With unemployment hitting its highest level for almost two years, it is not surprising that many people are feeling the financial strain. Many employees have spent the last five months on furlough on 80% of their normal pay. The loss of overtime and commission will have further impacted some. Some employees have been fortunate to return to work, but on reduced hours or with changes to terms and conditions, with some facing the possibility of a member of their household facing inevitable redundancy due to a COVID forced restructure.  

When you combine a 20% pay cut with the fact that a significant proportion of the UK population, live from one payday to the next, unable to get on the housing market and not in a position to save, if an unexpected expenditure comes up it can bring them to the point of a financial meltdown. This isn’t just a problem for people who are renting or people on lower incomes, many people find themselves significantly overstretched for various reasons, and many are struggling with financial difficulties. 

The impact of debt on employee’s mental health as well as every aspect of their lives, including relationships, personal stress and the effect on physical health should not be underestimated. It might be tempting to think that these are problems that employees need to deal with themselves, they should not be bringing their problems to work, but the reality is that poor financial wellbeing can have a significant impact on employee engagement and  

Productivity in your business, ultimately affecting the overall performance of the company. 

What can an SME do to relieve some of the stress? 

Many business owners and management teams may be facing these financial strains themselves. Still, it is important to remember that in these challenging times, there are some positive actions you can take to support your staff and keep your workforce engaged.  

Communicate good news clearly 

It is hard to turn on the news without hearing about the current UK debt levels; the impact COVID has had on the economy and the growing list of brands that are cutting workforces. So, if your business has good news remember to share it with your staff, it will make a difference to their confidence in their financial situation if they are confident they still have a job.  

Communication bad news clearly 

Gossip and rumours have a habit of spreading at speed, so act swiftly and calmly to deliver any bad news clearly, concisely and kindly. Take advice from professionals where required and ensure you are staying within the relevant legislation. Provide information in written format as well as verbally, so there is clear information for staff to refer back to. When under stress and receiving difficult news, employees rarely remember everything you have said, so it is good to give a reference point to ensure that there is a consistent message throughout the business.  

Provide Financial Education / Financial wellbeing programmes 

A 20% pay reduction over a period of 5 or more months can undo the best financial planning, whether there is a single income in the household or both incomes have seen a drop. There is an over-reliance on credit within the UK, and this will have exacerbated problems in households. However, ensuring that your staff have the knowledge and support they need to manage the financial challenges they are facing is a positive step a business owner can take.  

Providing signposting to debt relief charities such as https://www.stepchange.org/ or links to the https://www.citizensadvice.org.uk/ are simple and easy ways to show you are thinking of your employees.  

Seek input and be creative 

Remember, managers and business owners are not expected to have all the answers as to how you can help your staff with their financial wellbeing. People understand that businesses do not have an ATM in the corner of the office that magically dishes out the much needed cash. 

So simply asking the question, “how can we help” might reveal some ways in which you can relieve some of the financial pressure for employees on a temporary or long-term basis. For example, allowing someone to continue to work from home a few days a week may help them save on travel costs. Can you look at perk schemes that offer discounts for major retailers on a regular basis (although it may sound small, 5% off your weekly shopping bill adds up over the course of a month!). Perhaps even providing a loan to help them through this challenging period, or arranging a lunch and learn session on mortgages to help employees understand what they should consider in this regard.  

But asking the question will make sure that you are providing your employees with the personal support that they need right now.  

If you would like to chat through how to implement financial wellbeing actions to support your staff financial wellbeing, give us a call today.