Checkmate: why guiding employees to master money helps your business

As a chess grandmaster takes his place at the board, the timer gently ticking away, they have won and lost that match hundreds of times before making their first move.

For some, this sounds like an epic adventure of learning and growth. For others, it feels like pounding heartbeats, sweaty palms, and a touch of panic.

This moment may represent how some of your employees feel about and approach their finances, especially if most of their experiences with money and the world of finance seems largely beyond their control. The social, economic, and political landscape in the UK continues to evolve, which may result in a sense of uncertainty among many employees.

54% of the population feel anxious when dealing with their finances, according to our latest research Mastering the Age of Ambiguity, conducted in June 2022, and there are substantial generational differences in this number. Generation Z (Gen Z) and Generation Y (Gen Y), according to the report, are most likely to feel anxious when dealing with their finances (69% and 73% respectively), which is considerably higher than their Generation X and Baby Boomer counterparts (49% and 36% respectively).^{[1]Footnote 1}

Between Gen Z (aged 18-25) and Gen Y (aged 26-41), 60% of employees avoid their finances because, they are often out of their control.

They’re not approaching the table, much less feeling empowered to move the pieces within their financial reality. ^{[1]Footnote 1} And based on the wellbeing circle (the relationship between mental, physical and financial health), feeling less confident in one area of life may hit on other areas of life, such as performance at work.

Giving your employees the knowledge and means to build financial self-efficacy, or a belief in their ability to achieve financial goals, may help make a hardier workforce.

The making of masters 

Masters, of any trade or skillset, are borne of intense challenge. They didn’t ask for it nor do they want it nor is it fair, but Gen Z and Y are living through a unique economic reality that (if they choose) may set them up for mastering their money.

For young employees in their late teens and early twenties, feeling financially overwhelmed is potentially all they know. And for employees who are struggling to put food on the table, money matters become a daily battle that may be filled with feelings of helplessness, anger, and resentment.

Our research found that nearly two in three employees (63%) believe that managing their own finances has become more difficult in recent months because of the cost-of-living pressures. One in five (20%) say their current financial situation is affecting their mental health and two in five (40%) employees are concerned the money they have or will save won’t last.^{[1]Footnote 1}

In a recent study published in The Journal of Economic Psychology, researchers not only found a link between financial limitations and an increase in financial avoidance, but that, “when experiencing financial scarcity, pressing financial problems capture attention, while other important matters tend to be neglected. In addition, financial scarcity impedes cognitive function." ^{[2]Footnote 2} An employee consumed by financial anxiety and worry, even if they don’t open bills or financial statements, won’t have as much space to perform their best at work.

Employers can, however, help guide them out of the financial trenches and onto the battlefield armed with empathy, knowledge, and a strategy.

Building Financial Self Efficacy (FSE)

Whether it’s walking speedily by a mountain of laundry or crusted dishes in the sink, we’ve all experienced avoidance behaviour. And the experience is no different to letting the bills pile up unopened near the front door or ignoring the red bubbles popping up on your banking apps.

Since this is often internalised or unseen behaviour to others, it’s that much more challenging for you to know how to support these employees. Yet, it’s worth noting in a recent Frontiers in Psychology article, research not only found that “FSE may increase one’s propensity for high standards”, but that, “individuals with high self-efficacy for career decision-making were more likely to pursue high standards."^{[3]Footnote 3}

Avoidance behaviour is linked to our psychology, or the way we think, and how our brain evolved over millennia. If an employee isn’t acknowledging this type of behaviour, then resources may not be relevant. Encouraging employees on their journey to mastering their money may be about moving through Martin W. Broadwell’s four stages of competence framework, which is a model for learning a specific skill.^{[4]Footnote 4}

1. Unconscious incompetence (ignorance) refers to a person who doesn’t understand how to do something or even recognise that they’re missing a skill. The first step, then, is helping your employees reflect on their relationship with money.
   
   This could be by creating a financial support group, which is accessible online and available when needed. Here, employees will have a space to explore their relationship with finances and may find their first steps to developing healthier coping mechanisms. Topics can focus on specific questions that will help the member reflect on their behaviour around money. Allowing members to be anonymous, alongside group rules and a moderator, may help members feel safe.
2. Conscious incompetence (awareness) means that a person doesn’t have the skills yet, but recognises they need the skills; this is basic to the learning process.
   
   Here, and certainly in the previous stage, employers may create a confidential survey to identify the employee’s areas for Financial Self Efficacy. This survey could show employees the areas in which their skills need developing.
3. Conscious competence (learning) is the stage in which a person understands how to do something. For an employee, this means they’ve not only recognised their avoidant behaviour and the problems caused by this, but they’ve begun to incorporate positive financial actions in their life. This begins the development of good habits around money.
   
   At this point, an employer may support their workers by creating a resources hub specific to life stages, career points and areas of financial understanding. For some employees, this may mean learning more about budgeting and savings, but for others this may be about how to make their money work harder on their weekly shopping. The goal is to meet employees at their financial need.
4. Unconscious competence (mastery) is the point at which a person has much more practice in building a skill and it becomes “second nature.” This doesn’t mean that money matters become easy, but it means employees can change their relationship with money.
   
   For employers looking to support the mastery stage, signposting financial professionals who can help develop a short-term and long-term strategy may be a powerful step

As socioeconomic and political realities evolve globally with the impacts felt closer to home, perhaps making us feel like pawns on a chessboard, employers can be a positive influence by helping their employees develop the skills they need to cope in an, often, ambiguous landscape.

To explore the key concerns affecting employees in a continually ambiguous landscape, download the Mastering the Age of Ambiguity report.