Financial Well-being in the Workplace: Why It’s Crucial and How Employers and an HRIS Can Help

The need to focus on financial health has never been more pressing. Rising living costs, economic uncertainty, and the aftermath of a pandemic have all contributed to making financial well-being a central concern for both employees and employers. In this blog, we’ll explore what financial well-being really means, why it’s so important in the workplace, and how you as an HR manager or director can take proactive steps to support your team.

What is Financial Well-being?

Financial well-being is essentially the ability to feel in control of your financial situation and manage day-to-day expenses while being prepared for unexpected costs. It’s not just about having enough money, but about feeling secure and confident with your financial decisions.

When people are financially well, they:

• Feel confident in managing their money

• Have savings to fall back on in case of emergencies

• Aren’t overly stressed about paying bills

• Can plan for future goals like retirement, holidays, or major life events

But, just like physical or mental health, financial health can deteriorate, and when it does, it affects all aspects of a person’s life—including their job.

Why Financial Well-being Matters in the Workplace

Financial stress doesn't stay at home. It follows employees to work, where it can reduce focus, lower productivity, and even contribute to increased absenteeism. Research shows that people who experience financial difficulties often face other challenges too, such as mental and physical health issues.

In fact, a Money Advice Service survey found that 77% of employees with financial difficulties say it impacts their work. When workers are distracted by money worries, they aren’t performing at their best. This is particularly concerning for SMEs where every employee's contribution has a direct impact on the overall business performance.

Additionally, poor financial well-being can lead to:

• Increased absenteeism: Financial stress can result in more sick days as employees deal with the toll it takes on their physical and mental health.

• Presenteeism: Employees might be physically present at work, but mentally they are distracted, worrying about their finances.

• Low productivity: Those dealing with financial problems often find it harder to focus and remain productive during the workday.

• Higher staff turnover: Financial stress can lead to burnout, pushing employees to leave for what they perceive to be better-paying jobs.

For HR leaders, recognizing the signs of financial stress among employees is key to creating a supportive and productive workplace. Financial well-being initiatives can significantly enhance employee engagement and retention, helping your SME succeed.

The Generational Impact on Financial Well-being

It’s easy to assume that younger employees are the most financially vulnerable, but financial stress can affect workers of all ages. While younger employees may struggle with student loans or low starting salaries, older employees might face large mortgages, growing family expenses, or insufficient retirement savings.

Interestingly, research from Better with Money, a financial education provider, shows that even people in well-paying, more established roles can struggle with debt and financial anxiety. Whether it’s a high-earner living paycheck-to-paycheck or a new graduate navigating their first paycheck, financial well-being is not determined by income level alone.

As an HR leader, it’s important not to make assumptions about who might need financial support in your workforce. Offering inclusive, non-judgmental financial well-being initiatives that cater to all employees—regardless of age, gender, or role—ensures that everyone can access the support they need.

How Employers Can Support Financial Well-being

Supporting financial well-being isn’t just a “nice to have”—it’s quickly becoming a crucial part of the employee value proposition (EVP). Here are some practical ways SMEs can improve the financial health of their workforce:

1. Offer Financial Education

One of the most effective ways to improve financial well-being is by offering education that helps employees understand and manage their money better. Many people, regardless of age or income, were never taught how to budget, understand taxes, or manage debt. Employers can step in by providing financial literacy workshops, one-on-one counseling, or even online resources to educate employees.

Companies like Better with Money specialize in providing these kinds of educational sessions, tailored to the needs of employees. By offering workshops that cover everything from budgeting basics to retirement planning, SMEs can empower their employees to take control of their finances.

2. Provide Tools for Financial Planning

Payroll providers, such as PayCaptain, are now integrating financial well-being tools into their services. These tools help employees understand their payslips, manage their income, and even plan their savings. By incorporating financial management into the payroll process, employers can make it easier for workers to track their earnings, budget more effectively, and even set aside money for savings or investments automatically.

PayCaptain, for example, offers features that allow employees to manage their money in real-time, set up automatic savings, and even make charitable donations directly from their paycheck. It’s a way of bringing the back-office payroll function into the hands of employees, making it more user-friendly and interactive.

3. Encourage Savings Programs

Helping employees build a safety net is a powerful way to improve financial well-being. You can encourage this by offering company-matched savings programs, similar to pension contributions, or even partnering with banks to offer employee-specific savings schemes.

Automatic payroll deductions for savings can make it easier for employees to set aside money each month without even thinking about it. When employees have savings to fall back on, they are less stressed about their finances, which directly translates to better workplace performance.

4. Promote Open Conversations About Money

One of the biggest barriers to financial well-being is the stigma around discussing money problems. Many employees feel embarrassed about their financial struggles and are reluctant to ask for help. As an employer, you can help break down these barriers by fostering a culture where it’s okay to talk about money.

Encourage managers to check in on employees' well-being regularly, and make sure employees know where to go for confidential financial advice, whether it’s through your HR team, an external consultant, or services like StepChange or Citizens Advice.

5. Support with Debt Management Resources

It’s no secret that debt can be a huge source of stress for employees. Helping workers manage and reduce their debt is a key part of promoting financial well-being. There are several free resources that employers can point their employees towards, such as Christians Against Poverty, StepChange, and the Money Advice Service. These organizations offer free, confidential debt counseling and support.

Additionally, employers can partner with these services to provide in-house support, such as regular workshops or on-site debt counseling sessions, allowing employees to access help without the stigma of seeking it out on their own.

The Role of Technology in Financial Well-being

Technology plays an ever-growing role in supporting financial well-being. From personalized financial planning apps to payroll systems that help employees manage their money more effectively, technology is bridging the gap between traditional payroll functions and real-time financial support.

PayCaptain, for instance, integrates financial education directly into its payroll platform. This includes help with understanding tax codes, explaining pension contributions, and managing savings. Employers can leverage these tools to offer employees more control and visibility over their finances.

Moreover, tech tools can be designed to be engaging and easy to use, removing the complexity often associated with managing money. By using intuitive, app-based solutions, employees can get to grips with their finances in a way that feels natural and fits into their daily routine.

Financial Well-being: A Win-Win for Employers and Employees

Investing in your employees’ financial well-being is not just the right thing to do—it’s a smart business decision. Financially well employees are more focused, engaged, and productive. They are also more likely to stay with your company, reducing turnover and the associated costs of recruiting and training new staff.

For HR leaders in SMEs, supporting financial well-being isn’t about offering lavish benefits that break the budget. Instead, it’s about providing practical tools, education, and a supportive environment that allows employees to thrive both personally and professionally.

At HR Software Partners, we specialize in helping SMEs like yours implement the tools and strategies that will make a tangible difference to employee well-being. From selecting the right payroll provider to building a robust financial well-being strategy, we can guide you through every step of the process. Together, we can create a healthier, happier, and more productive workforce.

Conclusion: Take Action Today

The case for improving financial well-being in the workplace is clear. By taking proactive steps to support your employees' financial health, you can reduce stress, improve engagement, and foster a more resilient workforce. Start by offering financial education, promoting savings programs, and using technology to empower employees to manage their finances more effectively.

Ready to make a difference? Let HR Software Partners help you transform your workplace with tailored solutions that fit the needs of your SME. Contact us today to learn more.