During a cost of living crisis, financial wellbeing is a significant concern for employers and employees alike. On episode 131 of Talent & Growth, I spoke to Anita Lettink, a veteran of the HR and Payroll industry and author of How to Select Your Next Payroll, about how we can promote financial wellbeing in our employees. We covered topics from salary transparency to financial literacy, so read on to find out how you can improve the financial wellbeing of your team.
Why do you think financial wellbeing is not talked about enough?
I think the pandemic normalised talking about mental health, so we started to delve into that. We found that there were four problems that people were having – one of which was financial issues. That is completely understandable, because if you are worried about paying your invoices you are not bringing your best self to work. Instead you’re constantly trying to figure out how to pay the next bill or how to avoid the debt collectors.
Last year, after the war in Ukraine started, we were also faced with inflation, so you can see why the financial aspects of the employer-employee relationship suddenly became much more important in the first half of last year. What I noticed last year as I tracked a lot of investments in the HR tech startup space was a shift from funding talent and mental health solutions to funding HR and Payroll solutions and compensation and financial education tools. There is some progress being made, but it’s coming after the problems emerged.
How does supporting the financial health of employees contribute to that overall mental well being job satisfaction, and what can companies do to prioritise this aspect of care?
Before the pandemic it was unheard of that you would talk about your financial situation with employees.You could know that they are not managing their financial situation very well, but you could not really bring it up because it was considered their private business. I think after the pandemic, we started to realise that, first of all, mental health and financial health are sometimes very closely related. We also realised that not everyone gets a good financial education at home, and when you do not get it at home, you don’t get it anywhere else.
The first environment where you are faced with this situation is your job. Thankfully the pandemic has normalised the employer-employee relationship in the sense that we now find it easier to talk about private issues. One of those everyday conversations is slowly but surely also taking a financial turn. That means that when people find it really hard to manage their money, that can be a conversation at work. Employers are also making tools available, because they now understand that sometimes that is an issue where people can be taught how to be more aware of their income versus their outflow, but also manage it in such a way that it is beneficial to them.
A number of tools can tie into your Payroll solution or to tie into your bank account which give you a more accurate picture of your financial situation. All of these things coming together has created the perfect opportunity for employers to start having these conversations with employees, but also employees asking for solutions and help with their finances from employers.
The interesting thing is that these money issues happen at all levels. It is not just that employees with lower salaries suffer from these issues more often than employees with very high salaries. The reason is that when people earn a certain amount of money, they start to adjust their spending patterns, and before you know it, even people that we would consider rich have trouble managing their income.
What ways can companies effectively educate and empower their employees to make informed decisions about their financial health?
Make the right information available. Don’t just send people a payslip, but give them insight on compensation. A lot of companies provide benefits which have a monetary value, such as pension support, which is building wealth in a certain way. People assume that they understand their own financial situation, but there are cases where people switched companies thinking that they would get a higher salary, but their compensation amount did not change or was lower than before because of a change in additional benefits.Giving people access to an overview of their total rewards packages is really helpful, because it shows what you as a company invest in them. That’s when they can make much more informed decisions about their financial planning.
To learn more about financial wellbeing, tune into Episode 131 of the Talent & Growth podcast here.