Although many employers consider their employees’ finances to be none of their business, this delicate topic actually has the potential to directly affect their businesses.
Employees who are stressed about their financial situation often let their concerns affect their job performance. As a result, productivity and the company’s bottom line suffers.
However, there are several ways employers can help their employees with their financial issues without doing anything as drastic as taking a peek at their bank statements.
“Financial education has the potential to change people’s financial behaviors and, consequently, their job productivity,” says Rose Gantner, Ed.D., NCC, senior director of health promotion at UPMC Health Plan.
Smart Business learned more from Dr. Gantner about how employers can eliminate financial distress in the workplace.
What should employers know about the issue of financial education for their employees?
A majority of U.S. employees get most of their financial and health products from their employers and look to their employers for guidance. The average American lacks a basic understanding of money and the principles of fiscal responsibility. Add the current uncertainty of recent economic times and there is a good possibility that employees are more concerned about their financial futures than ever before and they are bringing those concerns to work.
Research shows that about 15 percent of employees in the U.S. are so stressed about their poor financial behaviors that their job productivity is negatively impacted. Persons dealing with personal financial issues can waste from 12 to 20 hours per week on the matter, according to GuideSpark, a company that specializes in corporate financial education.
How does an employee’s involvement in financial matters affect productivity?
Worry over money can cause inattention at work. The Centre for Financial Social Work has said that ‘money issues are the greatest stressor in people’s lives.’ Studies have shown that employees who are feeling positive about their finances are also the most productive. Not being able to pay the bills can weigh very heavily on an employee and can create work-related problems such as absenteeism and presenteeism. Employees struggling with financial concerns tend to have higher turnover rates, added health care costs, and more exposure to liability and lower productivity than do other employees, according to the Personal Finance Employee Education Foundation (PFEEF).
Is financial education a benefit that employers should offer their employees?
Providing financial education is one way for employers to demonstrate commitment to and concern for their employees. It also supports the recruitment and retention of quality staff. A good first step for the employer is to understand how important the issue of money management is to employees. Of course, the responsibility for financial management lies ultimately with the employee, but its effects can carry over to become a company’s problem, as well.
Partnership with the employer makes it more likely that employees can learn what they need to and be reinforced for taking this part of life seriously. Industry estimates show that financial wellness initiatives can generate a return on investment of more than 3-to-1.
What would a financial wellness education consist of?
A financial wellness education should focus on three main goals. First, it would attempt to provide employees with a sound knowledge of the principles of money. Second, it would help give them the ability to make financial decisions based on facts and sound reasoning. Third, it would help give someone the ability to manage their financial life based on personal values and goals.
What can an employer do to help his or her employees in terms of financial management?
Financial education has been shown to inspire employees to take action and make positive changes in their behavior; for example, turning stress about the future into showing them how to save for retirement. Persons who have received financial education are less likely to take time off to handle personal financial emergencies and are less distracted by the stress that financial problems could bring. Financial distress can lead to insomnia, high blood pressure, migraines and other serious health concerns, according to PFEEF.
How widespread is the problem of financial distress in the workplace?
According to a survey by PFEEF, an estimated 30 million American workers or, one in four are subject to serious financial distress. In 2009, the Society for Human Resource Management reported that in the previous 12 months there had been a 26 percent increase in employees having their wages garnished by collection agencies and a 20 percent increase in requests for pay advances.
How can employers define which money problems employees need help managing?
Overindebtedness, overspending, unwise use of credit, bad spending decisions, poor money management, insufficient money to make ends meet, and concern about the money needed to retire head the list of problems employees face. In a recent survey of more than 45,000 American workers, 71 percent said they would find it difficult to meet their financial obligations if their paycheck were delayed by one week.
ROSE GANTNER, Ed.D., NCC, is the senior director of health promotion at UPMC Health Plan. Reach her at firstname.lastname@example.org or (412) 454-8571.