This year’s National Payroll Week has undoubtedly taken on a particular significance not just for those who work in payroll, but for all the people who rely on their hard work to ensure that they are paid accurately and on time.
In the wake of spiralling costs, many of us are now faced with an unprecedented cost of living crisis- a recent ONS report has found that a staggering 89% of adults in the UK have already reported a rise in their living costs. The harsh reality is that for many across the country, their finances will be stretched like never before, with unprecedented amounts of people now worries about being able to afford basic necessities such as food or utilities.
There is also an already closely established link between money and mental health, something which is predicted to become especially pronounced as the cost-of-living crisis hits home. With more and more people set to struggle to keep their heads above water, businesses cannot afford to be blind to impact financial struggles can have in leading to spiralling instances of anxiety and depression.
So what role exactly can payroll teams and the businesses they work for play in helping to safeguard the financial wellbeing of their people and guide them through these challenging times?
What is the role of payroll in safeguarding financial wellbeing?
Payroll professionals have a huge role to play in driving forward greater financial awareness and education amongst employees. It’s a real cause for concern that there is little practical, financial advice given to people during their time at school. This means that people end up joining the workforce with very little understanding of how to best manage their finances, or of the variety of schemes available to make life a little easier.
It’s also important to note that financial struggles are for many people a deeply personal and often embarrassing set of circumstances for someone to find themselves in. It’s easy to fall into a trap of self-blame, even if money problems are a result of external factors beyond your control.
What this often leads to is a perceived taboo around discussing financial wellbeing. This presents a specific challenge for organisations as it means that the default for many experiencing money problems is to keep it to themselves. This means that any initiatives designed to support the wellbeing of employees are automatically starting on shaky foundations as it’s difficult to sometimes get a true measure of how many people actually need help.
It’s important therefore to remove the stigma around driving financial wellbeing discussions within the workplace. Research by the CIPD has found that actively demonstrating empathy and sensitivity can go a long way towards breaking down the traditional barriers people tend to throw up.
Payroll teams should act as standard bearers of financial good practice, removing the stigma around talking about money worries and helping their people understand how to make their wages go further.
A natural extension of doing away with the concept of financial wellbeing talk as taboo is that it offers a greater scope for organisations to act as influential guiding forces, offering educational tools and programs to support their employees and encourage smarter spending.
Employees who are struggling with rising cost and mounting debts should also be encouraged to seek out help from external agencies such as the government’s money and pension service. It’s important to remember that these pathways to help aren’t necessarily obvious to everyone, meaning that the most in need can often miss out on vital assistance. Workplaces have a vital role to play in raising awareness of these services and helping their people take their first steps towards getting the help they need.
Offer greater flexibility.
The flexibility afforded by the widespread adoption of home working has given employees an unprecedented opportunity to re-evaluate how they work- in many cases, coming to the conclusion that productivity being linked to the office is something of a myth.
The challenge for organisations has been trying to strike a balance between a return to normality and also taking into account this heightened desire for flexibility. Research by Aviva has shown a greater emphasis on work-life balance as a priority for employees.
As the cost of living crisis makes its presence known for more and more people, there is a sense that flexible working models have a further evolution to make, one where they pivot to becoming one of the most effective ways for organisations to safeguard the financial wellbeing of their people.
With the budgets of many organisations stretched thin, particularly after the prolonged disruption introduced by the pandemic, businesses are having to get creative in their thinking when it comes to rewarding their people. There may be very little scope for businesses to increase wages during these times so how can they effectively support their people as living costs increase?
Removing the need to be tied to an office location actually offers an unprecedented opportunity to help safeguard financial wellbeing. By having an effective remote setup in place, businesses can do away with the need for a costly daily commute for their people, which in the context of rising fuel costs in the UK, will go a long way towards softening the blow for many. It also helps focus the efforts of businesses when it comes to structuring their own rewards schemes. Many organisations offer company cars or other travel stipends which can be deprioritised with the introduction of remote working models.
The power of pay on demand.
The cost of living crisis is likely to demand an increasing sense of agility from organisations in being able to pivot to meet the challenges of rising costs threatening the wellbeing of their people. We’ve already discussed how businesses need to change up the way they look at their rewards schemes but what about their baseline payroll function?
With over one third of UK workers still living paycheque to paycheque, having a degree of flexibility in how they receive their wages will be of the utmost importance for people who want to stay in control of their finances and not be blind sided by unexpected costs.
Pay on demand is a form of employee payment method which allows people to receive wages as they earn them. Rather than being tied to the traditional model of weekly, fortnightly or monthly pay, Pay on demand allows employees the ability to have their wages “streamed” to them as and when they work shifts- avoiding long stretches of time between pay periods where money might be tight.
Another element of pay on demand is allowing workers the possibility to have their wages still tied into a rigid cycle but to also offer them the flexibility to draw down early, a portion of their salary in order to help cover emergency expenses or simply to cover a period of unusual spend (such as Christmas time or an MOT period for a vehicle.)
What’s next?
It’s clear that the cost of living crisis is set to impact so many of us across the country and the additional mental and physical strain financial woes can heap onto people means that it’s a crisis which businesses can ill afford to ignore.
At Advanced, we believe that businesses and their payroll teams have a hugely influential role to play as standard bearers and champions of good financial practice throughout the cost of living crisis and beyond. We also believe strongly that the technology and software relied upon by organisations daily offers them the perfect framework to drive forward conversation around financial worries. We created Advanced People Management, to bring together the best in Payroll, time and attendance and HR and to help you stay connected with the people who are so vitally important to your business. and create an ongoing strategy which focuses on supporting them.
This National Payroll Week, take the time to consider the impact the cost of living crisis could have on your people and your role in helping safeguard not only the financial wellbeing of your people but their continued mental and physical health, through the use of powerful and inventive payroll software.