Why you can’t afford to ignore financial health
The bottom-line cost
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Focus
Employee productivity and performance issues affect your bottom line. We estimate that poor financial wellbeing could cost a company with 5,000 employees £4.6million per year. With an average of 43% of employees considering changing jobs in the next 12 months (increasing to 63% for high earners) the cost of recruitment may also have a big impact. Do your employees feel valued and cared for? How would you cope as a business should you start to see a wave of employee movement?
The bottom line cost
Almost half (48%) of employees said they had spent part of their working day addressing personal issues, and almost half (46%) said they had taken time off for the same reason. Both of these are a significant increase on what we saw last year, and an increase on pre-pandemic levels also. These figures are even higher for those aged under 34 where we see 3 in 5 taking time to deal with personal issues.
Question: Yes, I have spent part of my working day addressing personal issues in the last 12 months
The table below shows how much time employees are taking, on average, to deal with their personal wellbeing issues. When we combine these and put that into real money terms, the cost to organisations is significant
Question: Yes, I have taken time off work to address personal issues in the last 12 months
Question: On average, how many days did you take off in the last year to address a wellbeing issue?
Assumes average UK salary of £31,285 from ONS Q4 2021. Assumes 35 hour week (7 hours per day, 5 days per week). Uses absence and hours information obtained from this study of 10,000 UK employees.
Estimated cost per year of poor wellbeing to a company with 5,000 employees:
Cost associated with spending working hours dealing with personal wellbeing issues is £3.0m
Cost associated with taking time off to deal with personal wellbeing issues is £1.7m
Estimated combined cost of poor employee wellbeing is
£4.7m per year*
That’s not the only impact we need to consider. In addition there are indirect costs of poor wellbeing such as presenteeism which is where the employee is physically present but is heavily distracted by the affects of stress, anxiety and loss of sleep. This can have a significant impact on their ability to perform at their best and will affect team performance and morale.
Workplace impacts
There are many things that affect our ability to carry out everyday tasks. When we are under additional stress and pressure, performing to our best can be challenging. We see more than half (57%) saying financial pressure affects their self-confidence which is a large increase on the last two years. That increase is echoed across all age groups however in those aged 44 and under this rises further still to more than 3 in 5 on average.
Question: Do you think financial pressure affects your self-confidence?
Looking directly at impacts on workplace behaviour and job performance – again we see this rising to more than 2 in 5 who feel financial pressure is impacting them in these ways. Both of these elements will be impacting team productivity, morale and customer outcomes and is something that needs to be addressed as a business priority.
Question: Do you think financial pressure affects your behaviour at work?
Question: Do you think financial pressure affects your ability to perform your job?
Workplace Exodus
While many employees will have valued the security of their existing roles through the uncertainty of the pandemic, employees are now reassessing their experience of the last couple of years and their prospects for the future. Undervalued and poorly supported employees may look to move to jobs that better align with their new-found lifestyle aspirations.
While businesses have a lot on their agenda as they try and stay resilient in the face of their own financial and business pressures, attracting and retaining quality talent and supporting them to ensure they perform at their best is a high priority for many. Generally we have seen a decrease in employees who don’t feel their workplace is supportive which is encouraging. There is however, still a significant portion – almost half (48%) who do not feel their employer cares, and 2 in 5 who do not feel their employer values what they do.
Question: How far do you agree or disagree with each of the following statements?
Feelings of underappreciation are felt across all levels of staff – they are not concentrated among those on relatively lower salaries or in a particular age bracket. We see a significant spike in those earning £80,000 to £90,000 per annum where more than half (55%) are considering a new role; and 3 in 4 (76%) of those earning £90,000 to £100,000 per annum. These will be experienced colleagues and likely to be senior members of the workforce and leadership teams.
Question: Are you thinking of changing job in the next 12 months?
LCP viewpoint
Shaun Southern, Partner, LCP
The cost of poor financial health amongst the workforce can have a significant impact on business...
...We can see that poor wellbeing leads to reduced productivity and team performance and increasing time off and sickness. The cost of this can run into millions for medium and larger sized firms.
Many organisations I’ve worked with have had an idea as to where the problems and challenges lay, but have not known the full complexity or depth of the issues amongst their workforce. One of the best ways we can help with this is with our data analytical expertise.
Companies hold a vast amount of data on their employees and when combined with additional data sources and analytics capability – the depth of understanding grows considerably and can shape organisational strategy. Communicating existing support as well as identifying areas where greater attention is needed can build powerful engagement with colleagues.
This strategic thinking, combined with valuable support and benefits can also go a long way towards helping with one of the biggest challenges employers are facing currently – recruiting and retaining their talent. In a post-pandemic environment, employees are reflecting on what’s important and many are considering changing organisation or industry as we have also seen in this report.
Our job, as independent consultants is to support our clients to ensure these challenges are identified, minimised and solutions in place for the benefit of the organisation and the workforce alike.
*Factors included in the cost to replace an employee:
- Reduced productivity during 1 month / 3 months notice period
- Management time and cost in interviewing and decision making
- Team disruption including covering any transition periods where role is not filled / training takes place
- Training and upskilling new recruit (even higher for skilled / specialist roles)
- Total reward package – salary, pension, core and flex benefits, tax and NI, holiday, equipment, location set up etc
- Equality considerations for existing employees should pay or benefits be higher to attract the right people
- Companies are offering take-on bonus and retention bonus during this fluid workplace period
Based on an average UK salary of £31,285 (ONS 2021), with a standard calculation factor of 1.5 x salary, we estimate that if those considering moving company actually move – the cost to a 1,000 employee firm would be £21.7 million.
*Factors included in the cost to replace an employee:
- Reduced productivity during 1 month / 3 months notice period
- Management time and cost in interviewing and decision making
- Team disruption including covering any transition periods where role is not filled / training takes place
- Training and upskilling new recruit (even higher for skilled / specialist roles)
- Total reward package – salary, pension, core and flex benefits, tax and NI, holiday, equipment, location set up etc
- Equality considerations for existing employees should pay or benefits be higher to attract the right people
- Companies are offering take-on bonus and retention bonus during this fluid workplace period
Based on an average UK salary of £31,285 (ONS 2021), with a standard calculation factor of 1.5 x salary, we estimate that if those considering moving company actually move – the cost to a 1,000 employee firm would be £21.7 million.