A Problem Shared ... Employees' Personal Finances Are Being Stretched as Far as Their Employers' Balance Sheets. Scott Payton Suggests Some Measures to Ease the Strain

By Payton, Scott | Financial Management (UK), March 2009 | Go to article overview
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A Problem Shared ... Employees' Personal Finances Are Being Stretched as Far as Their Employers' Balance Sheets. Scott Payton Suggests Some Measures to Ease the Strain


Payton, Scott, Financial Management (UK)


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Once upon a time, the job of the human resources department was all about ensuring that employees were well looked after, according to Lesley Uren, chief executive of HR consultancy Jackson Samuel. "In recent years the function lost this role as it became more business-focused and commercial," she says. Employee performance, rather than employee welfare, became HR's concern. But, since the downturn began to take hold, a growing number of HR departments have started to move back to their paternalistic roots, giving the workforce a helping hand through hard economic times.

There's a simple, hard-nosed commercial reason for doing this: it can help employers to retain their brightest and best performers. "Research shows that the way to keep people is to show that you have an interest in them as human beings," Uren says. "So there is a lot of debate in HR circles about the need for HR departments to recover their role as the steward of pastoral care."

So what exactly can firms do to help their employees weather the financial storm? And, crucially, how can they do this without piling further burdens on their already strained budgets? And what commercial benefits, apart from improving employee retention, can be gained from doing so?

While many businesses may be in a weak position to offer their employees more money, they can, through the provision of financial education, at least help them make their existing salaries go further. Charles Cotton, rewards adviser at the Chartered Institute of Personnel and Development (CIPD), argues that giving people guidance on their personal finances can benefit the employer. "After all, if people have got money worries, they're going to be more stressed and less productive. It's even possible that the risk of internal fraud could rise," he says.

The UK's Financial Services Authority (FSA) runs courses designed to help people manage their personal finances more effectively. It provides guidance to employees at about 500 organisations, including corporate giants such as Tesco (see panel, page 45) and even Royal Bank of Scotland, charities such as Save the Children and public services including the police.

Unsurprisingly, demand for these courses has increased substantially in recent months, according to David Whitely, a spokesman for the authority. "It's one of the fastest-growing areas of our financial capability department's work," he says. "Employers see it as a real benefit that they can offer their employees quickly and easily."

Under the scheme, the FSA produces a CD-Rom and a printed guide designed to demystify all aspects of personal finance. "Employers can take this information and distribute it to staff themselves, or we can introduce them to financial advisers who can come into the workplace and run seminars," says Whitely, who adds that the sessions can be tailored to people's specific needs. "Some might want to focus on pensions and retirement planning, for example, while others will want to talk about short-term savings."

After the group sessions, participants can arrange one-to-one meetings with advisers if they need more help.

The requirements of those taking part in these courses have changed since the downturn began, according to Whitely. "The main focus of the courses now is the steps you can take if your personal financial circumstances are changing--for example, what to do if you're finding it hard to pay your mortgage. Two years ago our sessions would be more about general money management issues," he says.

The FSA plans to send its personal finance guidance to 620,000 employees this year and to hold seminars for 30,000 people. Employers interested in taking part can visit www.fsa.gov.uk/financial_capability.

Cotton reports that many large companies are also providing confidential telephone helplines. "These are designed to advise employees on problems inside and outside work, and can be used to provide guidance for those with money worries," he says.

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