Posted / July 14, 2020
By James Malia, Sales Director
I’ve been involved in financial wellbeing and employee engagement for more than two decades and, yet, I feel like I’ve learnt as much about those topics in the last two months as in the rest of my career.
There are three reasons for this, with the primary issue, of course, being the coronavirus crisis. But while most of us have quickly gained first-hand experience of subjects like furlough and redundancy, I’m part of a small sub-section who are scaling an even steeper learning curve – the one you climb when you start a new job remotely during lockdown.
So I’m conscious both of the unsettling challenges in the work lives of my colleagues and of my own career change in, frankly, strange circumstances.
Furthermore, my new role is as a sales director for MyEva, the digital financial coach and adviser to employers and employees. This has provided me with a third reason to think about how the UK workforce are feeling about their financial and mental wellbeing and how workplaces can help them.
💰🔼 Malia’s Hierarchy of Funds
So what have I learnt? What have ten weeks of conversations with UK workplaces taught me about the wellbeing of their employees?
One of the key insights has been that most employees operate under something I now call their “hierarchy of funds” – a bit like Maslow’s Hierarchy of Needs.
This pyramid-shaped diagram tells us where our money goes and how money could motivate us more with a bit of planning. It also helps employers to understand why finances can actually help to engage staff.
As you can see, it starts with paying the “essentials”, like mortgage or rent, loans and credit cards, utilities, mobile phone and wifi.
You then have to buy food for the month. This is more difficult to plan, as you can’t go out on payday and stock up for the whole month, unless you live on pot-noodles and baked beans. You need to make sure you have enough to cover the whole four weeks.
Then, we have the car and other transport, an expense that will grow for most of us as lockdown eases. Next, you’re onto kids’ clubs or gym memberships, which will likely be on hold at the moment but will return soon enough.
Home entertainment comes next – whether it’s Amazon Prime, Now TV, Sky, Virgin, BT, Netflix, Disney TV or some other service.
Then we hit the nice-to-haves: takeaways, the cinema, clothing, nights out and holidays, with bigger goals in the distance such as retirement, weddings, house moves and bigger family spends.
So, the first question to ask when you’ve processed this is why do your colleagues go to work each day? What motivates them? Is it to pay for broadband or pay off a loan? We know they need to put food on the table, but do these essentials actually motivate people? Do they bounce into work on a Monday morning knowing they will be able to pay for their mortgage? What do they actually WANT to spend their money on?
Secondly, where on the pyramid does their money normally run out? Most of us have more month than money and we all run out just as we get to the fun stuff. The things we actually get to enjoy – want, not need – the things that actually motivate us, are just out of reach or we have to make sacrifices to have them. That isn’t motivating. It’s like watching films month in month out that finish two thirds in (we all rented one of those back in the days of VHS!), or only reading books with the last couple of chapters removed.
So how can workplaces provide motivation? What we certainly can’t do, while the world turns itself the right way up again, is throw money at the challenge by offering all of our employees pay rises.
The answer is that we need to help our staff to make their money go further. With a financial expert, coach or guide our colleagues can not only find ways they can save money and budget better, but can also be prompted to take action and set goals.
Chipping away at the pyramid can ease anxiety and give work more purpose. It can also limit any reliance on credit with the right support. It can help staff find a positive outcome that means something to them and their families.
Some of this help might come from your organisation’s employee benefits scheme, if you have one, because your staff will already be able to save money through on things like gym membership, cinema, food and holidays.
But there are some other simple, practical steps you can help them scale the hierarchy of funds and reach the goals they really want to achieve.
These include using budget planning tools, lowering credit limits, operating two bank accounts and more. No rocket science, just baby steps that can make a huge difference.
I’ll go into these in much more detail in a second part to this post – so stay tuned!