CIPD Scotland invited Stephen Pearson, chair of Financial Inclusion for Scotland, to share some good examples of organisations supporting employees through the cost-of-living crisis.
Evidence shows that financial worries can have a detrimental impact on health and wellbeing, commitment and engagement. Last year’s CIPD reward management survey indicated that for three in ten workers money concerns have a negative effect on how well they do their job.
In Scotland, the 2022 CIPD ‘Working Lives Scotland’ report found that only 35% of those earning less than £20,000 could keep up with bills without any difficulties.
Inflation was at 10.1% in January 2023. According to the latest CIPD Labour Market Outlook overall pay increases will be below inflation, leaving many employees struggling.
But there are some surprising upsides hidden amongst the challenges. Employers across Scotland are looking for innovative ways to enhance non-financial reward packages.
I would like to highlight two good case studies from my personal experience; one from a medium sized employer in the third sector and one from a large university employer.
Non-financial rewards
Leuchie House is a charity based in East Lothian with a staff of around 90. It provides respite holidays for carers and their loved ones who suffer from neurological conditions like MS and MND.
The cost-of-living crisis is a double blow, on top of shortages of care and nursing staff made worse by Brexit.
Facing a possible exodus of key staff in 2022, the management team put forward an innovative reward package to the board.
At the heart of this package was a budget-stretching salary uplift across all grades. But it also included a raft of practical changes designed to make the lives of the care team a bit easier. These include the provision of simple, healthy breakfasts for those on the morning shift, soup and roll lunches and other healthy snacks. Evening shift workers can have a home cooked hot meal.
Leuchie has installed charging stations for mobile phones and introduced a car sharing scheme to reduce fuel costs. Free uniforms and professional training, cycle-to-work benefits and a retail shopping discount scheme complete the package, with the team seeking advice about whether any changes amounted to taxable benefits.
How has this gone down with the Leuchie staff?
HR manager, Jaime Calder, told me: “Our cost-of-living review package has been really well received. Showing that we care about how employees are coping with the crisis and making small practical contributions to ease the burden has made a positive difference to morale and retention.
“We are currently seeing retention figures of 85% for staff who have been with us for over one year, compared to an average for the sector of around 75% according to Scottish Social Services Council data.”
What about large employers?
In my experience, some large employers have been reluctant to promote financial wellbeing, despite offering other health and wellbeing benefits including counselling and advice. For some reason, money matters were viewed differently.
One large employer, keen to duck the issue, told me: “It would be inappropriate for us to interfere in the financial affairs and problems of our employees.” A convenient cop-out which thankfully is no longer the case in most organisations. 51% of employers recently told the CIPD that financial wellbeing is being discussed more.
Partnership approach
The University of Edinburgh employs around 17,000 staff, some on relatively low salaries.
The university has taken a partnership approach to financial wellbeing. In addition to providing fair contractual remuneration packages, it is working with First Scottish University Credit Union and Salary Finance to provide financial education and new approaches to personal budgeting, savings and debt management for staff who need support.
Such partnerships can boost the wellbeing offering, providing great outcomes for employees.
The university was an early adopter of the payroll platform provided by Salary Finance, a relative newcomer to the pay and benefits sector.
Salary Finance provides employers and employees with a combination of financial education and employee financial wellness solutions that sit as part of the employers’ pay and benefits offering. This includes debt consolidation for employees struggling with existing debts, often at very high interest rates.
The University of Edinburgh simply promotes the scheme – staff who are struggling can approach the lender direct, without fear of embarrassment or stigma attaching to their debt worries.
Combining the wellbeing benefit package with payroll means loan repayments can be taken directly from salaries, at relatively low interest rates. As a result, employees can have the burden of expensive debt repayments and all the associated anxieties lifted. And the employer does not need to offer payroll loans itself, but rather through a trusted partner.
Louise Kidd from the HR team at Edinburgh University told me: “We are keen to support financial wellness, and this has become especially relevant during the cost-of-living challenges that our employees are facing.
“Our financial wellbeing partners, First Scottish University Credit Union, and Salary Finance, provide financial education and new approaches to personal budgeting and debt management to any of our employees who need help.
“We don’t provide payroll loans direct but through our partners, so employees can access fair loans that are repaid via salary along with the ability to use a payroll savings facility.”
Holistic approach
With more industrial action about pay and conditions continuing across multiple sectors, it is vital that employers consider a holistic response to pay and benefits that includes non-financial benefits, financial education and financial wellbeing tools alongside core remuneration.
Responsible businesses should be concerned about how they supporting their people.
The CIPD is calling for employers of every size to develop a financial wellbeing policy that helps employees achieve a decent standard of living by paying a fair and liveable wage, providing financial wellbeing benefits, and supporting in-work progression.
This new CIPD guide provides practical advice to financial wellbeing for HR practitioners and employers, including a five-step process for developing a financial wellbeing policy.
Stephen Pearson
Stephen will be part of a panel on financial wellbeing at the CIPD Scotland Annual Conference on 30 March.
He is chair of Financial Inclusion for Scotland and Leuchie House, and is an Advisory Board Member of Salary Finance.
