Rising living costs drive need for financial wellbeing in employee engagement, says HR Star

The rising cost of living has shifted the focus of employee engagement, placing financial wellbeing at the forefront, according to Kelly Tucker (pictured), founder and managing director of HR Star. 

She added that, in response to financial pressures in 2025, companies need to rethink how they engage their workforce. 

Tucker said: “As living costs continue to rise, companies must acknowledge the financial pressures their workforce faces and take proactive steps to support them.

“Employee engagement has always been linked to job satisfaction, career growth, and workplace culture.”

Tucker added: “However, in today’s economic climate, financial security is a key determinant of an employee’s overall wellbeing. 

“When financial stress takes hold, it affects productivity, focus, and morale. Companies that fail to address this risk disengagement, higher turnover rates, and reduced performance.”

To avoid disengagement and higher turnover, businesses must include financial wellbeing in their engagement strategies, according to Tucker.

This can involve offering financial planning resources, flexible benefits, and competitive salary adjustments.

She said: “HR teams are pivotal in navigating this shift, ensuring that financial wellbeing is not just a conversation but a structured support system within the organisation.” 

HR departments can offer financial wellness programs and salary sacrifice schemes, and implement remote or hybrid work options to save employees on commuting and childcare costs. 

She added: “HR should create a culture where employees feel comfortable discussing financial concerns and accessing support without stigma.”

Practical actions for retaining staff include assessing and adjusting salaries with inflation and economic changes. 

Providing access to financial management workshops and counselling is also essential along with measuring the success of financial wellbeing initiatives, Tucker said.

She said companies should monitor participation, turnover rates, productivity, and absenteeism to gauge effectiveness.

Tucker said: “Financial stress can be isolating, but companies can ease this burden by fostering an open and transparent dialogue. 

“Communicating clearly about available support, benefits, and company-wide initiatives reassures employees and builds trust. 

“When employees feel heard and understood, their engagement and loyalty naturally strengthen.”