War for talent & The great resignation
Even before COVID-19 and the Cost of Living crisis, the cost of absenteeism and presenteeism to UK workplaces due poor financial wellbeing was estimated to be £1.56bn.
Since 2020, citizens everywhere have been reassessing their life and changing the way in which they view work. There has been a tectonic shift in the job market, and an explosion of new opportunities for workers to switch locations and careers. The net result is that attracting and retaining talent has become harder than ever.
According to Randstad, vacancies in the UK are at the highest level in over 50 years, with 69% of workers ready to move to a new job within just a couple of months. Staff resignations are an unavoidable element of working life, however the current rate of churn is a cause for concern for business leaders across the UK and beyond.
It has been estimated that the cost of replacing an employee is equal to at least six months of their salary, and many experts believe this to be a conservative figure.
This estimated cost of replacing a member of staff may also ignore the time required from existing team members involved in the recruitment, training, and onboarding processes.
The good news is that an effective financial wellbeing strategy can tackle these issues head-on. In research from PwC it was discovered that 76% of financially stressed employees are attracted to businesses that care about their financial wellbeing, and it was found that 1 in 3 employees rate access to an unbiased financial expert is the No.1 benefit they would like to see introduced.
Tensions in the workplace
It is no secret that the relationship between employer and employee has been tested in recent years. The COVID-19 pandemic, remote work policies, the Cost of Living, and now a recession looming on the horizon have all added pressure, and financial wellbeing has taken the brunt of it.
Personal financial issues can impact us physically, emotionally, mentally and socially. It’s therefore no surprise that employees have said that their financial stress and money worries over the past year have had a major impact on them in the following ways:
Mental health 34%
Physical health 23%
Relationships at home 21%
Productivity at work 18%
Attendance at work 15%
Loyalty and retention
When it comes to retaining talent at an organisation, the research is clear, financially stressed employees are 2x more likely to look for a new job.
According to PwC, 38% of employees who are stressed about their finances are actively looking for a new job, compared to just 16% who aren’t stressed about their finances. So tackle financial stress in the workplace, and that’s 22% more of the workforce who are settled in their role.
The best talent expects the best support, and this is especially true for financial wellbeing. So when employees rate their financial concerns as the No.1 reason for stress, recruitment and retention strategies need to take note.
76% of financially stressed employees are attracted to companies that care more about their financial wellbeing. PwC
Wellbeing, stress, and productivity
The impact of financial stress can be corrosive for businesses. According to Aegon research, it was estimated that poor financial wellbeing costs UK employers more than £1.5 billion each year through absenteeism and presenteeism alone. Not to mention the cost of employee churn.
In addition, a study from the Dutch National Institute for Budgeting uncovered that financial stress was the direct cause for a drop in productivity of approximately 20%.
These insights are all part of a wider trend of preoccupation at work, and the Cost of Living situation is stretching a lot of employees to the point where their productivity and performance can drop off a cliff.
24% of employees under 25 have experienced mental health problems as a result of money worries. Close Brothers
The impact of absenteeism is often clear and measurable, with the drop in attendance uncovered with relative ease. However, measuring the loss of productivity from presenteeism is much harder.
In fact, some studies have suggested that presenteeism is actually more costly to businesses than absenteeism. At the root of this problem is financial stress, the elephant in the room, causing distraction and dissatisfaction for anyone who is suffering with it.
How to tackle these problems?
Since the outbreak of COVID-19 in 2020 and the explosion of remote work, many employers have renewed their focus on mental health, and invested in additional resources. This has included examining the various workplace factors that can affect the health of their employees, such as burnout, disconnection, and exhaustion.
However, money problems have fast become the primary cause of mental health issues, and now have the potential to directly impact an organisation’s bottom line in key areas such as productivity, attendance, and retention.
In PwC’s 2022 Financial Wellness Survey, employees who said that money worries had impacted their mental health were:
6x more likely to struggle with productivity
2x more likely to be looking for a new job
7x more likely to be affected by absenteeism
And among financially-stressed employees, 49% said that there had been a severe or major impact on their mental health from money worries in the past year.
Given this close connection between financial wellness and mental health, there is now a growing number of employers focused on providing holistic financial wellbeing and coaching for their staff, to sit alongside their existing mental health support.
Showing your organisation a better way
Want to provide immediate support for you team’s financial health? Book a free Financial Wellbeing Lunch & Learn for your workplace.