The link between employee resignation and financial wellbeing

Financial wellbeing is described as having a good relationship with money and having the confidence to make financial decisions independently. Employees who have good financial wellbeing will feel secure and in control of their finances now and in the future, having the ability to comfortably afford essentials such as food shopping and household bills whilst also being able to afford some luxuries. Those who are financially secure will have the ability to manage unexpected expenses, perhaps having an emergency fund with enough money saved for unplanned eventualities. People with good financial wellbeing are less stressed and therefore less likely to experience mental health problems that impact their productivity in the workplace, leading to high levels of employee absenteeism. 

Although mental and physical wellbeing is often prioritised amongst businesses because they are more obvious catalysts for employee resignation, financial wellbeing is also extremely important. Financial freedom amongst employees encourages the development of a happier and more productive workforce who enjoy their daily tasks and can fully focus on their work days without tackling high levels of stress. Ultimately, good employee financial wellbeing can play a big part in ensuring that your team and talent do not leave your organisation prematurely. 

Before the pandemic, research showed that 11.5 million people had less than £100 in savings to fall back on. This shows how important it is for employers to step up and support employee financial wellbeing.

Employee resignation and financial wellbeing

Unsurprisingly, employee financial wellbeing and rates of staff resignation within a business often go hand in hand. Employees who feel that their financial and overall wellbeing is supported effectively by their employer are less inclined to quit their jobs due to workplace dissatisfaction. Research shows that nearly 80% of employees who responded to a recent survey stated that they would prefer to have an employer who cares about them rather than a 20% pay increase. This confirms the extreme importance of supporting your employees. 

Research shows that 26% of 2,651 employees say that they are less productive in the workplace due to financial worries. They may find themselves unable to concentrate fully on their tasks if they are preoccupied worrying about how to make ends meet. Post pandemic, the phrase The Great Resignation has been used to describe the high levels of employee workplace resignation. 

The pandemic has undoubtedly negatively affected many individuals’ financial situations, with 59% of people belonging to the 18 to 34-year-old age group saying that they were forced to postpone a major life milestone such as purchasing a home due to a lack of finances. Research shows that 72% of workers who faced increased financial stress during the pandemic are attracted to workplaces that care more about their financial wellbeing than their current workplace. It is in the best interests of your organisation to take steps to improve the way that you handle financial wellbeing. Good employee financial wellbeing will reduce the costs to your business of employee turnover. 

Loyal and efficient employees are one of a business’s largest assets and should be treated as such. If your business effectively supports the financial wellbeing of employees with valuable education and tools, members of your team are more likely to want to perform well to keep their job and progress within the organisation. Research shows that financially stressed employees are almost 2.5 times more likely to search for a new job and take an average of 15.5 days off of work per year. This is costly for your business in terms of productivity and reduces consistency within your departments. Important tasks may not be completed on time if the relevant employee is often absent from work and other employees may have to work harder to achieve when they are a team member short. Employees who have good rates of attendance may feel stressed and put-upon, therefore increasing the likelihood that they too will search for another job. 

The cost to businesses of poor financial wellbeing is great. In the UK, about 90% of large businesses say that they have been impacted by poor financial wellbeing in terms of reduced productivity, loss of talent and high levels of absenteeism. Prioritising your employee’s financial wellbeing is becoming more important and prospective employees are increasingly attracted to employers who value this. In 2021, 46% of employers offered financial wellbeing programmes within the workplace. This compared to a figure of 40% in 2020. The cost of living crisis and the effects of the pandemic mean that many employees continue to face financial hardship.

How can employers support employees’ financial wellbeing?

There are numerous proactive ways in which employers can support their employees’ financial wellbeing to ensure that staff resignation is kept to a minimum. It is important to check in regularly with each of your team members even if they are not showing obvious signs of poor financial wellbeing. Prevention is better than cure, and if you regularly speak to your employees to ensure that they are managing well, they are less likely to become swamped by financial stressors such as debts. 

Research shows that employees would like more financial guidance from their employer. Take steps to understand the financial worries that are most prevalent within your workforce so that you can take action and know best how to support your employees. Common employee financial concerns may include saving for big life milestones such as weddings and children or saving enough money to purchase a home or support themselves during their retirement. 

To support employees’ financial wellbeing, be sure to pay your team a fair wage that is suitable for their specific role. This will ensure that employees feel appreciated and valued. If an employer fails to pay a fair wage, employees may be inclined to consider other workplace options that may offer them increased pay. 

Overall, as an employer you must pay close attention to the ever-changing financial wellbeing landscape and consistently ensure that you are supporting your employees in the most effective ways. This will benefit you and your team in the long run.