‘Poor pay, anxiety over money affect employee performance’
The Chartered Institute of Personnel Development (CIPD) has said a better pay package would boost employee effectiveness and raise productivity.
It, therefore, stressed the need for improved remuneration for workers, describing it as a critical factor for the growth of any organisation.
CIPD in a report, noted that with rising rate of inflation, organsations are likely to effect pay squeezes, but added that firms needed to do more to help their employees cope with their financial concerns.
It noted that one out of every four employees suffer from money worries that it affects their ability to perform their responsibilities effectively.
A new survey of 1,800 employees revealed that the number of employees reporting financial challenges has risen to nearly 31 per cent among 18-24 year olds and up to 32 per cent for older workers.
The survey, conducted by the CIPD and Close Brothers Asset Management, highlighted why organisations need to do more to support the financial comfort of their workers, especially in firms where salaries were reviewed downwards even as inflation rises.
“The problem is not limited to only low earners. With 20 per cent of employees earning poor wages, their financial anxieties affect their ability to do their jobs effectively.”
However, women are more likely than men to report that money worries affect their work, with nearly 28 per cent women reporting the problem, compared with less than 23 per cent of men.
A reward and performance adviser at CIPD, Charles Cotton said: “The report clarifies how financial well-being can impact not just the employee health, but also workplace productivity.
“Money worries affect people regardless of their age, gender or level of pay and with one in every four workers admitting that it impacts their work negatively, it is clear that organisations should focus on the financial comfort of their employees as part of their workplace agenda.
“This will become increasingly important over the next 18 months as rising inflation will likely lead to pay squeeze and increased concerns about personal finances”.
He added that employers not only have a duty to care for their employees but should also see their bottom lines benefit if they invest time in developing a financial well-being strategy and play an active role in supporting staff in this area.
“Today’s businesses need to consider the impact of financial worries having on employee health, happiness and productivity and look at what they can do to help reduce their stress levels,” he said.
The Head of Financial Education at Close Brothers Asset Management, Jeanette Makings, said: “Pensions changes, increasing life expectancy, uncertain economic times, rising inflation and constant changes to the tax system mean that the financial landscape has never been more difficult to navigate.
“Money worries now weigh heavily on a huge number of employees across the country, impacting their performance in the workplace. So it is more important than ever that employers recognise their role in helping staff to understand and improve their financial well-being.”