The CIPD points out that stress is the main cause of long-term sickness in the UK, and that stress is often the result of financial instability.
For example, many employees do not understand their own payslips, and personal money management is not something they have ever been taught.
The Open University Business School (OUBS) in partnership with Share Radio has commissioned research that reveals two-thirds of employees have never received any personal financial education.
“HR professionals have a key role to play in providing financial education for employees and to offer appropriate guidance, because the consequences for business can be far-reaching, suggests Roger Davies of Genistar.
The Consequences of Financial Instability
“The average family now spends 40% of its monthly income on debt, according to the Family Inclusion Centre,” explains Roger. “The Institute of Fiscal Studies suggests that families will be worse off in 2021 than they were in 2008.”
“Financial instability can be corrosive, eating away at people’s sense of security and wellbeing, and affecting their working as well as personal lives”
“At the same time, employees are having to navigate their way through pension schemes where the responsibility has shifted firmly onto their own shoulders,” continues Roger.
“This all adds to the pressures people can find themselves subject to,” Roger explains, “with serious knock-on effects for employers with stress causing increased absence from work.”
What is HR’s Role in Financial Education?
HR departments are not legally obliged to offer financial advice to employees but Roger believes it is short-sighted for them to neglect this area of employee welfare.
“Employees are key asset, and if they are unable to perform to expectation then this can affect long-term productivity, and have a negative impact on workplace culture,” Roger observes.
HR professionals should be able to offer help at every stage, from managing pay month on month to pension guidance.
“There’s auto-enrolment on pension schemes to consider,” Roger suggests, “where, by 2018, all employers will have to offer access to some form of pension scheme to their staff.”
“Financial education should become an inherent part of HR’s role in offering advice and support to employees, whether directly or through commissioning outside expertise”
This is all essential in ensuring employee wellbeing, job satisfaction and productivity.
“A happy employee is more likely to be productive, is of greater value and is easier to retain,” Roger concludes. “This makes financial education something HR departments simply cannot afford to ignore.”