Money worries linked to poor performance, warns CIPD study

A new report from the CIPD in conjunction with asset managers Close Brothers highlights the scale of employees’ financial worries and the impact on productivity.

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The professional body for HR and people development's survey of 1,817 UK adults found that a quarter suffer with money problems significant enough to affect their ability to do their job. It also suggests younger generations and women are being hardest hit.The number reporting problems rises from a quarter to nearly a third (31%) among 18–24 year olds. Respondents living in London are also among the most affected (32%), with the twin pressures of the spiraling cost of living and accommodation in comparison to average income, and Londoners (60%) more likely than the UK as a whole (38%) to value being able to save for the future, likely to be among the causes.

Money worries affect higher earners too

As anticipated given the ongoing gender pay gap, more women than men report money worries impact their ability to do their work effectively. Close to three in ten (28%) women report this as a problem compared to less than one in four (23%) for men. Nearly one in three employees (30%) in the public sector say money worries have affected their job performance, too.However, higher earners are not immune from financial pressure. One in five (20%) earning £45,000 to £59,999 report that financial anxiety has affected their ability to do their job, the study finds. With economists predicting rising household costs in 2017 and the uncertainties around the value of the pound with the prospect of hard Brexit, such factors are likely to exacerbate the issues for people struggling financially, as well as for employers given the wider impact on employee wellbeing and performance.

Impact of financial anxiety on wellbeing and work

The CIPD’s study links financial wellbeing to productivity, reporting that physical fatigue caused by lost sleep worrying about money as the most common explanation for how financial concerns have impacted people’s productivity. One in five employees (19%) reported this in the survey.To respond to employees’ concerns and wider macroeconomic trends, the CIPD is therefore advising employers how they can better support employees during these uncertain times of low wage inflation and higher living costs.

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What employers can do to support employee wellbeing

Drawing on current employer practices, the CIPD reported that earning a higher wage was the top cited solution. Other solutions chosen included being rewarded in a fair and consistent manner (41%), being able to save for the future through a pension (26%), and being able to develop and progress in their career (20%).Charles Cotton, the CIPD’s reward and performance adviser, commented: “Financial well being is a sensitive issue, and employers need to recognise that employees may be cautious about discussing their financial circumstances with their colleagues, but getting the system right will ultimately benefit everybody involved. Employers should create a well-rounded reward strategy that recognises this and can flex to meet the individual needs of each employee.“This report shines a light on how financial well-being can impact not just employee health, but also workplace productivity. Money worries affect people regardless of their age, gender or level of pay, and with one in four admitting it negatively impacts their work, it’s clear that organisations should be focusing on financial well-being as part of their workplace agenda. This will become increasingly important over the next 18 months, as rising inflation is likely to lead to a pay squeeze and increased concerns about personal finances.”

Helping employees 'more important than ever'

Jeanette Makings, head of financial education at Close Brothers Asset Management, added: “Pensions changes, increasing life expectancy, uncertain economic times rising inflation and constant changes to the tax system mean that the financial landscape has never been more difficult to navigate.“Money worries now weigh heavily on a huge number of employees across the country, impacting their performance in the workplace, so it is more important than ever that employers recognise the role they can play in helping staff to understand and improve their financial well-being.“Equipping staff with the tools they need to take control of their finances now and for their future will not only improve their own well-being, it has been proven to boost productivity levels – benefiting both business and workers.”

For related news and features, see our human resources section.

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