How can employers help in the cost of living crisis?
As the cost of living crisis continues to impact the UK, this article looks at how employers can support employees when they need it most.
Hold informal discussions
Everyone is likely to experience issues with money from time to time, however there is a significant difference between having to scrimp until next payday and being in serious financial debt. Therefore, to effectively support employees with financial difficulties you will need to have a firm understanding of their situation.
However, as with many personal issues it cannot always be easy to spot those who are struggling financially, meaning line managers and business owners should be alert to signs such as reduced morale and performance. Whilst there may be a number of explanations for this type of behaviour, holding regular one-to one catch-ups should give you an opportunity to find out whether financial difficulties are having this effect.
Private, informal discussions will allow affected individuals the opportunity to explain their situation and let you know about any problems they are experiencing. During these conversations, keep in mind that employees may feel embarrassed, or worried that their financial struggles will affect their job prospects. Therefore, it is important to remain considerate and reassuring.
Given the difficulties associated with financial debt, it would be wise to provide employees with expert practical advice on how to manage their money and improve their financial situation. If you have one, Employee Assistance Programmes (EAPs) often prove useful in this regard, as they typically offer an array of confidential services designed to support staff and set clear targets to achieve improved financial and emotional wellbeing.
Alternatively, you could recommend that the employee contact a registered debt management charity, who are typically able to offer free advice and tailored debt management plans. It is important that managers are aware of these options and feel comfortable explaining the benefits to staff.
Along with counselling, financial education can help employees gain a better understanding of how to manage their money and offering this may guard against instances of debt in the future. Although the scope of education programmes may differ depending on your resources, you may consider contacting one of a number of third party organisations that run free workshops for employers. You may find other organisations in your sector or location can host a join event.
As this will be a sensitive topic for staff, it is important that any education schemes are appropriate to avoid belittling or embarrassing individuals. Instead, these programmes should focus on helping individuals make the most of their existing income through improved money management and saving plans.
Keep in mind that such education may prove especially beneficial for apprentices, or other young workers at the beginning of their professional career, who may be less experienced in managing their finances. However, these courses should still be made available to the entire workforce regardless of their age.
As a short-term solution you may consider offering the individual the chance to work paid overtime, where possible, to earn some extra cash and improve their financial situation. Whilst you shouldn’t get into the habit of bailing staff out of their financial difficulties in this way, it may be an agreeable solution for both parties, especially if you are experiencing a period of high demand.
Advance on wages
You may also choose to offer staff an advance on their salary in order to help them pay off any mounting financial debt, hopefully alleviating a significant amount of emotional stress in the process. Again, whilst this may help resolve any immediate issues you should consider how sustainable this solution is. After all, personal debt can often be attributed to a number of underlying issues and there is a risk that offering an advance on an employee’s salary will only paper over the cracks and may lead to similar issues in the future.
Offering an interest-free loan can be another effective way of helping employees deal with financial hardship, giving individuals the funds to pay significant costs, including car repairs or public transport season tickets that can prove vital in ensuring employees are able to attend work on time.
Naturally, there may be some concern about the risk associated with loaning employees a lump sum and it is important to outline your approach to this in a specific policy. It would also be wise to have an agreement, separate to the main terms and conditions of employment, that outlines the repayment plan and the ability for the employer to reclaim this money from employees’ final salaries, if they leave their employment before the loan is paid-off.
Focussed employment benefits
Aside from the above, you can also safeguard against future incidents by ensuring employee benefit schemes are structured in a way that offers employees financial support wherever possible. The type of benefits on offer will vary depending on the size and nature of the organisation and may range from private medical insurance to discount schemes that offer staff the ability to save money on everyday purchases.
Since it is important that any benefits are suitable for the existing workforce in order to be effective, it would be wise to conduct an employee benefits survey to get an understanding of what type of support staff would prefer.
If you would like further information on any of these suggestions, or a discussion on the benefits that your business may be able to offer employees, get in touch.
Credit to CIPDHR-inform for this article