As the winter months approach, the cost of living crisis is having a significant impact on households across the UK. A sense of financial anxiety among the population peaked in July 2022, when consumer price inflation rose to 10.1%, a figure not seen since 1982.

As a result of these grim reports, people are looking to a wide variety of sources for support. HR plays a vital role in supporting the well-being of workers in these challenging times. Since companies are also likely to find themselves in financial difficulty in the current economic climate, the time has come to consider a path that has the best interests of both employees and the company at large in mind.

Examine existing financial well-being propositions

In addition to paying a fair wage, employers have a responsibility to help their employees manage financial anxiety. Financial well-being goes beyond being able to pay bills at the end of each month; it also includes feeling that you are in control of your cash flow, have measures to deal with any unexpected costs, and are on your way to a healthy financial future. Employers can make a huge difference to their employees’ lives outside the workplace by taking a few simple steps to overhaul their existing approaches to financial well-being.

A quick and easy first approach would be to assess the extent to which internal communication channels are already being used to communicate about financial well-being. Open discussion of financial matters is an important step in reducing the taboo on the subject. Companies may consider offering money management talks or even simply pointing employees to resources that could help them with this, such as MoneyHelper or Citizen’s Advice. Such an approach provides stability to employees while enhancing overall well-being and also promotes employee engagement, benefiting the organization at the same time.

Think about offering flexible benefits
Organizations can already conduct benefits reviews on a regular basis, making sure their proposition offers the best value for both employees and the business. For organizations that don’t have this regular cadence of updates to their HR strategy, and those that haven’t made any changes since the cost-of-living crisis became acute, it may be time to update strategy and consider flexible benefits.

Flexible benefits allow employees to choose a package that best suits their needs. Most schemes of this type allow staff to maintain their existing salary while changing the mix of benefits they receive, or to reduce their salary to receive more benefits. As with any benefits scheme, there are a number of different flexible benefits that businesses need to consider. For example, commuter loan programs allow employees to purchase an annual season pass and pay monthly through their salary, rather than paying the entire year up front. Commuting loans help reduce your monthly outgoings instantly and make finances much more manageable. Similarly, schemes like workplace ISAs and financial planning can help employees build their finances for the long term.

Flexible benefits arrangements can be more cost-effective for the business, as it means organizations aren’t investing in benefits that employees aren’t using. It also, of course, supports the employee in a way that makes financial sense for their individual circumstances.

Consider investing in payroll technologies
Fundamentally, employees cannot afford to experience delays or discrepancies in their wages at the end of a pay cycle. Employers have a duty to ensure that every member of staff is paid accurately and on time, especially in times of economic hardship.

For businesses that haven’t yet outsourced their payroll, now might be the time to take that step. Payroll software supports HR and payroll teams to manage, maintain and automate payments to their employees in one place, eliminating the need for spreadsheets and manual data entry. Managing payroll in this way ensures greater levels of accuracy and accountability, with automation reducing the likelihood of human error and increasing efficiency.

Create a culture of financial security
There are a number of steps that need to be taken by employers to ensure their workforce has a sound approach to their finances through economic hardship and beyond. These steps reinforce and are reinforced by each other: for example, accurate, outsourced payroll is reinforced by financial education through internal communication tools. Living and working during an economic downturn can be challenging, but when companies take action to protect their employees, the benefits are widespread for both staff and organizations.

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