Chief Innovation Officer, Zellis
The pressure continues to bear down on employers to help their people navigate the worst cost-of-living crisis for decades. Dramatic rises in the costs of fuel, energy, and food are now having a profound impact on the wellbeing of millions of employees in the UK. The situation looks even more challenging in light of the gloomy economic outlook for 2023.
In the first part of this report, our research exposed how a lack of confidence using numbers, along with low numeracy skills, affects people’s financial wellbeing and, consequently, their wider mental health.
We found that only one in seven employees in the UK and Ireland actually feels very confident using numbers at work and in their everyday lives.
Employees who lack confidence with numbers feel less productive, less secure in their jobs, and less employable. But we also found that this lack of confidence was affecting wider wellbeing and home life. Alarmingly, a quarter of employees who have low confidence with numbers told us that this negatively impacts their mental health (through anxiety or depression), and almost 20% said it holds them back when supporting their own children.
Payroll accuracy and understanding is more critical than ever
It’s no surprise that people who feel less confident with numbers and lack numeracy skills are less engaged with their personal finances, including pay and benefits. They’re less likely to check their payslips regularly and less able to understand the information presented to them. But most worryingly, we found that they are less able to spot errors relating to their pay and benefits. They simply don’t have the knowledge or confidence to make informed or proactive decisions. During the current crisis, the impact of this is magnified.
Employers therefore need to help those employees with low numeracy skills to understand their payslips and to feel more comfortable asking questions and raising concerns. This means simplifying terms, removing acronyms, and presenting information clearly and concisely.
Perhaps most critically, they need to ensure accuracy in their payroll at all times.
Recent high-profile payroll errors such as those at Next, Asda, and EY have highlighted the implications of payroll errors for employees who are struggling to pay bills and cover day-to-day expenses. As People Management reported: “It’s a real-world issue that has implications for workers’ wellbeing, as well as their ability to buy basic goods, pay bills, and not fall into debt.”
Payroll errors are a real-world issue that has implications for workers’ wellbeing, as well as their ability to buy basic goods, pay bills, and not fall into debt.”
People Management
Indeed, our research found that 51% of employees feel a mistake with their pay would lead to stress and anxiety. And 50% state that it would lead to financial difficulties, such as not being able to pay rent. Employers simply cannot afford these types of mistakes when the stakes are so high.
Overall, a staggering 59% of employees state that payroll errors can negatively impact their mental health. And this figure rises to 78% among those who have a diagnosed mental health condition. This clearly shows the role that payroll plays in employee wellbeing, yet many organisations are failing to make the connection between how we pay people and their overall health.
Best practice guidance for employers to promote financial wellbeing
Evidently, employers have an almighty task on their hands to help their people through what will undoubtedly be a very trying and worrying few years, and particularly those employees that lack confidence and skills with numbers.
Of course, no employer will be able to stop the financial pressures that their people are feeling throughout this cost-of-living crisis. But every employer can provide a framework and starting point for people to better manage their finances to cope with these pressures. They can also provide support and services for those people who are struggling to make ends meet, and for those whose mental health is being impacted as a result.
But for employers, the difficulty is working out how to go about tackling such a wide-ranging and complex challenge, where there simply aren’t many easy answers or quick fixes. When there are so many measures that employers could take, the key is to identify the behaviours we can influence that will have the biggest impact on employee financial wellbeing, both in terms of how they are able to manage their finances and in how they are able to protect their future.
Financial wellbeing is ultimately about three things: having control over the money that comes in and goes out on a regular basis, having the financial and emotional resilience to cope with the things that happen in our lives, and how we feel about the part money plays in our lives.
One of the most impactful things that employers can do when it comes to financial wellbeing is to help employees develop a positive relationship with money, where they control money, rather than money controlling them. Employers should be helping their employees to view money as a positive enabler in their lives, not as something that’s confusing, scary, and difficult to manage.
This report aims to help employers to do just that. Bringing together the thoughts and insights of leading experts in financial wellbeing, payroll, and remuneration, we present best practice guidance for employers to revise their financial wellbeing and payroll strategies.
Of course, it’s vital that employers listen to their employees to better understand their immediate and longer-term needs, opening up ongoing dialogue. With that in mind, the report shares new research findings detailing how employees feel their employers can better support them over the coming years. This includes ways in which payroll can be improved to make it more accessible and engaging. It also covers the education, services, and financial products that employees feel would improve their own financial and mental wellbeing.
Critically, the report highlights the need for employers to take a strategic and consistent approach to financial wellbeing, focused on driving the behavioural changes which are so critical for employees to feel more confident and in control of their finances during this crisis.
This in turn will lead to better decision making and a more sustainable approach to financial management and planning. All of this will be absolutely essential in tough economic times.
Zellis commissioned comprehensive independent research among a wide cross-section of the workforce:
2,010 online interviews with employees in the UK and Republic of Ireland; 80% worked for organisations in the UK; 20% worked for organisations in Ireland.
The respondents worked for organisations of all sizes; 50% worked at companies with 1,000 or more employees.
Respondents worked in different industries including healthcare, government/public sector, retail, hospitality and leisure, transport and logistics, manufacturing, and construction.
73% of respondents worked full-time and 27% worked part-time.
57% were on a fixed salary and 43% were paid on an hourly basis or at a variable rate.
All research was conducted by Insight Avenue in September 2022
Note: Totals in charts/tables for single-coded questions sometimes add up to more or less than 100% due to rounding.
The following people provided interviews to add context and insight to the research data. We are grateful for their input and support.
Senior Performance and Reward Advisor, CIPD
Charles Cotton is a CIPD senior adviser. He directs its reward research agenda and recently led on how HR teams can help tackle in-work poverty and support their staff during the cost-of-living crisis. He is also responsible for the CIPD’s public policy work on pay and benefits and has given evidence to several select committees, such as on executive remuneration and ethnicity pay reporting, as well responding to various consultations, including on pensions, the national minimum wage, and corporate governance.
cipd.co.uk
Head of Reward and Deputy Director of HR, University of Lincoln
Ian Hodson is responsible for oversight of the university’s operational and strategic approaches to reward, as well as recognition and benefits. Overseeing HR systems including payroll, HR database, expenses, absence, and self-service, he has long advocated for more meaningful employee pay advice. Under his steerage, the university is supporting employees’ financial wellbeing with both proactive guidance and reactive support, while tackling the rising competition for talent with a more progressive reward system.
lincoln.ac.uk
Chief People Officer at EMIS Health, Non-Executive Director at Zellis
Jacqui Summons has extensive international HR experience gained during more than 30 years in CHRO and senior HR positions, at leading global organisations including GlaxoSmithKline and Standard Chartered. In her current role at EMIS Health, she led the HR response to the pandemic at EMIS, successfully navigating through the impact in the UK and India. She also brings her expertise to the role of non-executive director at the UK and Ireland’s leading payroll provider, Zellis.
emishealth.co.uk
Gethin Nadin is an award-winning psychologist who has been helping some of the world’s largest organisations to improve employee experience and wellbeing for two decades. He has been featured in major titles including Forbes, the Guardian, and Financial Times, as well as key HR, reward, and pensions publications. Gethin has been listed as a Top 101 Global Employee Experience Influencer and was named an Inspiring Leader 2021. He has published two bestselling books: A World of Good: Lessons From Around the World in Improving the Employee Experience and A Work In Progress: Unlocking Wellbeing to Create More Sustainable and Resilient Organisations.
zellis.com
