Why is financial wellbeing important in the workplace?

Do you work at your best when you are stressed?

The answer is probably, no. 

And stress can be caused by any number of factors. Financial stress can be the most crippling of causes. Our financial security does not just impact ourselves, it affects our entire family. When employees are worried about money, their work suffers. Financial wellbeing is known by many names, like financial literacy, wellness, confidence or resilience. Put simply it is all about people having a good relationship with their money. 

Because of this, employee financial wellbeing is an important aspect of an individual's overall wellbeing, and it is becoming increasingly recognised as a critical factor in workplace productivity and employee satisfaction. 

In this blog, we will explore why financial wellbeing is essential in the workplace and how employers can promote financial wellness among their employees.

What’s the impact of financial stress on businesses?

So what does the data say about how financial stress affects the workplace?

1. It reduces productivity

First and foremost, as financial stress can have a significant impact on an individual's mental and physical health, it can affect their performance. One study reports that 18% of workers saw a decline in their productivity when stressed about their finances. This amounts to £2.5 billion in lost productivity for UK employers. 

There are dozens of reports out there that all report similar findings. Although the proportion of respondents being affected by financial trouble differs from report to report (based on the sample size and the makeup of those quizzed), the conclusions are all the same: financial worries cause stress, leaving workers distracted and damaging productivity.

2. It increases absenteeism

In addition, the same study revealed that financial stress increases absenteeism. 10% of workers surveyed had taken time off work due to financial concerns, averaging 4.9 days off for every employee affected. When taken as a sample of the UK as a whole, this amounts to 13 million working days lost per year.

Again, although all the reports on the phenomenon are going to attach slightly different figures to the impact, all the reports are in agreement: financial worries cause employees to take more time off work. This affects how productive a company can be. 

3. It affects morale

Something that is harder to quantify, but should definitely be mentioned is the knock-on effect of financial stress. With workers taking time off due to stress, their colleagues have to pick up the slack. This can have a compounding effect on morale in the workplace. As the remaining colleagues feel the absence of their missing colleague, their own stress levels can rise and morale can dip across the whole workforce. 

Also, financial stress can also affect an individual's relationships, including those with colleagues and supervisors, which can impact the work environment. Employees experiencing financial difficulties may feel distracted or overwhelmed, leading to communication breakdowns and misunderstandings.

Now we have seen the impact of financial stress on businesses, how can companies make steps to support their employees’ financial wellbeing at work?

How to improve financial wellbeing in the workplace

1. Craft a comprehensive workplace wellbeing strategy

People are inherently complex, with our wellbeing influenced by a multitude of factors. As we’ve seen, challenges such as financial stress can all impact our mental state and damage our performance at work. To truly flourish in our professional lives, it's crucial that we not only feel financially secure, but are physically and mentally well, and socially connected.

Creating a programme that enables your team to thrive at work involves addressing these varied aspects of wellbeing.

Developing such a strategy, especially with an existing strategy, requires a balance between a thorough approach and the flexibility to meet diverse needs. How do you ensure your efforts are effectively reaching everyone and supporting employees across different life situations?

That’s where we can help. 

We’ve developed a guide to help you evaluate your current strategies and uncover new approaches to wellbeing. Moreover, it will help you gain insights into the critical role of wellbeing in achieving your business objectives.