What's a financial wellbeing policy and why do I need one?

This article was first published on LinkedIn. Subscribe to Jane-Emma Peerless' 'HR Money Blog' newsletter to read her articles as soon as they are published.

Employee financial wellbeing is fast becoming a company issue as the cost-of-living crisis bites. HR and Finance teams need to work together to get ahead of the questions, collaborate, step up, educate and support.

The CIPD's financial wellbeing research states that while nearly half of all workers are suffering financial worries, financial wellbeing is not being considered in overall wellbeing strategies in 89% of cases even though poor financial wellbeing has important implications on employee well-being and performance.

Many companies have spent a great deal of time, effort and money on mental health and rightfully so. However, as the report reveals, there is direct link between mental health, stress and financial wellbeing.

Poor financial health will inevitably lead to absences and sickness (or excessive presenteeism). Chronic mental and physical health will then affect product, leading to greater stress and greater financial uncertainty. It's a vicious cycle.

So what is a financial wellbeing policy, anyway?

I'm ashamed to say I'm currently part of the 89%. I'm currently isolating all the financial benefits and education we offer our staff across a myriad of providers in order to create a single document which we can then share with everyone. It turns out that putting a financial wellbeing policy together is not as difficult as it might first appear. I suspect that will be the case for most of us as we are probably doing things to aid positive financial outcomes of our people but may not have expressed it in these terms.

For example

• Are you paying more than the government mandate % into your workplace pension? For example have you split it to take a greater share and the employee a little less? (say 4%/4%)
• Have you embraced salary sacrifice for pension contributions which enables the employee to save for their pension without bearing additional NI?
• Do you offer debt/counselling/advice services either directly or through a benefits provider?
• Do you offer interest free or low interest short term loans for the purchase of capital items?
• Do you offer discounts on your own products?
• Do you regularly offer vouchers as rewards?
• Do you regularly alert your staff to all the financial scams they might fall victim to and educate them on how to be vigilant and informed?

If you said yes to three or more of these, you are already acting to support your employees’ financial wellbeing, and there is a financial wellness policy ready to be formed.

Educating people about personal finance and how to protect themselves in the event of financial hardship is an ongoing conversation that needs to happen regularly. But it's not easy. We all know what it feels like talking about the importance of pensions to a group of 20-somethings whilst watching their eyes glaze over. It's tough to talk about long-term savings and money but oh so important. Training managers in how to talk to their people about finance and persuading my super friendly and fantastic financial controller to become an internal employee champion is my next quest. Watch out Hussein Zainulabidin FCCA!

Money Week Editor-in-chief and financial wonder woman Merryn Somerset-Webb started this conversation 12 years ago with her book called "Love is not enough - a smart woman's guide to money". Inspired to act from watching (at first hand) friends and family run headlong into financial disaster by not understanding how money works, she wrote a brilliant, funny, frank guide to being financially aware and independent. I gave a copy to every female employee at the time – it was that good. It’s a little out of date now, many of the products she writes about don’t exist any longer – and I hope she updates and republishes it sometime soon, as it’s sorely needed right now. Merryn - I hope you are listening.

Working for the Financial Times in the 90's I remember our continual amazement at the popularity of beginners guides to personal finance, regularly published on a Saturday particularly amongst readers who worked in complex financial fields but clearly needed help with the basics of personal finance.

As HR leaders we have to navigate a world where consumerism is still king; our people aspire to have MORE and messages around saving and being frugal tend to get ignored. Remember that episode in Series 4 of "Sex in the City", where Carrie Bradshaw realises that the reason she can't put a deposit down on her flat when given the opportunity to is because she has spent $40,000 on shoes? That episode still resonates with me. I found it profoundly shocking as it seemed to expose the single daydream the series was built on. That spending money on clothes and shoes and going out endlessly to bars ultimately gets you absolutely nowhere.

I think it's interesting that we spend a lot of time talking about working on employee performance and development within roles, within the company, and the wider world. Maybe we should really direct more of our attention to helping our people understand everyday finance and the impact it has on their lives. The everyday financials that we would all be better off understanding.

As an example, our CFO gave a talk earlier this year, as part of a Financial wellbeing month, on how to understand the basics of tax and what your tax code on your payslip really means. It was really well attended and I think we will be repeating it regularly. Its now my priority to make financial wellness and integral part of our overall health and well-being strategy and I'm open to ideas and shared experiences as we all have the potential to make a big difference in our employees' financial wellbeing, and by extension their lives.