Tag: credit unions

Your Money, Your Way

Wouldn’t it be great if you could apply for a loan without worrying that one mistake or debt from years ago is going to prevent you getting some extra money?

Banks and the majority of finance companies only make decisions based on your credit score. This magic number – which not enough people know, or want to know – is the only number that matters to most financial companies. We don’t think that’s right or fair.

A system where the deck is always stacked against you

Credit scores prevent too many people from accessing finance that they are perfectly able to manage and afford. In the building where we are based, there’s an entrepreneur – let’s call him Dave – running a successful company, with investors, paying customers and staff. But Dave can’t get a loan. He pays himself a decent salary – not a huge amount, but enough to live in London, and all he wants is a small loan to consolidate some debts and buy some new furniture.

Unfortunately, when Dave was a student, he got a credit card. Then another, then another. Five in total. Most students have more than one card and overdraft. Being a student is expensive, and banks advertise at them aggressively to take out as much credit as possible. Banks love students. They spend as much as they can, but rarely pay off a card or overdraft in full so that they can make money off them for years afterwards.

He was bombarded with free offers, and the credit cards were ridiculously easy to get. He did keep up all the repayments, except for one card – unfortunately forgotten in a move to London. It had a small unpaid balance – only £50.00.

It took a while for the demand letters to catch up with Dave. Once they did, he paid the balance, including the arrears, but the damage was done. The unpaid card left a black mark on his credit file for six years, making it impossible for him to access low rates in the meantime. His issue wasn’t the debt; it was that he never would have signed up for so many student cards if it wasn’t for aggressive targeting, easy applications and free offers. As a young student, he wasn’t mature enough to realise the long-term impact of these offers.

Banks stack the deck against those who need access to finance the most and credit scores are one of the main ways they screw people over.

A fairer system, with Credit Unions

Credit unions need to make responsible financial decisions, which means they need to factor in the results of a credit check. However, this isn’t the only way they judge loan applicants.

When you apply through FairQuid, they take your employment history and salary into consideration, alongside affordability. One black mark on your score from years ago isn’t going to prevent you getting a loan. Employment history – such as whether you’ve been with your current employer for a year or more. This shows positive financial behaviour, stability and your ability to earn a living. People, not algorithms decide if you can get these loans.

Loan payments come directly from your salary, which means they take the affordability of this into consideration too. No responsible lender should ever provide credit you can’t afford. Loans through credit unions also automatically include a savings account, which means, over time, your financial health keeps getting better.

Now is the time to take control of your finances, with FairQuid: Your Money, Your Way.

Find out more and apply here.

Broken Heart, Broken Credit: Making Sense of Credit Scores

Loans, store cards, credit cards and mobile phone contracts seem like a great idea when you are in a happy relationship.

But when things go wrong, which can happen at any age, monthly payments can turn into hazardous liabilities that can trip you up years later. Taking out credit – which includes phone contracts – for someone else is always risky, even when you are married.

Even if someone else is giving you the money to cover the payments, the debt is still yours. You are legally responsible. One such example is a guy who used his good credit score to get a phone for his girlfriend at university. Let’s call him Andrew. He took out a 12-month contract for her, but six months later, they broke up, and both of them moved to different flats.

A Series of Unfortunate Events

All of the bills were going to their former address. He didn’t change the billing address, and she stopped paying him. He wrongly assumed she would take over payments – which anyone can do, even without access to the account or needing to pass security questions. Maybe she did for a while, but at some point, she stopped paying, and he wasn’t paying anymore.

It took another six months for the debt to catch up with Andrew. When it did, it was over £150, including late payment charges and collection agency fees. He paid it and assumed the situation was dealt with. It was hard enough breaking up with his girlfriend, never mind the added pain of paying off her phone contract.

He was wrong to assume the debt situation was over.

Six years later, after climbing his career ladder, promotions and stable employment, Andrew’s credit has finally recovered. It has taken six years of being careful with money and not being able to get much credit for the one ‘black mark’ to stop affecting his ability to get loans, credit cards, store cards and a mortgage.

Making Sense of Credit Scores

Andrew is not alone. Millions of people – for one reason or another – have limited access to credit as a result of bad scores preventing us from accessing finance many of us can, on current salaries, easily afford.

For many people, credit scores are like a black box. Black boxes constantly record numerous data inputs on planes. In the same way, credit reports record data from numerous sources: our bank accounts, credit cards, phone companies, utility companies, store cards, mortgages, and any applications to apply for more credit.

Most of us don’t know our credit scores. However, you can find out easily enough – using ClearScore (free), Experian (free trial – but remember to cancel) and other free tools. But if you don’t know, yet want to apply for something, such as a loan or credit card, you run the risk of damaging your credit further thanks to marketing from banks and other companies that suggest you will be successful.

Aggressive tactics and offer target those most vulnerable, and more likely to need credit quickly. When people are denied, it can be tempting to try payday lenders, and others that offer money at an extortionate rate. When your credit has been damaged, but you are rebuilding, and in steady employment, payday lenders should not be your only option.

There is an alternative solution, thanks to FairQuid: Your Wages Your Way. If you’ve been employed for at least one year at your current employer, you can apply for a loan through credit unions that take employment history and salary into consideration.

We don’t base everything on credit scores. You also get an automatic saving account as part of this loan: starting from a minimum of £10 per month, with payments for both coming directly from your salary, making budgeting easier. All your employer needs to do is verify your employment and adjust your payroll if you are approved. It doesn’t cost them a penny. Find out more and apply here.

Your Wages Your Way

Worrying about money is a horrible feeling. It stops people sleeping at night. It grips you in the pit of your stomach. Money worries can get in the way of even the brightest summer day.

No one wants to worry about money, but even those who earn decent money – or at least have a stable job – can find themselves in a tricky position. In the UK, average household debt is around £13,000, and around 70% of us have no savings.

So it doesn’t take much to unsettle most people finances: A boiler breaking, car fails an MOT, an expensive month with too many Birthday’s, not to mention, for families, Christmas and the Summer Holidays.

The problem is, banks aren’t always willing to lend extra money when someone is in a tight spot. Banks assess whether they can lend based on credit scores. When applying for a loan, overdraft extension or credit card, it doesn’t really matter what you say. That is one reason you can apply online without speaking to anyone these days – people don’t decide who gets money anymore, algorithms and credit files do.

If you have a good credit rating, then getting access to a little extra money – or having that money (or credit) already available shouldn’t be an issue; but we know this isn’t always the case. Not everyone has an ‘excellent’ credit score.

Millions of people are stuck in ‘persistent debt’, paying off old credit cards, loans and overdrafts. And then there are others, whose credit files are still affected by acts of kindness that get turned into bad debts, such as when people get phones or loans out for other people who then don’t pay, or move away.

Bad credit scores still penalises people who have steady jobs and salaries that cover all their costs, except for unexpected bills and other expenses. You shouldn’t have to turn to payday lenders to rescue you from a tight spot.

There is another way. For anyone who’s been employed at least one year with their current employer, you can – through credit unions – get a loan that should pay off any current debts and help you start to build up some savings.

All you need is your employer to verify your employment. If you are accepted for the loan (which comes with an automatic savings account – starting from a minimum of £10 per month). People, not algorithms decide if you can get these loans. Loan and savings payment come straight from your salary every month, just like Ride to Work schemes, travel and childcare schemes and other salary deductibles (council tax).
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All your employer needs to do is verify your employment and adjust your payroll if you are approved. It doesn’t cost them a penny. Find out more and apply here

FairQuid: Your Wages, Your Way.

High Rents Negatively Impacting Recruitment and Retention

Living in London is always going to cost more than anywhere else in the country. Capital cities attract more people, more opportunities and, therefore, are more expensive places to live, travel around and enjoy.

But in the last decade, many people are starting to question whether the cost of living in big cities, is simply too high?

London is Europe’s largest metropolis, responsible for 22% of the British economy, with employees in and around the capital paid 29% more than the rest of the country. And yet, the cost of renting and buying a house is prohibitively expensive compared to anywhere else in the UK. Although other large cities, such as Liverpool and Manchester, are rapidly creeping up in price too, partly in response to the rising costs of living in London as people move away to previously cheaper areas.

Mind the Gap

According to Zoopla, the average cost of renting a one bed flat is £1,690 a month, with rent absorbing at least 52% of pre-tax earnings. Other cities, such as Liverpool and Manchester are also more expensive than the rest of the country, with rent higher in areas near major commuter routes, such as Merseyrail in Liverpool. Manchester – which some are now calling the ‘London of the North’ is witnessing London-style price rises for property, with the city experiencing a 20% increase in recent years.

These high costs are even worse for younger employees and graduates, often forced to live in cheaper accommodation, sharing with several others; with them at risk of falling prey to slum landlords and those willing to exploit desperation. Some landlords charge around £500 for beds in kitchens, living rooms, even cupboards and sheds.

House prices are also a lot cheaper, with the gap between London and the rest of the country at £300,000, according to recent figures. In 20 years, property prices have gone up 450% – on average – with Westminster and Hackney increasing around 700% since 1996. It is no surprise that there are now more renters than owner occupiers in the capital.

How High Rental & House Prices Are Impacting Employers

According to employer data from Grant Thornton, the accountant, seven of ten are worried about the cost of rent and housing preventing them from attracting the talent they need. People will always come to big cities for opportunities and advance their career, but if the cost of living is excessive, graduates and younger staff – and anyone without money in the family or substantial savings – may look elsewhere.

Some companies, including KPMG and Deloitte – both big four accounting firms – are now providing accommodation for graduate employees.

Deloitte provides a campus atmosphere, with room prices between £180 and £220, after-work activities organised and travel is only 30 minutes to the office. Far better than staff commuting from outside London, taking multiple trains or buses, or paying £700 for a living in a shed someone’s garden. KPMG makes introductions to private banks, making mortgages far more affordable with lower rates.

Unfortunately, not all organisations can afford to subsidise accommodation or make introductions to private banks to guarantee favourable rates. Even when staff are paid well, saving for a deposit and one or more months rent in advance is expensive. When rents are higher, so are the other associated costs. Buying is even more expensive and, therefore, unrealistic. Staff living in cold and uncomfortable accommodation might stay in the office longer if only to stay warm, which negatively impacts productivity.

One way to support staff in large cities, if you don’t have the resources of a big four firm, is to offer employee benefit loans. It won’t cost you anything, but through credit unions, your team can access loans that would make a deposit more affordable. Make city living more affordable for your staff. Our employee benefit loans and savings accounts, provided by ethical credit unions, are the answer. Find out more.

Sick of Walking a Credit Card Tightrope?

More than 5 million British people have credit card debt that they won’t clear in full for ten years. Some consumers are paying £2.50 for every £1.00 borrowed, which is concerning enough that the Financial Conduct Authority (FCA) is going to make banks take action.

Credit cards are everywhere. In the UK, we are top of global league tables for credit card ownership, according to Kantar Media TGI research, with 73% of the population owning at least one credit card. Sixty percent of people pay the balance in full every month, with average credit card users only accessing 7% of the available funds. Some even play one card off against another, making more money than they pay in charges.

However, not everyone has the funds or ready access to credit facilities to juggle cards and pay balances every month. But that hasn’t stopped credit card companies targeting people – even those who can’t afford it – with offers to transfer a balance to a card with 0% interest.

With average household debt around £13,000, we have to wonder if the financial sector is once again following a dangerous and irresponsible path? What about consumers: Are people aware that alternative options exist?

Making Sense of 0% Balance Transfer Offers

Credit cards are useful when they can be paid off quickly, or when you are only using them for small purchases. But for the 3.3 million people paying more in interest than the outstanding balance, banks are earning a considerable profit from those customers. Hence FCA concern; although, action to help them may not come into force until 2018.

We need to remember that banks can’t stop people from spending. All they can do is offer advice, guidance and ensure customers understand their options. It could be said that many are failing in this area, especially when offering someone a 0% credit card balance transfer.

Offering a customer a new credit card, with a long zero-interest rate period (up to 40 months, or more) sounds like a great deal. Transfer fees are often 3.9% or less, with some free or only 1%, which is usually far less than one month’s worth of interest.

Providing someone can afford to pay the debt in full they are getting a bargain, but for many who can’t afford this, they are effectively being tricked into prolonging their debt cycle. Applicants should check they can afford the deal first, with affordability calculators on most comparison websites. Credit score tools, such as ClearScore, will also show whether you are eligible for an offer, which is worth checking, since once a credit check is done it leaves an imprint on your file, thereby reducing your score.

Not only that, but not everyone who is eligible gets a great deal. About half are offered a higher transfer fee with a shorter zero-percent interest timescale. Not everyone who gets these offers is eligible, which means applying leaves a negative impression on your credit file. The FCA has also found that 20% of people on zero-percent deal cards did not expect to pay interest on a new purchase. A classic bait and switch, with banks concealing information they ought to make clear to applicants.

A Better Alternative?

Transferring debt from one card to another is fraught with risks. Especially if you are worried about your credit score. Loans from banks are harder to get than credit cards. Thankfully there is an alternative. With FairQuid, you can take out an affordable loan and consolidate credit cards and any other debts.

We only work with ethical lenders and credit unions, and they use a broader set of criteria to assess a loan applicant, including your salary and number of years with your employer. Minimum eligibility means at least one year with your current employer.

Want a solution this year? Debts you want to consolidate? Or are you looking for an easy way to start saving?

FairQuid is here to help. Our loans have already made debts more affordable for hundreds of people across the UK who want to reduce their debts and start saving. Fill out the form on this page so you can ask your employer to offer this as a completely free benefit to all staff.

Why Credit Unions Are The Future of Employee Financial Wellbeing

Consumers lost confidence in mainstream banks as a result of the recession. Mortgage foreclosures, PPI, tighter lending criteria and rejected loan applications crippled millions of families and businesses when they most needed help.

At the same time, governments in the UK, US and Europe were bailing out banks to the tune of several hundred billion pounds. Financial executives were walking away with six and seven-figure golden parachutes when customers were having homes repossessed. It wasn’t a good time to be in the financial services sector, and even now, we are living with the repercussions of that economic collapse. Media stories of massive RBS losses still stir up old resentments.

Banks have more competition. Customers expect more from financial providers; they expect them to make smarter, more ethical, choices. Credit Unions, now numbering 500 across the country, with over 1.6 million members, are a group of competitors that have benefited from a public unwilling to put all of their money and trust back into banks. Credit unions are more popular in other countries, with over 40% of US consumers a member of a credit union. In the UK, that figure is around 4%.

Most credit unions are considerably smaller than banks. It makes it difficult for them to make potential members aware of them. Employers could step in with a solution that helps staff and reduces stress-related absence and staff turnover, with support from credit unions.

How Credit Unions Can Solve Absence & Turnover Problems

Debt and unexpected bills reduce employee performance. Stress increases staff absence, even turnover when they are worried enough about money to look for another job.

With average household debt around £13,000, we can’t assume that banks will lend more money if an employee wants to consolidate debts, or they have an unexpected bill, and we can’t even assume that those on higher salaries save money since savings rates are so low in the UK. In case of an emergency, people are as likely to turn to payday lenders and credit cards than savings.

Credit unions have a better solution, which employers can help their staff find, through employee-benefit loans and savings accounts. Here are a few reasons why credit unions can provide an advantage for employer’s looking to reduce stress, absence and turnover amongst staff, whilst also improving long-term financial wellbeing.

1. Loans based on years in service

Credit union members can only get loans when they have been a member for a certain amount of time. When it comes to employee-benefit loans through FairQuid, credit unions need a minimum of one year’s service with an employer. This way, you can reward service with the option of loans and savings accounts from an ethical financial provider they would not normally be able to access straight away.

2. Salary and employment history influence the loan amount

Mainstream lenders don’t take this as much into consideration as credit unions that offer employee-benefit loans. The longer you work for a company, and the more you earn, the more you can borrow; generally up to £7,500.

Banks put far more weight on credit scores, which means any bad history will increase your interest rates or make an employee ineligible for a loan, even if they can afford it. That doesn’t help people who want to consolidate debts or pay for an unexpected bill, which in turn means they could take time off due to stress, suffer low productivity (financial stress can cause your IQ to drop 13 points) or start looking for another job. Consequently, productivity suffers, all as a result of something outside your immediate control.

3. Manageable affordability and savings

Anyone who gets a loan from a credit union becomes a member, which means they also need to start saving – as a result of automatic enrolment in the Membership. Since both the loan and saving amount are taken at source – the same as Tax & NI – the employee doesn’t see the money come into their account and then have to pay it out.

In effect, they don’t miss what they don’t have. This way, they adjust to the slightly lower Net salary, whilst knowing that a rainy day fund is building up and their debts are decreasing.

4. Hassle free loan applications

Employee-benefit loans also make applying for a loan far easier, since the bulk of the paperwork they need is verified through the employer. Credit unions can process applications faster. Staff who are stressing about money can have a solution that eliminates these worries quickly so that everyone can get back to work.

Need a solution that makes a real difference to your staff, without costing your organisation a penny? Debt is everywhere, but it doesn’t have to drag down your productivity. Our employee benefit loans and savings accounts, provided by ethical credit unions, are the answer. Find out more:

What To Look Out For When Employees Are Struggling With Debt

Despite Brexit inspired fears of an economic slowdown, the British economy keeps growing, with recent forecasts from the Bank of England, European Commission and IMF reporting positive upgrades for 2017.

Business and consumer confidence remains healthy, even optimistic. Fears of recession are receding in people’s minds, replaced by new fears, such as what chaos US President Donald Trump might unleash on Twitter today. Unemployment is currently at 5.4%, with businesses continuing to recruit new staff, grow and invest. At the same time, consumers are borrowing at a rate we have not seen since 2008.

The most recent figures from the Bank of England show unsecured consumer debt – credit cards, loans, overdrafts, car finance and second mortgages – grew 10.8% in November 2016, totalling £192.2 billion.

Peter Tutton, head of policy at the debt charity, StepChange, pointed out that net lending is growing at rates not seen since 2005. Speaking to The Guardian, he said: “Alarm bells should be ringing.” When student loans are thrown into the mix, average UK household debt reaches £12,887, according to the Office for National Statistics (ONS) and TUC.

Are Consumers Saving?

Confident consumers don’t save, they spend. Historically low-interest rates are also partly to blame. Not only is money cheaper to borrow, but saving it generates miserable returns. When an economy is strong, savings fall. They are currently at 5.6%, according to the latest Bank of England figures from Q3 2016.

According to StepChange, if every household had £1,000 as a rainy day fund – which is less than the three to six months financial experts recommend – it would reduce the risk of 500,000 families falling into short-term ‘problem debt.’ For many households – especially those earning decent money – it is easier to take out another credit card than saving.

When Debt Becomes a Problem

Debt is everywhere. Managers and highly-paid professionals have debt. Business owners can’t assume that their staff aren’t struggling with finances as a consequence of comfortable salaries. Higher pay makes it easier to borrow, which in turn, reduces the desire to save and keep a rein on outgoings. When money is flowing freely, now is the time to get into good savings habits, which is also something employers can encourage.

Employers can’t tell employees what to do with their money, but they do have a duty of care that extends to personal and financial wellbeing. An unexpected expense, changing circumstances – such as divorce or a suddenly unemployed partner – and bills getting out of hand can soon push people into tricky financial circumstances. It can happen to anyone, especially when there is no buffer to cushion the blow.

Watch out for warning signs. Bad and unexpected debt can impact productivity, employee morale, causing absences, sick days and stress. Here are a few things managers and colleagues should look out for:

  • Changed circumstances: especially new expenses or reduced household income (a relationship or marriage breakdown) – not reflected in lifestyle choices. If someone is living the same way – going out and splashing cash around – they could risk getting themselves into unmanageable debt.
  • Exhaustion, irritability and stress: We spend a lot of time with our colleagues. People notice when team members are mentally and physically drained. Bad moods, lack of sleep and exhaustion have many causes, but financial worries are always worth asking about, providing this is done sensitively.
  • Poor diet: Financial anxiety is another reason people comfort eat, sleep less, drink more, and stop taking care of themselves.
  • Anxiety, anger and an inability to concentrate: Everyone reacts to stress differently. Some may withdraw, whereas others get angry, or can’t concentrate at work, which is unsurprising when studies show that worrying about money reduces mental capacity, comparable to losing 13 IQ points.

No one wants employees to suffer without offering some intervention and help. There are several solutions, from training to practical interventions, such as the ethical loans we provide through our platform to savings accounts, which is also something we can offer employees. When it comes to saving, small change soon adds up. Providing any assistance is offered sensitively, and the help is received willingly, an employee can get unexpected costs back under control without extra stress or being forced to pay ridiculously high rates that only make a situation worse.

Sources:

1. The Guardian: https://www.theguardian.com/business/2017/jan/04/uk-credit-cards-borrowing-debt-economic-crash-fears
2. ONC and TUC figures in the BBC: www.bbc.co.uk/news/business-38534238
3. B of E savings figures: www.economicshelp.org/blog/848/economics/savings-ratio-uk/
4. Princeton study on debt and cognitive impact: www.wired.co.uk/article/worrying-about-money-can-lower-your-iq

Savings can also be a cause of stress

Reading a story today on CityAm* about a recent survey conducted by Equiniti on employees and their saving habits; few things stood out.

Just under half (46 percent) of workers want their employers to offer them financial education, while a similar proportion (49 per cent) feel their workplaces could do more to help them make informed savings and investment choices. 58 per cent of savers and investors are not putting away as much money as they would like, with a fifth (19 per cent) saying this is because they are not sure of where best to invest their hard earned cash next.

“…It’s in the employers’ interest, it helps build loyalty and mitigate financial stress …” normally one would think that having some savings should relieve stress, not cause it. A lot of companies, when they think of financial stress and employees being in distress think of employees who are prone to fall prey to payday lenders or have an unsustainable balance on their credit cards. The savers are thought of as people who are financially prudent and hence need no help.

According to a recent post by Daily Mail*, “Millions of customers with savings accounts in Britain are already suffering from historically low returns, with many popular savings accounts paying close to zero.” Financial Conduct Authority has also named and shamed few banks and Post Office as having easy access accounts that in some circumstances pay no interest. Many banks have been criticised for so-called ‘teaser rates’ which lure customers before slashing back the benefits once the cash has been deposited”.Long term financial education and investments through company share plans are good but the employers also need to look at short and medium term savings of their employees. Money that is being saved for Christmas shopping, a big purchase, a holiday or for a rainy day unexpected expense. Having this money

Long term financial education and investments through company share plans are good but the employers also need to look at short and medium term savings of their employees. Money that is being saved for Christmas shopping, a big purchase, a holiday or for a rainy day unexpected expense. Having this money sit in a zero interest zombie bank account isn’t the only option.

Credit Unions are the original P2P (peer 2 peer) Finance companies since the time P2P Finance or the social economy weren’t fancy terms. Members savings are not just protected under the FSCS (just like a bank) but they earn dividends on their deposits at the end of the year. Unlike saving account interest rates of banks, the dividends are not fixed or reduced by the credit unions. It is directly linked to the money the credit union earns by lending to its members.

So it is a win-win situation – you save when you don’t need the money, withdraw when you need it. If you need more than you have saved, then you can borrow from the credit union itself and help yourself and other members earn dividends from the money you borrow. Member helps member, the social economy at its original best.

FairQuid runs the tech platform where you can connect your employees to your local credit union and instil long-term financially behaviour change. Start now

*CityAm article

*DailyMail article

Payday lender to pay £34m to customers

Today it has been reported that Payday lender, CFO Lending, has agreed with FCA to pay £34 million to 97,000 customers for its unfair trade practises. Some of the unfair practises being referred to are overcharging customers, sending threatening letters, and failing to help customers who found themselves in financial difficulty. More detailed list can be found here.

News like this affirms our belief and strengthens our resolve that we are on the right track. FairQuid’s Credit Union partners are a good viable alternative to consumers falling prey to payday lenders in their times of financial need. We not just help with short term borrowing needs but also help in creating a savings kitty that can be relied upon for future needs (even though it may mean you don’t come back for another loan the next time, but that is ok with us). More details on the scheme can be read here.

Brexit: Implications for HR

Leaving the European Union is a substantial step for any member state to take. The decision is in many ways a social, cultural and political one, but it is also one which carries economic implications. The United Kingdom’s decision to leave the European Union, or ‘Brexit’, has consumed much debate. The magnitude of the economic costs and benefits of Brexit cannot be known with certainty before the event. The unexpected result of the vote and its ensuing fallout has created an atmosphere of instability and ambiguity, which never bodes well for the economic climate.

As per the data from Adzuna, a job-search website, their count of new job ads put up was 29,000 compared to 39,000 (This is week on week number), a worryingly large fall of 26%. The count of new ads over the past seven days is 570,000, compared to 615,000 the week before (a 6% fall). Employers, it seems, are already less keen on hiring. Many companies opt for stack ranking (also known as “20-70-10” system) of employees in this situation, which creates job insecurity and demotivation among the workers. The workers are divided into “A” (20%), “B” (70%) and “C” (10%) players, where A being the top performer, B the vital majority and C being the poor performers. The “C” workers are let go as management feels this way they can kill two birds with one stone – 1. Reduce workforce costs ahead of tough time, 2. Avoid letting go of the vital majority for some time. However as the workers are not told their ranking, it creates a sense of job insecurity among “A” and “B” players as well, since they feel they would be the ones in the next round.

As a result, “A” performers start leaving as they are in a position to secure alternative jobs even in a tough economy. So the business is in some ways stuck with “B” players as they do not find jobs as easily in the tough market but with the insecurity and de-motivation their productivity drops and can very quickly become “C” players. So very easily the companies can be left with “C” players that they were trying to reduce to begin with.

When you force employees to fit into a pre-determined ranking system, you do three things:

1) Incorrectly evaluate people’s performance, by forcing line managers to fit their teams in the 20-70-10 bell curve model

2) Make everyone feel like a number, and

3) Create insecurity and dissatisfaction when performing employees fear that they’ll be fired due to the forced system.

This flux and uncertainty of Brexit is an opportunity for the HR professionals to not be reactive but be proactive. As an HR professional if you are proactive then you not only prevent “A’s” from leaving but also motivate “B’s” to become “A” players. You should consider that people have responsibilities toward their families and they have bills to pay every month. The best reassurance and benefit one can provide in these tough times is the freedom from financial distress.

It is time for companies to start focusing some of their HR efforts on tackling financial stress. With the new breed of employee benefit offering money management tools; it’s now possible to do this effectively and in a targeted manner. Employers should tie up with financial employee benefit providers like FairQuid that provides access to savings and affordable loans through local Credit Union partners. The employees irrespective of their salary scale just have to fill in the loan application form online from the convenience of their office desktops. The saving contributions and repayments are automated through payroll deductions; therefore they don’t have to worry about missed repayments. Since Credit Unions are providing this facility based on their employment and length of service with the company, it encourages the employees to stay with the company till the loan is repaid and thus helps directly reduce the turnover rate in the short term. Thus FairQuid, through its Credit Union partners, provides financial freedom to one and all irrespective of their income.

Giving employees the tools for financial resilience can break the needless spiral of anxiety and stress. This is crucial as far as productivity is concerned, where the impact of financial stress on the workplace can be dramatic.