncertainty. Education about pension schemes / investments and encouraging employees to take an active interest in their pensions can then support improved financial well-being for younger employees. IH: Education underpins everything – it’s always going to be the best support for longer term financial well-being. However, there are currently people who need a monetary reward as a shorter-term fix to help them through the current challenges. It’s important with monetary rewards that they don’t become part of an expectation, with colleagues depending on them or becoming disappointed / disengaged if they don’t happen regularly. The economy will return to a steadier position and the extremities of financial hardship will lessen. However, financial education in the form of group or online learning will continue to be an important asset to have. MM: A combination of both is the most effective way to support employees, so providing employees with the tools and practical advice to better understand how to manage their finances, and being flexible and quicker when it comes to pay day solutions. Businesses need to bring discussions regarding financial management to the forefront of their business priorities this year. It’s more important than ever. The good news is that companies are trying to support employees during these hard times. Providing tools, strategies and advice before a problem occurs, rather than after,
That could be achieved through lifestyle benefits, helping spread costs or through salary sacrifice. The next component is helping facilitate good saving habits through accessible saving vehicles. This could be a save at source current account, an individual savings account or a pension. Sometimes, though, finances don’t go to plan and can be a stressor. This is where good employers can offer facilitative loans, employee assistance programmes and well-being support, where appropriate. Melanie Mills: At Caxton, we’re calling on UK businesses to do better. This can often mean just simple and small changes which can give their employees increased flexibility around pay, faster payments when errors occur or reimbursement, not just with salaries, but also work-related expenses when needed. There needs to be overall better peace of mind when employees have unexpected bills or emergencies in between pay days. Zoë Robbins: Having clear contracts and policies so employees know what to expect with their pay can allow them to plan accordingly. Other benefits can also play a part, including occupational pension schemes and access to employer-secured discounts. Organisations could provide a range of resources to support employees in increasing their understanding, especially around longer-term financial planning, such as for retirement. This could be provided in- house or by a third-party specialist company. Michelle Sutton: At the minimum, there should be an employee well-being support service, which includes the provision of financial education and resources to find the support they need. At Suez, we (with the help of our well-being ambassadors) heavily promote our employee health and well-being support services, which are free to employees and family members (with a few age restrictions). We also partner with a well-known benefits provider (Reward Gateway). Through this platform, our employees can view the full suite of benefits available. So, I’d suggest: l having a clear view of what’s on offer l communicating using all methods you have to promote the benefits l ensuring you have ambassadors who’ll be ‘on the ground’ and on hand to ensure the benefits are known. Word of mouth is invaluable.
This issue, Jerome spoke to:
What steps can organisations take to support their staff in achieving a good level of financial well-being? Vickie Graham: Financial well-being is how people feel about the control they have over their money. It’s all about achieving a sense of security that you’re in charge of your day- to-day finances and that you have enough money to make choices about how you live your life. Financial well-being is increasingly important within organisations, especially when you consider that 34% of employees* cite financial pressure as a cause of stress, and 15% admit this financial stress impacts their performance at work. Therefore, it’s in an organisation’s best interests to support employees’ financial well-being. There are some quick wins which can be implemented within organisations to support employee financial well-being, such as communicating the benefits and cost savings available to employees through their employment. Things such as ensuring employees understand their payslips and how their net pay is calculated will achieve a sense of knowledge and understanding which may not be felt if they don’t understand which tax bracket they fall into, for example. Payroll professionals can also communicate and explain the benefits to employees of salary sacrifice arrangements, or any savings which can be made through cash plans or saving at work schemes. Again, these areas contribute to employees having an understanding and sense of control regarding their money. Ian Hodson: Financial well-being has to start with financial education, and it’s important colleagues can make informed financial decisions. Building on that, it’s about supporting colleagues to save, through helping them with their everyday finances. Vickie Graham DipM FCIM ACIPP, business development director, the CIPP Ian Hodson MSc ChFCIPPdip, head of reward, University of Lincoln Melanie Mills, chief revenue officer at Caxton Payments Zoë Robbins MCIPdipp, head of payroll and employee changes, HR One Michelle Sutton MCIPPdip, head of reward and pensions, Suez.
*taken from Cost-of-Living Crisis Report, produced by Champion Health
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| Professional in Payroll, Pensions and Reward |
Issue 91 | June 2023
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