Keeping employees focused and productive can be a challenge for many companies. The amount of research that’s been conducted around this topic has grown exponentially over the past decade and for good reason. Without a doubt, when employees feel more at ease and unburdened by their personal financial situation, they will be more focused on their work duties and with that, have their heads in the game.
Financial Stress Is Disruptive… And Not For The Better
Through a 2016 survey, PwC uncovered startling results regarding financial stress. The findings revealed, 52% of employees claim to be stressed and preoccupied about their financial state, with 45% claiming their finances cause them the most overall stress in their lives.
According to financial guru, Dave Ramsey, over 55% of employees in the United States are disengaged in the workplace due to some level of financial stress. Some researchers believe this equates to approximately 20 hours of unproductive and wasted hours per month. The repercussions of low productivity and how this impacts an organization’s bottom line is deleterious, but understanding the many causes that come into play when calculating the disruptive nature of financial stress is more complicated.
Disengaged employees are less likely concerned about customer satisfaction, show less loyalty to their employer, experience higher healthcare costs related to stress-related illness, and are more likely to be absent from work. In addition, the burden of financial stress can be something people carry with them as they enter into the workforce, and not something that manifests due to a life-long habit of poor money management or misfortunate circumstances.
According to a 2013 study in the publication Anxiety, Coping and Stress, researchers found that recent college grads with greater perceived financial stress experienced more anxiety and depression as compared to their counterparts who were not saddled with financial burdens. Financially, in 2014, seven out of ten college seniors exited school with an average of $28,400 in student debt, as reported by the group, Project on Student Debt. These findings equate to the condition of new talent entering the workforce and the state of emotional distress they experience before even starting their career pursuits.
On the opposite end of the spectrum from new people entering the workforce are the employees who cannot afford to retire. In a recent Charles Schwab survey of 1,000 401(k) participants, nearing retirement age, it was reported that 24% of them admit to being stressed about their retirement finances more than their job security. This has led many people to reconsider their retirement age and continue working to a much older age, than anticipated, to qualify for a bigger payout of their social security benefits.
Help Is On The Way
As many companies today offer employees physical wellness programs, incorporating financial responsibility training is, also, a doable offering. “Personal finance is 80% behavioral and 20% head knowledge,” states Dave Ramsey. Ramsey believes this is due to people simply not understanding how to manage their money and further knowing very little about making the money they do have work in their favor… this is where education comes into play.
With the assistance of organizations that specialize in employee wellness and benefits plans, employers can offer informative programs as an on-going and informal learning process. One thing companies need to understand is that financial stress can occur because of different reasons. What may be the cause of financial stress for one person may not be the same stressor for someone else. Illness, divorce, and unforeseen situations like personal injury, or the responsibility of primary caregiving to an aging parent are not situations people necessarily prepare for, but once they occur, financial stress usually follows. Regardless, of the cause, education is still the key here. Along with education comes confidence. When people feel more in control of their financial state, they will feel good about other things in their life and respond accordingly.
Employers can, also, incentivize employees to participate in financial wellness programs by offering company-paid inducements such as: company-wide financial retreats, lunch and learns, or bonus days to participate in financial learning classes off the work premises.
Integrating programs that instruct your employees on various financial savings and financial protection techniques with emphasis on the benefits of why it’s in their best interest to participate, shows that employers have a bona fide interest in their most precious asset: their human capital.