Whilst the EU Pay Directive, which came into force in 2023 to establish better pay transparency standards, will only apply directly to EU Member states, it will likely have a knock-on effect for UK businesses and workplace culture in the years to come.
This will undoubtedly raise expectations for pay transparency, both across Europe and in the UK, and pressure business leaders and employers to facilitate cultures which welcome more open conversations around money and personal finance in the workplace.
Indeed, whilst the proliferation of news stories around the cost-of-living crisis may have brought the topic of money closer to the forefront of business conversation, talking about personal finances at work remains mostly taboo.
From fears of appearing ‘unprofessional’, to anxieties about jealousy, discussing money matters can feel uncomfortably intimate.
Yet, with nearly 13 million adults now struggling to pay bills and a fifth of adults borrowing more money than they did a year ago, workers across different industries are feeling the pinch, and doing so in silence. In order to support employees’ financial and mental wellbeing, employers today can do more to open up the floor to conversation about a topic that can often feel like a shameful secret.
The impact of money stress
The increased financial pressures felt across the UK have had far-reaching effects, and recent research by Perkbox found that over half (57%) of UK workers have had money troubles in the past 12 months due to skyrocketing costs. As a result, many are suffering from increased stress and anxiety, with a quarter (25%) reporting they are unable to concentrate at work because they’re worried about their financial situation.
The Mental Health Foundation has suggested that the mental health impact of the cost-of-living crisis is ‘another pandemic in the making’, and such stress and anxiety can be exacerbated by the perception that discussing money is considered by many as inappropriate. Understandably, when workers are preoccupied with stresses elsewhere, productivity is affected, so businesses will feel the impact of this if they don’t step up and encourage more open, collaborative discussions around money challenges.
Company culture unravelling
There is a clear demand from employees for more openness on the topic of personal finance in the workplace. However, when these conversations do happen, employer guidance is essential to ensuring that they are both productive and inclusive. Perkbox’s research revealed that nearly a quarter of respondents admitted that previous discussions resulted in feelings of animosity between colleagues and, therefore, had a negative impact on company culture. Furthermore, 30% admitted to feeling jealous of colleagues who are not concerned about their finances.
As a former CFO with an established financial background, I believe financial conversations are essential in businesses and can be valuable to their people. Employers should lead by example and normalise conversations about finances and encourage workers to feel empowered to share their challenges.
This will help employers understand where support can be best delivered. Of course, this needs to be balanced with emotional intelligence and sensitivity to the personal circumstances of individuals. For example, implementing open-door policies, where employees can discuss financial concerns with managers or HR representatives, can be one effective strategy.
Tailored support and benefits
Furthermore, not only do businesses risk their company culture and key employee engagement opportunities by not addressing their workforce’s financial stresses, they also risk losing their best talent. Nearly a third (29%) of the 2,000 UK workers surveyed by Perkbox admitted to actively looking to leave their current company in favour of one that provides greater support. Moreover, 34% shared that they felt resentful that their employer had not done more to support them.
Salary increases are often what first comes to mind when thinking about financial support. However, it is not always possible for businesses to offer raises on a regular basis. The good news is there are other options available. In fact, over a third (35%) of workers would welcome more personalised perks and benefits as a means of financial support, with discount schemes to help save on shopping and flexible rewards (like those that can be spent going to the cinema or ordering a takeaway) among the most popular choices.
Through the provision of tailored perks and benefits, employers acknowledge the uniqueness of each employee’s personal financial situation and the distinct challenges they are facing. By doing so, they are able to implicitly acknowledge the value of each of their workers as an individual, rather than rolling out blanket benefit offerings that may be unsuited to some.
Looking forward
The past few years have been financially challenging for both businesses and workers. However, it’s clear that companies can no longer ignore the impact that a culture of avoidance – particularly when it comes to money – can have across the workforce.
Instead, employers should step up their support of employees in the areas that are most needed. Only then can they build a robust and resilient business, with engaged employees willing and able to drive the next stage of growth.
