Why is British Productivity So Low: What Can Be Done?

Productivity may not sound like an election issue, but in reality, this is something the government and businesses have been wrestling with for some time. British economic output, our levels of productivity, are too low.

As a country, we are an advanced, complex, mature economy. We are innovative. Our products and services are bought across the world. However, when it comes to productivity – a way of measuring the “output per unit of input, measured per worker or by the number of hours worked,” according to economic correspondents.

Simply put, productivity is a way of showing how much money we make, as a nation, after weighing everything that goes into making those products and services. Economists include everything we produce in these figures, from accountancy and financial services to cars, wind turbines, chocolate and trains.

Mind the Gap

Compared to other advanced economies, our productivity is low. We are 30% behind the US.

Since the 1990s, the Office for National Statistics (ONS) has published an international comparison table of productivity. Between the UK and other G7 countries (the US, Japan, Germany, France, Italy and Canada), there was a 9% gap, which reduced to 4% in 2007. However, since the recession, that has increased again to 18% compared to other G7 countries.

However, within the UK economy, there are enormous gaps, between high-performance businesses and so-called “zombies”, and between different regions. London is 60% more productive than Northern Ireland, which is the least productive region of the country.

OECD research notes that fast-growing companies are more productive than ever, but there are more “zombies” – businesses that are absorbing talent and capital better used elsewhere. According to the Financial Times, this indicates that “a slowdown in the diffusion of know-how and slower elimination of the weakest competitors”, is causing a drag on the country’s economy.

What is the Solution?

Productivity affects everyone. Some areas, such as the City of London (Square Mile) and Aberdeen, home to the UK oil and gas sector, have a much higher Gross Value Added (GVA) than others. Sectors, where margins are higher, will generate larger profits (for owners and shareholders) and higher salaries and bonuses for workers, pushing up productivity.

Infrastructure also plays an important role in the productivity puzzle. Major civil projects, such as Crossrail, the Heathrow expansion, Transport for North (created out of the Northern Powerhouse initiative) and HS2, are all expected to improve economic output and, therefore, productivity. Broadband upgrades and other initiatives will have a similar positive impact.

In November 2016, Chancellor Phillip Hammond announced a national productivity investment fund of £23 billion, for innovation and infrastructure over the next five years. Expect productivity to be mentioned in the run up to the snap election in June 2017.

Businesses are also keen to improve productivity. Over the last decade, many companies have bought and implemented software and other technology solutions as a way of improving processes and producing more in the same amount of time. However, Mario Draghi, the European Central Bank’s president, has noted that too many “European companies were [still] failing to incorporate them into their operations.”

Technology is not the only solution. Financial worries – either from long-term debts or short-term emergencies – reduces productivity, since it reduces employee morale, causing absences, sick days and outward signs of stress, such as tiredness, irritability and accidents.

We also need to remember that productivity is more than a statistical breakdown of how hard we all work. How much computers and machines produce, how we are doing compared to other economically advanced countries. It is an outward sign of human satisfaction. Happier employees are more productive. Knowledge economy workers need to mentally perform at a high level, consistently, which means stress and anxiety – caused by debt, a lack of savings or retirement funds – has a negative impact on productivity, engagement at work and happiness.

Make it easier for your staff to get their finances under control. Offer them employee benefit loans, combined with a saving account. Give employees the option of taking a loan connected to their employment – contingent on years of service and performance – with repayments funded directly from their salaries. Credit ratings are still important, but finally, there is a way to ensure past financial performance isn’t the only criteria to judge future stability.

Employee benefit loans give staff with a way to consolidate debts and start putting money aside in that rainy day fund. Now that is an employee benefit your staff can take to the bank. Find out more today.



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:

Lending Money to Staff: Pros and Cons?

We aren’t born worrying about money, as Yorkshire Bank likes to remind anyone who uses their cash machines.

And yet, for the majority of adults in the UK, money worries cloud our waking thoughts – and troubled nights sleep – more than we realise. Old debts, credit cards, overdrafts, store cards, consumer credit purchases – such as cars and sofas – can make it difficult to save for a rainy day, for a holiday, or for buying a house. Most of us work to live, making money a recurring source of worry.

It is worse when you are in debt, which most households are, to the tune of £12,887, according to recent figures from the Office for National Statistics (ONS), on average, which includes student loans. Mortgages aren’t included in that figure.

Sudden unexpected costs can throw a household budget into turmoil. From new tires to a broken boiler (1 in 5 break every year), we can’t always control how we spend our money. It would be great if we could, but life can get in the way.

When people don’t have a rainy day fund – which is easier said than done – it can force them into a limited range of options, especially if poor credit scores and other lines of credit prevent them from borrowing more from banks and building societies. Under these circumstances, some will turn to an employer, especially if there is a history of lending money to staff in need.

Should You Lend Money to Staff?

There are a few different ways companies lend money to staff. In London, interest-free annual TfL travel passes are a great way for employees to save money on tubes, trains and buses, with the payments deducted monthly from salaries. For this article, we are talking about when an employer transfers money to an employee as a loan.

Although there are risks, there are a couple of benefits to lending money to employees.

Loans encourage loyalty. Unlike loans from banks, credit unions, or even payday lenders, this money is directly tied to an employer; therefore, an employee is more likely to feel a stronger sense of loyalty to the company. Taking money worries off their mind means they can focus on work, which in turn means they will be more productive, thereby creating more value for your company.

However, there are downsides, which businesses should consider before lending money.

#1: Potential Consumer Credit Implications

Loans to employees can become voidable if there is no 14 day cooling off period given, no annual statement of accounts, and if there are any restrictions on how the funds are used.

The Consumer Credit Act casts a wider net than many employers probably realise, with fines of up to £5,000 and, potentially, two years in prison, if a company is caught issuing consumer credit without a license. Without realising it, companies that lend money to staff could be in breach of the Act.

#2: Discrimination Concerns

From a financial perspective, some employees are a lower risk than others. Unfortunately, lending to one and not the other can cause tension, bad feelings, and potentially, charges of discrimination being levelled against a company.

#3: Loans as a Source of Stress, Financial Dependence

Loans aren’t always a one-off. When the same staff are coming back for loans, emergency advances and quick cash injections, it raises the question as to whether you are doing more harm than good. Clearly, in these cases, they have become financially dependent on the extra money and are living beyond their means.

In the long-term, this is an unhealthy cycle that needs to be broken. Plus, this places an undue financial strain on a business when it is constantly acting as a credit line to employees. There is an alternative solution: Employee benefit loans, combined with a saving account.

Give employees the option of taking a loan connected to their employment – contingent on years of service and performance – with repayments funded directly from their salaries. Credit ratings are still important, but finally, there is a way to ensure past financial performance isn’t the only criteria to judge future stability.

Employee benefit loans take the strain and financial risk off employers, whilst providing staff with a way to consolidate debts and start putting money aside in that rainy day fund. Now that is an employee benefit your staff can take to the bank. Find out more today.


> http://www.macfarlanes.com/media/1731/loans-to-employees-consumer-credit-act-implications-ric-march-12.pdf
> http://www.hrpayrollsystems.net/are-employee-loans-a-good-idea/
> http://www.personneltoday.com/hr/how-to-offer-loans-to-employees/

Do Employees Care About Workplace Perks?

With growth at 2% and unemployment at 4.8% in the UK, we might be forgiven for thinking the recession is receding into memory. And it is, for the most part. Except for the impact recent economic history is still having in the workplace.

In the years immediately after the recession – when Europe was wobbling on the brink of another – employees were under pressure to do more with less. Everyone was being asked to do more. Work longer. Work harder. But without annual pay rises and other financial incentives. For several years, belts were tight everywhere, in every sector.

Consequently, many hardworking employees felt undervalued and poorly rewarded. Business owners and HR managers needed to do something to reward them for working so hard, without resorting to pay rises or bonuses. Around the same time, ideas started filtering through from venture capital-backed startups in California. Startups are competing against the likes of Facebook and Google for staff, which is why many started offering perks and benefits that helped them recruit the talent they need and win some free publicity.

What Kind of Office Perks?

Perks in the office can range from free breakfasts to early finishes on Friday, to an employee bar, drinks fridge, or beer or Prosecco on tap. Pet dogs are becoming a popular choice, for staff, and growing an audience on Instagram. Other offices have beanbags, hammocks, slides, nap rooms, pool tables and Yoga classes.

Unlimited holidays, flexitime and the option to work remotely are also popular choices, especially for fast-growing companies and SMEs.

Employers argue that perks aren’t just useful team incentive and recruitment tools. Perks are also useful for promoting a stronger work/life balance, reducing staff turnover and increasing engagement at work. Free food and drink is one of the easiest to implement, and most popular choices, since it encourages staff to interact more in-person, whilst saving them time and money going out for lunch. We can’t deny that some form of employee incentives – such as pizza or an early finish on Friday – is useful for morale and team communication.

Get the Basics Right

However, it can be easy for an employer to use perks as a way to forget what employees really need to feel valued and stay productive. Long-term loyalty does not come from perks. Salary and financial benefits are vital. Communication – such as feedback and praise – is invaluable. Honestly is essential. Employees don’t like to feel they are at the receiving end of a lie.

Google, known for perks and incentives, investigated their impact in 2012. Oddly enough, “it found that employee morale wasn’t directly linked to Google’s benefits”, according to Reed.

CV Library found that 85% would prefer some form of financial reward, instead of a workplace perk or benefit. With the average household debt in the UK around £13,000, there has never been a better time to offer your team benefits that really matter, which could be anything from a pay rise, to bonuses, to something financial, but cost efficient, such as employee benefit loans and savings accounts.

Giving employees the ability to reduce debts and increase savings, without adding to your payroll costs is a win-win for everyone, especially if you are keen to offer practical support, but need to consider economic factors now that Article 50 has been triggered. Clearly, employees value financial incentives more than gimmicks and “perks”, which means an employer should consider a range of options to deliver these solutions for their team.

We work with ethical financial providers to deliver these solutions to organisations across the UK, costing the employer nothing, whilst ensuring their staff can consolidate debts and start saving. Loans and savings: Reducing one and increasing the other at the same time. Find out more today.


Reed: http://news.reed.co.uk/office-perks-have-they-lost-their-pulling-power/
CV Library research: https://www.employeebenefits.co.uk/issues/january-online-2016/85-would-opt-for-a-pay-rise-or-bonus-over-workplace-perks/

Debt and Economy Damaging Careers and Earnings of Millennials

Our economy is growing, but that doesn’t mean we have seen the last of the recession. It continues to exert an influence on the prospects and earnings of professionals who started their careers during the recession.

Millennials – those born between 1984 and 2001 (also known as Generation Y) – in the UK ended up with the short end of the financial straw. Around the same time – the early 2000’s – the economy was ballooning into a bubble; Generation Y was being sold the dream of earning a degree and walking into a high-flying graduate job, with signing bonuses, cars, and benefits. Then, in 2008, the recession hit.

Dream jobs for graduates became scarce. Young people, used to their own freedom, were forced to return home. A bleak reality sunk in, with dreams put on hold and a younger generation taking any job they could get, from zero hour retail contracts to low-paying freelance gigs. No one expects to graduate from three years of study with a first or 2:1 only to return home and work at Burger King, but for some, especially those who aren’t from privileged families, that is what happened.

Although the recession is over, it takes millennials even longer to get on the housing ladder. Savings are frighteningly low amongst this generation. And debt is high, thanks to student loans, overdrafts and credit cards. But the recession has had a more subtle, yet ultimately more damaging impact on the career prospects of millennials.

Lower Career Confidence

Millennials are – incorrectly – considered fickle and loyal only to themselves. Partly thanks to social media, the “oversharing” generation appear quick to change partners, university courses and jobs. However, a recent study by the Resolution Foundation has found that workers born in the mid-1980s are half as likely to switch jobs as those born in the previous decade. Only 25 percent of millennial professionals regularly job hop, in stark contrast to one of the career stereotypes of that generation.

Wages are also stagnant for younger generations, making it harder to pay off debts or save for a deposit. Perhaps unsurprisingly, many who weren’t able to find work after graduating went self-employed, which comes with other risks and rewards.

For those in employment, “One of the most striking shifts in the labour market has been young people prioritising job security and opting to stick with their employer rather than move jobs,” said Laura Gardiner, a senior policy analyst at the Resolution Foundation.

Can Employers Support Millennials More?

Through no fault of their own, Gen Y employees entered the labour market at the worst possible moment. For many, this slowed down, derailed or resulted in entirely new career plans and pathways. It also made this generation of professionals more cautious. Consequently, they don’t take as many risks, which is why they place a higher value in job security, skills development and reassurance, in the form of praise and feedback, more than previous generations.

However, with unemployment lower than ever – at 4.8% – we know this situation is already starting to change. Younger workers are eager to get on the property ladder. Perks and benefits are great, but millennials prefer salary increases, bonuses, commission or another form of financial reward. Employers should not depend on loyalty when they are only handing out “soft” incentives, such as training, flexitime and Friday treats, like pizza and cake.

One of the biggest financial challenges for younger workers is debts and savings. Too much of one, not enough of the other. Pizza and cake will not keep staff loyal forever when they need to clear debts and pay deposits. However, you don’t always need to give millennials a raise to solve these issues.

Instead, we can provide long-term debt consolidation and savings accounts from ethical lenders through our platform, making it easy for you to help them repay debt responsibly and save for a brighter future, without costing employers anything. Now that is an employee benefit your staff can take to the bank. Find out more today.

CIPD: http://www2.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2017/02/23/job-loyalty-denting-millennials-pay-and-careers-report-finds
CV Library research: https://www.employeebenefits.co.uk/issues/january-online-2016/85-would-opt-for-a-pay-rise-or-bonus-over-workplace-perks/

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.


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

Impact of Employee Financial Stress on your Bottomline

Employee Stress

Recently came across a well-researched post in America about the impact of employee financial stress and its impact on company’s bottom line in real dollars and cents. You can read the whole post and the sources of data they have researched against these, at the bottom of our post.

The main theme was around an acronym they had created – DEFACE and how it adds real costs to a company’s bottom line. We thought we will follow their lead and see how some of this adds up to a company in the UK of 500 employees and paying (for this post’s sake) a minimum wage of £7.20 an hour.

First, the acronym itself relates to Days available (attendance or lack thereof), Engagement (productive hours at work), Fatigue, Alertness (workplace accidents), Commitment (Staff turnover) and lastly Ethics (correlation between stress and temptation to steal at work).

Days Available: on an average 10 hours per month is lost due to absenteeism, 70% of all job absenteeism is tied to stress-related illnesses, of which the leading cause is financial stress. So if we assumed 7 hours a month due to financial stress, the cost impact is £302,400 per year. This obviously does not look at the opportunity cost to business of missed deadlines on customer orders and production backlog

Engagement: On average, a financially stressed employee will spend 20 hours per month dealing with financial issues at work. 70% of UK workers talk about being affected by financial worries. So if we take that as the staff numbers impacted, the cost impact is £604,800 per year

Fatigue: ‘Present-eeism’ where a worker is physically present but absent due to distractions about financial concerns, steals 6 hours of productivity per month per stressed employee. Applying for the same numbers as Engagement, the cost impact is £181,440 per year

Alertness: About 70% of workplace accidents are stress-related due to the distractions of that stress. The US paper said, “As a result, companies with 1,000 employees see about 23 stress-related accidents per year, costing about $29,000 each.” We checked the UK government’s Health and Safety Executive (HSE) website and see that for the UK the figures are £1.6 million for fatal injury, £7,400 per non-fatal injury. If we only look at non-fatal injury then the cost is £85,100 per year

Commitment: Staff turnover is high amongst financially stressed workers as they are willing to switch for an even small increase in wages. If we looked at the UK average turnover of 19% and studies show that 40% of turnover is stress related, the cost of replacing such employees is £5,000 each. So again the overall cost would be £190,000 per year

Ethics: Financially stressed workers are more tempted to steal from their employer, and in the US 4.2% of employees have been caught doing just that. Since we could not find similar data for the UK and did see that most of these were limited to Retail and Logistics sector (as far as available data we could find), we decided to exclude this from our calculations.

So for the 500 staff company, the overall cost of employee financial distress can be as high as £1,363,740. Now that is a substantial sum of money to be left unplugged from your bottom line.

There is a lot of awareness and emphasis now on Financial Education and Employee Financial wellbeing within the HR practitioners across the UK and this segment of Benefits is growing the fastest by various industry estimates. Though education is a good objective but education alone will not bring about behavioural change.

Companies need to be part of the alternative instead of being on the sidelines. The obligatory saving contribution in addition to loan repayments, is one small feature of FairQuid partner Credit Union loans that not only help employees consolidate their existing high-interest debt (thus saving money in interest costs) but also bring about a behavioural change in savings habit in a way that they have a pool of money saved by the time their debt is paid off. So the next time they need money for an unexpected expense, they don’t think of borrowing as their first option.

For more information on how your company can become a part of the movement, contact us

American source article

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.

Things that make you go Yay!

When you start a new business typically you are focussing on idea validation, market validation, product validation to begin with. Very soon you move on to market sizing, revenue and expense forecasting, cash flow models to ensure you can not just grow fast, but survive too. Go-to-market plan execution then consumes you.

In all of this the thing that makes it all worthwhile and gives you the stamp of approval, is feedback on how you have actually made a difference in someone’s life.

Feedback like this (reproduced below) is what makes us go Yayyyyyy!!!

“Just a quick mail to say thank you for helping me out with this work based loan!

This has helped me out massively. Trying to look after three kids and day to day bills I found myself in a hole and felt I had nowhere to turn. I was maxed out on two credit cards, one with a limit of £3500 and the other £1000. My Vanquis card had an interest rate of 39.9% APR and the Halifax had a 18.9% APR. Some months my outgoings on these credit cards amounted to around £200 and this was just in interest alone! At this point no matter how hard I tried I felt this was never going to be paid. I tried looking into other loans to pay these off in full but was declined.

Thanks to this scheme I have been able to borrow £4000 and with some help from my first wage I have manage to pay both credit cards off in full. Both of these cards have now been cut up and cancelled to avoid falling back into the same situation. I now have one manageable payment of £280 for the next 24 months. The fact this comes straight out of my wages on payday makes it so much better for me as I don’t miss it. Knowing in 24 months I will be debt free and also will have accumulated £240 in savings is a huge weight lifted from my shoulders and for that I thank you!” a FairQuid user

New Employee Benefit Loan Scheme officially released to Lancashire Businesses

FairQuid, a new employee benefit loan scheme which promotes employees’ financial wellbeing, has recently exited its trial period and been officially released to the Lancashire business community.

Initially launched and trialled at 645-strong Darwen based manufacturing company WEC Group Ltd, the scheme aims to improve employee engagement and retention by offering access to low cost borrowing and improved money management practices through the use of local community Credit Unions.

Challenged with a high staff turnover (>20% p.a), WEC Group Commercial Director Wayne Wild was looking for an employee benefit that would attract and retain talent. He was convinced that Credit Union membership could be a huge benefit for his employees, so he worked with the Jubilee Tower Credit Union in Darwen (who were recently awarded the Publisher’s Award at the Red Rose Awards 2016) and became co-founder of FairQuid as a solution.
Within one year of implementation at WEC Group, FairQuid achieved its goal of improving staff retention well above expectations. Over 130 employees joined the scheme within the first few monthsand over £140,000 of high interest debts have been refinanced through Jubilee Tower Credit Union.

Staff turnover dropped to under 4% for those taking advantage of the scheme, saving the business over £240,000 in recruitment and associated staff replacement costs.

As a simple, fair, and responsible framework, employees can apply for a short term loan from their local credit union through an online platformprovided by FairQuid. Criteria is based around their salary, service level and employee record, and a maximum of 20% of an employee’s annual salary is the loan value which can be applied for. Repayments are automatically deducted from the employees wage within a set period of a maximum of 24 months meaning no payments can be missed.

The success of the scheme is mostly due to the fact that FairQuid encourages a responsible pay back method with set repayments through payroll deductions. No roll over borrowing is possible in accordance with the ethical rules of Credit Unions, which are not-for-profit organisations operating savings and loans accounts for their members.
Wayne commented: “It’s a win-win-win. The employer wins by saving on retention and recruitment, and staff win with access to low-cost borrowing and improved sense of money management.”

FairQuid also offers many benefits to Credit Unions as it helps them acquire new members, increases fund development and improves their portfolio quality. In addition, it enables employers to improve productivity and decrease staff turnover, which on average costs companies 4% of their bottom line.

Wayne Wild continues: “All loans are provided by the local credit unions and repayments are made through payroll deductions, meaning there is no strain on your company’s cash flow. We have no liability for the loans which makes it a great staff benefit for WEC Group at absolutely no cost to us.”

Following its success, FairQuid was officially released to other North West businesses at a recent Lancashire HR Employers Forum in Preston with strong interest recorded on the day. The company is now actively promoting the scheme to other organisations who are interested in helping employees improve their financial wellbeing.

A number of Credit Unions in Lancashire, Cheshire and Yorkshire have already joined the scheme, enabling FairQuid to increase their catchment area further. Discussions are already in place with other credit unions and employers nationally.