The data behind why scarcity-alleviating benefits improve business outcomes

Money worries can reduce cognitive capacity by up to 13 IQ points

The challenge: It is unsurprising to hear that money worries can have a negative impact on an employee’s wellbeing and consequently, work performance. However, it is a concerning statistic that worries of scarcity can impact cognitive capacity by up to 13 IQ points -  potentially taking someone of average intelligence to superior, or downwards to borderline deficient.

Imagine a team in your organisation who are suffering with money stress - and how their collective wellbeing and mental capacity might be impacted if they’re operating 13 IQ points below their baseline - this does not make for a happy workforce, and certainly not for company productivity.

The action: There is no perfect solution to supporting staff with their finances, and often it is the multi-pronged approaches, those which promote choice and flexibility, that are most valued by teams. Education obviously plays a huge role in building financial confidence in your workforce, as well as transparent and accessible money-adjacent policies (pensions, parental leave, sick leave, etc), to establish clarity and peace of mind for staff.

However, education and policies are not enough to create a winning financial wellbeing strategy; practical and interactive solutions are often more highly valued by teams, as these allow the creation of bespoke financial wellbeing toolkits which suit their needs. By providing tools such as flexible access to pay, shift-tracking, and state support calculators, to name a few - the fear of a financial ‘lack’ that often drives the scarcity mindset can be mitigated.

Dipping into savings adds an extra 50 days of money worries per year

The challenge: Having a savings buffer is one of the strongest pillars of financial health, and directly counters the scarcity mindset. Opposingly, dipping into savings is a financial action which can have a significant negative impact on life quality - our research showed that it can equate to an extra 4.2 days of worry per month, just over 50 days per year. In the past year, almost half of adults have had to dip into their savings to cover basic living expenses. 

For instance, a scarcity mindset can often restrict individuals from investing in personal or professional development (further education, upskilling, and so on) - as there is a fear of not having enough money to cover living essentials. Having savings allows more freedom and flexibility to invest in education and skills which can uncap an employees’ earning potential - and allow them greater professional growth. 

The plan: With the ongoing Cost of Living Crisis, workers across the UK, particularly those on low-incomes, have found it difficult to to keep up with increasing expenses; and saving can often fall by the wayside. By providing an accessible and straightforward savings tool: either internally, or through a financial wellbeing platform, (ideally using an opt-out model, which has been shown to raise participation from 16 to 71%), employers can help workers to make saving an act so habitual that they forget they’re doing it. 

Regular saving not only builds long-term financial health and eliminates scarcity fears, but it creates happier and more productive teams - who have more cognitive capacity to dedicate to the workplace. You could extrapolate this point to suggest that happy and financially-comfortable teams are more likely to stay in their employment - positively contributing to business outcomes surrounding retention. 

Pay visibility boosts productivity by 11%

The challenge: It’s a natural course of business that unforeseen circumstances will leave shifts and roles unfilled at times. Illness, turnover, seasonal and economic factors can all be contributors to issues of recruitment and retention that have a knock-on effect on scheduling and staffing - and these challenges are naturally more prominent in industries with a high proportion of shift workers, for instance, hospitality, retail, and healthcare. 

Additionally, non-fixed contracts can play a role in these difficulties; they can be beneficial to the employer and employee for different reasons - but they can also leave employers open to issues of unpredictability when it comes to availability and staffing. 

The plan: There are several valid strategies to help address issues of recruitment and retention, which directly contribute to issues surrounding staffing shortages. However, there is research and data to suggest that providing a benefit in which employees have visibility over their shifts and pay increases worked hours by 11%. 

This is unsurprising when you consider the psychological difference of a team member considering taking an extra shift with access to clear financial insights vs. not. With access to shift-tracking and pay visibility information, an employee can understand exactly how much additional hours are worth to them financially, visualising their hard work in tangible terms.

When pairing this benefit alongside flexible pay, the positive impact on the employee is amplified. Often organisations pay overtime between 4 and 6 weeks after a shift has been completed, which more often than not falls into the following pay cycle.

With access to a flexible pay as part of a financial wellbeing toolkit, an employee can take an extra shift, see those hours appear in their virtual payslip, and access their earned pay as soon as they wish - perhaps to cover an expense, make some space in their budget, or put into savings. This immediacy reinforces the motivation to accept more shifts for the direct and immediate recognition of their efforts.