A Workplace Risk Hiding in Plain Sight: Addressing Financial Diversity

While most organisations have processes and frameworks in place to manage workplace diversity, there remains a significant, frequently overlooked risk that can have deep and widespread consequences if not properly understood: financial diversity.

Aon provides financial wellbeing programs to organisations globally across a range of industries and sectors. Our experience has revealed a clear common denominator: the challenge of managing stress employees may have around finances. The current economic environment has elevated this risk, which may lead to retention and productivity issues and may make it harder to address the overall wellbeing of your people.

It is often assumed that people on lower salaries are more affected by financial stress, but we have seen it doesn’t discriminate; everyone, from the junior levels to the CEO, can struggle to meet their commitments, especially when economic conditions are challenging. Understanding financial diversity is key to providing effective support.

Financial wellbeing used to be discussed in terms of creating wealth, managing debt and having sufficient retirement savings. However now we approach it at a much more fundamental level: the ability to get through current financial conditions without harmful stress.

Australia has experienced 14 interest rate rises in 14 months, and we’ve seen some employees report their household budget has increased more than 30% compared to last year (2022-23)¹.

However wages are stagnant². Now more than ever it is important to help your employees tap into their behaviours around how they deal with money and identify habits that could be adjusted to make a difference.

People under 45 have never encountered challenges such as these; 1990 was the last time inflation was above 7%³. This may mean some of your workforce is most probably feeling some level of financial stress.

Add to this the expectation for managers to be better equipped to support employees in the wake of COVID, and the need for an effective financial wellbeing strategy may be evident.

Within the contract between an employer and an employee, remuneration plays a significant role. Yet some managers may be apprehensive talking to an employee about their financial wellbeing. Conversations that feature remuneration, incentives or bonuses, or benefits are just a few of the many opportunities for a general, non-invasive conversation to assess the financial pressures that may be influencing an employee’s behaviour and intentions.

Understanding the diversity within your workforce of behaviours towards money is helpful to being able to provide effective assistance. Aon has developed a behavioural framework where people place themselves in a certain category after reflecting on their money habits. It is not a matter of one category being better than the others; it is more about gaining an awareness and understanding of attitudes to money that could help improve financial behaviours and potentially reduce stress, but also may help increase productivity and minimise flight risk.

In the current economic climate,1 in 4 Australians are finding it hard to get by on their current income⁵, creating a perfect storm for financial stress. On the flip side, few organisations are currently in a position to provide substantial pay rises to recognise employee effort⁶. A possible consequence is that employees will leverage the ongoing war for talent and change employers to get a higher salary.

For those that do stay, financial stress might become evident through physical, emotional, and/or mental factors, such as increasing rates of absenteeism or falling productivity levels.

The C-Suite might point to the company’s benefits program as a solution, however our research reveals it often has a blind spot when it comes to effectiveness of these programs, and the level of stress in employees⁷.

That’s not a call to cut back on a benefits program. On the contrary, a relevant, accessible and easily understandable suite of benefits may have a substantial impact on reducing financial stress.

Critical to its effectiveness is recognising the diversity of spending attitudes and behaviours. Creating, or providing access to, a range of resources to suit various age groups and lifestyles is one step. There are some excellent online tools, and many EAPs may also include budgetary advice in their menu of services.

It may be a matter of reviewing and adjusting your offer to ensure it is relevant to your workplace, and which may result in your employees having a better understanding of their own financial personality and what behavioural changes might help them.

Aon’s Financial Wellbeing team draws on Aon’s global insights from being a world leader in reward, benefits and wellbeing advice, and decades of devising effective employee engagement strategies.

Clients who come to us for financial wellbeing programs receive tailored solutions for their individual challenges, including an initial assessment using a wellbeing maturity index. Recognising that many people and culture teams are already stretched, we are also able to provide a comprehensive suite of resources to assist with strategy implementation.

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