The increasing plea for financial education has opened the door to driving a more fun element into pay packets and helping staff set aside money, reach a target, and achieve their financial goals. Research from Sodexo Benefits and Rewards Services[i] looked in to the main reasons that people are dipping in to their long term savings and found that 61% do so for household and car emergencies, 55% for holidays and 12% for a shopping spree. The results here clearly identify a need to educate the difference between short, medium and long term financial goals, and encourage staff to put aside money to treat themselves from time to time!
The role of employers
Financial education has been the HR buzzword over recent months, and was also the theme for this year’s National Payroll Week. With increased attention being paid to employee wellbeing, it is clear that employers should consider playing a stronger role in helping staff achieve their monetary goals, giving finance divisions a stronger hand in boosting company culture and quality of life for staff.
An increased focus in this area will demonstrate employers’ understanding of their employees’ needs, in turn positioning companies as desirable employers with cutting edge, positive financial wellbeing initiatives.
The benefits of payroll
Although businesses and payroll departments are not authorised by the FCA to offer staff direct financial advice for individual circumstances, companies can provide support by introducing goal setting tools that help employees plan ahead. Such tools could include interactive workshops, online platforms, or payroll initiatives, such as money management tools, all of which encourage better money habits.
Employers can also help employees identify the difference between long term financial security for retirement and shorter term goal setting. Long term financial security includes pensions and planning for retirement, whereas short and medium term goals might include a holiday, new sofa, honeymoon fund – or even a spare pot of cash for a rainy day!
Employee benefits packages provide the perfect opportunity to introduce financial support and goal setting into the workplace. Without needing to give out staff bonuses, which may not be an available option in some businesses, employers can help staff work towards their individual targets through money management tools that work alongside payroll. Indeed, a new breed of employee benefits is being born, with money management tools giving staff support to set money aside through a voluntary automatic deduction from their payroll packet - with employers also able to top-up or boost the total amount set aside by employees.
A brand new friendship
Employee benefits orientated towards money habits are encouraging the overlap of two traditionally disparate areas of a business, HR and payroll, having a profound effect on the internal structure of organisations.
The recent pensions freedom initiative, added to the introduction of auto-enrolment and the changes in childcare provisions, has required HR and payroll departments to work together closer than ever before, as businesses must clearly communicate the changes to staff and provide support in understanding how their finances will be affected.
Payroll’s involvement in employee benefits offers the traditionally remote department the opportunity to redefine its role within a company, and demonstrate that payroll has a lot more to offer. Salary sacrifice schemes are a novel and positive way for employees to set money aside in order to achieve personal goals, which will revolutionise attitudes towards payroll and encourage a more interconnected relationship between departments.
A breath of fresh air
The link between finances and employee wellbeing has never been stronger, and employers should consider the exciting new ways that they can help staff to set aside money for the trip of a lifetime, or long coveted handbag. There is a strong incentive for employers to encourage financial planning, as helping employees achieve personal goals will improve their wellbeing, maximising workplace efficiency.
The benefits of further crossover between HR and payroll departments can introduce a wave of new possibilities and breathe a new lease of life into payroll divisions, helping businesses stay ahead of the curve in delivering employee benefits to their staff and positioning themselves as attractive employers.
[i] Sodexo Benefits and Rewards Services, 2014