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 HR personnel 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.
Debt counselling
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. 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 line managers and HR personnel are aware of these options and feel comfortable explaining the benefits to staff.
Financial education
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.
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.
Additional work
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.
Company Loan
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 workplace policy. It will also be wise to agree a plan for the repayment of any loan, which allows you to reclaim this money from employees’ final salaries if they depart the business before the entirety of the loan is paid-off.
Focused employee 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.
The cost benefits to working from home were amongst the reasons employees enjoyed doing so throughout the Covid pandemic; they were able to save on commuting expenses, reduce childcare fees and live in cheaper areas. Many also believed it provided a better work-life balance. However, as household bills now climb, homeworking may no longer be an attractive prospect.
For some homeworkers, returning to the office may be a useful way to save on energy bills. Where this isn’t possible, employers might want to consider providing a homeworking allowance, to ease the financial pressures associated with working from home, especially through the winter months.
For other on-site workers, commuting expenses may be more of an issue. In these circumstances, providing travel ticket loans or free parking can help reduce their overall outgoings. The introduction of hybrid or flexible working can also reduce overall expenses. This may be done through the offering of flexi-hours, compressed hours or reducing working time.
Further initiatives employers may wish to consider to ensure they are providing adequate support to employees is offering an employee assistance programme (EAP), introducing rewards and benefits programmes, providing free on-site meals and refreshments, and providing financial literacy and education sessions.