Empowering employees: Boosting productivity through financial wellbeing 

The cost of living crisis, characterised by record inflation, surging interest rates and higher prices for essentials such as housing, food and utilities, has placed significant strain on household budgets.

This financial stress is not only detrimental to employees but also poses considerable challenges for employers, who see reduced productivity and higher levels of burnout. 

At Mercer, we define financial wellbeing through four pillars:

Each pillar plays a crucial role in a person’s overall wellbeing, with flow-on effects for their mental, social and physical health. 

Over the past few years, employees have faced unprecedented economic pressures that have infiltrated each of these aspects of their lives. 

UK inflation hit a record level of 11.1% less than two years ago, and despite recent declines, the effects of these increases are still embedded in ongoing costs. Interest rates, which hovered near zero for years, climbed to over 5%, affecting those seeking to remortgage or buy homes. Rent and food prices also surged, while utility bills reached unprecedented highs. 

These financial burdens contribute to increased stress and anxiety among employees, which, in turn, affects their productivity, performance and overall wellbeing.

When employees are preoccupied with financial worries, their focus and performance at work may suffer. This phenomenon, known as presenteeism, occurs when employees are physically present but mentally distracted, leading to reduced productivity.

Financial stress can also lead to higher absenteeism if employees take time off to deal with financial issues or stress-related health problems. Stress, depression and anxiety were the leading causes of sick leave in the UK in the 2022/23 financial year, costing 17.1 million days off work¹.  While mental ill-health is not always financially driven, research shows the two are deeply connected². 

These effects of financial stress are personally destabilising for employees, with ripple effects for their employers. 

A workforce burdened by financial stress may be less productive, less engaged and less present. This not only affects business performance but also increases the costs associated with hiring temporary staff and managing higher turnover rates.

To mitigate these challenges, employers should implement measures to support their employees' financial wellbeing. One effective approach is to introduce financial education programmes, which helps empower employees with the knowledge and skills to manage their finances more effectively, which may lead to improved financial decision-making and reduced stress.

Financial education can take various forms, including group workshops, one-on-one coaching sessions and digital resources. For instance, Mercer offers comprehensive in-person and digital programmes that cover essential topics such as budgeting, saving, managing debt and planning for retirement. 

These programmes not only enhance employees' financial literacy but also foster a culture of openness and support around financial issues. They are highly customisable, allowing employers to tailor content to suit the specific needs of their workforce.

Additionally, employees with more specific financial concerns can access personalised support, often covered by their workplace benefits. This tailored assistance may enhance employees’ appreciation of their benefits, contributing to improved staff retention and morale. 

In today's challenging economic climate, supporting employees' financial wellbeing is not just a compassionate move but a strategic one. Employers who commit to financial education programs can expect a more focused, productive and engaged workforce that remains loyal over the long term. 

This investment not only helps employees navigate their financial challenges but also enhances organisational performance, creating a healthier, more resilient workplace where both employees and the business can thrive.

To find out more about how Mercer Marsh Benefit’s Financial Education proposition can help your employees, contact your local Mercer Marsh Benefits consultant or email workplace-education@mercer.com for more information.

Footnote

1. https://www.hse.gov.uk/statistics/dayslost.htm

2. https://www.nhs.uk/every-mind-matters/lifes-challenges/money-worries-mental-health/