Why CFOs need to budget for employee wellbeing

Whilst the role of the CFO may be associated with budgeting, financial KPIs and modelling, the role of employee wellbeing may be overlooked, even though it has arguably never been more important.

Employee wellbeing follows the idea that employees are respected in their work environment; they are not treated as a means to an end but their physical and mental health, and work-life balance, are acknowledged through the daily running of the organisation.

Whilst budgeting for employee wellbeing may be costly, the role of childcare, working from home and flexible schedules cannot be underestimated in terms of the value it can add to employee productivity, attendance and retention.

Here are key points backed up by industry experts that highlight why allocating resources for employee wellbeing is imperative for CFOs in the UK.

Legal and regulatory compliance

In recent years, the UK government has demonstrated an increased focus on the welfare of employees through a series of legislative measures. Laws such as the Health and Safety at Work Act, Equality Act, and regulations related to mental health and wellbeing set legal standards that companies are required to meet.

“CFOs must ensure compliance with these regulations, which often necessitates budgetary allocations,” says Justine Gray of Trending Impact.

“Failure to meet these legal obligations can result in penalties, lawsuits, and reputational damage.”

Gray notes that by budgeting for employee wellbeing initiatives, such as mental health support programs, ergonomic workspace improvements, and adherence to health and safety standards, CFOs can safeguard the company from legal ramifications while simultaneously fostering a positive work environment.

Improved productivity and employee engagement

Enhancing employee wellbeing significantly contributes to increased productivity and engagement within the workforce.

Studies have consistently shown that employees who feel supported and valued by their employers are more engaged and motivated.

“A report by the Mental Health Foundation revealed that 12.7% of all sickness absence days in the UK can be attributed to mental health conditions, which may be chemical or as a result of significant life changes, including bereavement and separation,” explains Richard Allan from Divorce Bob.

“Absenteeism not only impacts productivity for that individual and their surrounding team but also incurs substantial financial costs for the company.”

Allan says CFOs need to recognise the direct correlation between employee wellbeing and productivity.

“Budgeting for wellbeing initiatives, like flexible working arrangements, wellness programs and mental health support services, can lead to reduced absenteeism and increased employee engagement,” he says.

“This, in turn, fosters a more productive workforce and minimises the financial impact of absenteeism, subsequently benefiting the company’s bottom line.”

Talent attraction and retention in a competitive market

“In the UK’s competitive job market, attracting and retaining top talent is a challenge for companies across various industries,” explains Dean Benzaken, co-founder of TechNational.com.

“Employees increasingly seek workplaces that prioritise their wellbeing and offer a supportive environment,” he says.

“CFOs must acknowledge that high turnover rates come with substantial costs. The recruitment, onboarding, and training of new employees have financial implications for the company.”

Benzaken says that by investing in employee wellbeing, such as offering comprehensive healthcare benefits, mental health support, and work-life balance programs, companies can differentiate themselves as employers of choice.

“This investment not only aids in retaining top talent but also attracts potential candidates, thereby reducing turnover costs and maintaining a competitive edge,” he says.

Find ways to incorporate wellbeing and sustainability goals

 In today’s business climate, the role of employee wellbeing, as well as sustainability, ESG and CSR, are boxes that need to be ticked for CFOs and senior executives.

Dan Kettle of energy startup, Warmable, explains “What might start at CFOs and organisations allocating funds for employee wellbeing, there are also opportunities to fulfil other economic and sustainability requirements.”

“Not only can working from home provide support to working parents and employees that live far away, it also helps to reduce carbon footprint.”

Kettle notes there are employee benefit schemes in the market that reward customers and employees who look after their health and exercise.

“One example might involve offering free bikes and parking for employees to encourage them to cycle to work, or creating a clean, green and energy-efficient workplace that makes employees comfortable in their surroundings,” he says.

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