Steve’s Blog – ‘Night Terrors’

Steve Herbert, Head of Benefits Strategy at Howden Employee Benefits & Wellbeing writes his regular column for Employer News – this month, he talks about the things which keep employees awake with worry – and why employers should care:

“Nothing in life is to be feared, it is only to be understood.

Now is the time to understand more so that we may fear less.”

Marie Curie

A Twitter thread rather caught my attention recently.

The question being asked was this;

“Was there a kids show or character that terrified you as a child?”

It’s the sort of nostalgic social media question that is virtually guaranteed to generate a significant reaction, and the large number of responses outlined a very mixed bag of fears.

Scoring heavily in the fear index were the more obvious candidates such as Daleks, Cybermen, the animated version of “Watership Down”, and the Child Catcher in the film “Chitty Chitty Bang Bang”.

More obscure answers included Hartley Hare from “Pipkins”, Worzel Gummidge, and the Moomins.

And then there were those terrors that could be classed in the truly weird category, including some otherwise lovable characters such as Teletubbies, the Wombles, and that saggy old cloth cat Bagpuss.  The most bizarre fear listed was the animated bee at the start of the sitcom “The Good Life”.

Aside from being rather fun, the responses also highlighted that virtually everyone is frightened of something.  And that applies just as much to the adult world and workplace as it does to the kindergarten and children’s TV listings.

Employee Financial Stress

Of course one common employee fear is around money – or more precisely the lack of it.  Many people cite this as a reason for regular worry and sleepless nights.

Now a financially stressed and tired worker is unlikely to be as focused, engaged or (importantly) productive as those without money worries.  And the reality is that the years of austerity have taken their toll on the financial well-being of many employees.  1 in every 8 UK workers is now in poverty, and millions of others are struggling to make ends meet.

A look at recently published figures from The Money Charity only goes to confirm this issue.  Their July report highlights that personal debt is up by £922 over the last 12 months, with the average total debt per household (including mortgages) standing at £59,708.  One startling statistic from the same report is that those workers with average credit card balances who are making only the legal minimum repayments (as many workers do) could take 26 years and 9 months to clear their debt!

These striking statistics suggest that financial worries are far from a minority concern, and it follows that it’s very much in the employer’s interests to do what they can to help their employees in this area.

The good news is that thousands of businesses across the nation have already accepted this challenge, and gradually an eco-system of workplace support on financial matters is establishing itself at the core of many Employee Benefits offerings.

The biggest challenge is finance

One of the biggest concerns for financially stressed employees is the ability to source competitive finance.  Employees with a poor credit score are likely to face very high interest rates on such loans, or indeed be denied finance completely.  This unfortunate situation led to the growth of “payday” lenders earlier this decade, but following a string of negative headlines and government intervention that option is now in decline.

Yet a practical and low-cost solution to this issue is still very much needed.  After all, if an employee faces an unexpected major cost at the start of a month, then they might well struggle to get to work or even put food on their family table until the next payday.  The reality is that access to finance is a very real necessity in modern Britain.  So what to do?

Workplace Finance

The response to these concerns has been the recent rise of “Workplace Finance” offerings in the UK.  Under this scenario the employer selects a finance provider, and the provider then supplies loans and/or savings products to the workforce as required.

The key advantage of this approach is that the finance provider can base employee lending decisions on more than just credit score and affordability alone.  Items such as employed status, service history, and salary level can be included in the process.  And – importantly – repayments are made as part of the payroll process (rather than by the more usual Direct Debit route), so the loan provider has more assurance that monthly loan commitments will be kept.

All of these factors mean that finance is sometimes offered where otherwise it would be declined, or the workplace loan might be offered at more competitive rates than those offered on the internet or High Street.  Such an offering obviously has great appeal to employees, and is particularly useful in debt consolidation exercises, enabling employees to get their monthly finances under control.

Some employers are also actively promoting payroll advance tools, allowing employees to advance some of their earned income in exchange for a small fee per transaction.  Again this is proving popular with employees where it is available.

These tools are both highly useful and important – and are already making life much easier for thousands of employees each month.

Other features?

These same products often offer a number of useful other financial features too.

Competitive short-term saving vehicles are available, with contributions to such plans again being made via the usual payroll processes.  Encouraging savings in this way (either alongside a loan or as a stand-alone decision) helps reduce the need for future borrowing.

Other useful tools often include the provision of credit score checkers, signposting towards debt management assistance, and online Financial Education tools.

The above are all valuable facets of the offerings, and should be promoted by employers when available.

What about Workplace Financial Education?

Yet there remain some valid concerns that either or both Workplace Finance and salary advance tools might be overused by employees – thus kicking the can of financial stress just a little further down the road, and potentially making the problem much worse in the long run.

This is why Workplace Financial Education should still be the primary objective of employers seeking to provide practical support for their workers on financial issues.  Because managing money is much more than seeking finance or savings at the best rates.  Understanding and managing everyday spending is the first step to better financial health, and on-site interactive workshops is a great way of bringing that to life, and providing tangible support to large numbers of workers for a relatively low annual cost to the employer.

Nothing to fear but fear itself?

The truth is that in 21^st Century Britain running out of money remains a very real worry for many millions of workers.  Employers that help replace that financial fear with understanding will have gone a very long way towards improving the lives of employees and their families, whilst also helping the overall productivity of their workforce too.

Steve Herbert is Head of Benefits Strategy at Howden Employee Benefits & Wellbeing