Financial worries are keeping one in three Brits up at night. Close to half of all working adults have had to borrow money just to make it through the month. This despite holding down full-time jobs.
Monica Kalia, co-founder and chief strategy officer at Neyber shared this insight at a round table on financial wellbeing and employee incentivisation at FD Surgery earlier this month.
“Since 2016, we’ve surveyed 10,000 employees across all sectors to uncover the state of financial wellbeing. This year’s report reveals thatAbout 58%, more than one in two people suffer from financial worries, and more than 48% have borrowed money to meet basic financial needs,” she said.
“If you cut that data, you’ll see hospitality and retail are some of the sectors that more acutely affected because of the nature of the pay structure, and fluctuation of hours which affects the predictability of income.”
“Paying people more may not be the answer. SMEs need to put other things in place for financial resilience so that employees feel more supported and better about their financial health.”
The intimate session saw 10 finance directors from various SMEs, from logistics startup LOVESPACE to high-growth hospitality business, Tiny Rebel Brewing Company. Other attendees represented the manufacturing sector, the charity sector and real estate and property development, among others.
All of the round table participants had one thing is common: they were all looking to learn from others on how to engage with an incentivised and financially resilient workforce.
What is financial wellbeing?
“When we started Neyber our focus was on developing this notion of financial wellbeing,” Kalia said. “We’ve been focused on raising the awareness of what it means and why it matters. Traditionally, there has been a focus on whether engagement and wellbeing in general really matters to businesses.
“The discussion revolves around pay and perks, but’surprisingly the benefit of a wellbeing strategy is actually very important, particularly with the changing demographic,” Kalia added. “People want more from their employer.”
“My impression is that things have shifted and employees do want that support in terms of financial wellbeing and engagement.”
Businesses seem more ready to adopt physical wellbeing schemes and strategies, she explained, from private medical to gym memberships and fruit in the office. More recently, mental wellbeing strategies have been put in place, and there’s stronger recognition that employees with mental health issues don’t have a support mechanism within society. Therefore the employer needs to step into that arena.
“In many ways, financial wellbeing is in a similar situation as how mental wellbeing was perceived a few years ago. Mental wellbeing was very much stigmatised. People didn’t want to raise their hand and say they had mental health issues. Now we’ve come full circle.”
According to Kalia, most employers demonstrate a level of openness and willingness towards supporting employees with mental health issues with the right mechanisms. But when it comes to financial wellbeing, the taboo still exists.
Financial wellbeing in the last three or four years has started to emerge as a new trend, but it hasn’t been easy for employees to ask for help when they need it.
“In many ways in the UK, we don’t talk about money. The idea that you’re not coping casts aspersions about your ability to do your job.”
There is now a general recognition in the UK that wellbeing strategies can make a big difference, but how much of the responsibility for employee financial resilience sits with employers” And what can finance directors do about it?
Paying more isn’t the answer
One of the FDs in attendance was Will Edwards, who used to work at Google in Silicon Valley, which arguably represents the gold standard for employee engagement.
“A lot of my perceptions are shaped by my time at Google. I think financial wellbeing means a lot of different things to different people,” he said. “We’re at a startup where we offer, in many ways, only the very basics of any sort of benefits. Financial incentives are a combination of pay and some potential market upsides. It’s quite a different dynamic from a business that has loads of cash and can afford to pay above-market rate,” he said.
“The financial wellbeing side of it only goes so far. If pay is the whole thing that’s incentivising somebody to stick around, there’s really nothing else that tying them to your business. There might be a pay raise but six months later, that person is going to leave.”
“Whether it’s benefits, or simply a recognition of good work, or (instilling a) feeling of belonging within an organisation outweighs the direct financial security benefits. I’ve seen many times paying someone more hasn’t been beneficial in any way.”
Communication and awareness counts
Another participant in the round table is a finance director of a mid-sized manufacturing firm.The issue affecting him the most is getting employees engaged and on board with the slew of benefits the company offers. “In the past we’ve always said ‘we haven’t got the money for these schemes’, but nevertheless we want to achieve something,” he said.
His business employs around 400 employees, 200 are on the shop floor, 200 are in the offices. “We have quite a lot of benefits, from a very nice pension scheme to a comprehensive health plan,” he said. “Every time we want to promote those things, people don’t really seem to care. They rarely read the newsletters or are aware of what we have in place and what we’ve developed over the last few years.
“Perhaps it’s a matter of better communication, so that employees know their basic salary, the benefits available to them and the total package as a result.”
Kalia argues that it’s not about paying people more. Financial wellbeing adopts the ‘teach a man to fish’ philosophy, where education and schemes like anonymised payroll deductive loans can help.
“It’s a relatively new concept that employers can readily support financial wellbeing and helping employees manage their money. We believe that what can really help is giving employees that baseline financial education and making them aware of what they need to be thinking about to help them get to their goals,” Kalia explained.
Neyber offers employees financial education through an online hub, with a range of content according to their life goals. “We recognise the varied demographic in the workforce. Some people are looking to buy their first home, some looking to pay for college education and so on. Employees can go online and share their personal goals and they receive a content feed specific to their needs,” she said.
Flexible working and a positive company culture can help
For Tiny Rebel Brewing Company FD Hannah Williams, a core part of building a happy, productive and loyal workforce lies in a strong company culture.
Tiny Rebel Brewing Company is a family-run business that has grown from two employees to 110 in six years so they’ve had to quickly adapt to growth. “One of our biggest focus is our staff. We’re a family business so our employees also work like a family. We’re more output-focused and like to give our employees autonomy to do their jobs. I don’t care if it takes them 60 hours or six hours as long as they do the job they’re meant to do,” she said.
Williams shared an anecdote of how one of her employees took a sabbatical due to personal issues. The company supported his decision and was there for him during the tough times. “It’s these little things. Now I know I have his loyalty because you have to keep that personal element in business,” she said.
As a working mother of three, Williams says that has helped her support other working parents in the business. “I’ll accommodate anyone else who has kids to find a schedule that works for them. I can do it, so I know they can do it. If they can’t put in the 40-odd hours a week in ‘office hours’ I know they’ll put it in on the back end.”
“You very quickly know when you recruit people that they’ll fit in the culture or they won’t. If they don’t, they’re very quickly out.”
Staff happiness sits at the core of Williams’ business, and the impact of boosting employee happiness is long-ranging. “The way we look at it, we’ve got 110 people. If they’re happy and talk about our business, they are our ambassadors. They’ll go out in our T-shirts, they’ll buy our beers at Marks & Spencer. It’s all those little wins that drives loyalty. Our staff turnover is crazily low, especially in the hospitality industry which is so competitive.”
Employers can be part of affordable borrowing schemes
For Williams, if someone’s worried at work, they’re at work worrying, and only about 50% effective. “If we can help support them with a grand, or whatever they need to cover them, and we can workout a repayment plan that is suitable for them, it’s taking one thing off their list,” she said.
Typically, many employees have credit card debt. Many of them have payday loans, and are paying north of 20% interest every month. These are some of the financial worries keeping so many employees up and night and distracted at work.
According to Kalia, Neyber allows employees to consolidate their debt and the range of interest rates goes up to a maximum of 17.9% but on average people borrow about 8%.
“The idea is we can help them with their financial situation by effectively giving them a payroll deductive roll. We work with your payroll and help anyone who wants to borrow anonymously. The employer doesn’t need to know who needs this loans and it can avoid the stigma,” Kalia said.
In the last three and a half years, Neyber has rolled out to over 170 companies across the UK, including some of the largest companies in logistics and retail, like Asda, Royal Mail, and DHL. Neyber is now in the process of launching a salary deductive ISA in the next couple of months, as well as a report that examines the correlation between pension opt-outs and indebtedness.
“You might have the best pension scheme in the world, but if employees can’t afford to contribute, that’s a problem. You have to think about employees’ financial wellbeing as a holistic picture. From a benefits perspective, I could have best-in-class benefits, but if my employees can’t actually benefit from them, that needs to be addressed.”
