“Employees with money problems are like sharks swimming around the workplace taking bites out of the bottom line.” – E Thomas Garman, Personal Finance Employee Education Foundation

Last week we looked at some poor money habits that can cause you to feel distressed about your finances. These practices include spending more than you earn, not saving for emergencies, depending on credit for consumer purchases, not planning for financial goals and taking unwise investing risks.

Research has shown that people with money problems usually end up being tense, worried and depressed. The Centre for Financial Social Work has stated that “money issues are the greatest stressor in peoples’ lives.” Financial distress can actually lead to insomnia, high blood pressure, migraines and other serious health concerns.

While it’s clear that people’s money challenges impair their personal lives, it may not be that obvious that these troubles can negatively impact the workplace. What happens when financially challenged people go to work? Do they leave their money worries at home?

Money Distress At Work

The reality is that employees’ personal financial problems will spill over into the workplace. This results in several negative implications which eventually lead to lower profits for businesses:
Absenteeism – studies show that financially stressed workers use more sick leave and are absent from work more often;

‘Presenteeism’ – although employees are at work, they spend time on activities unrelated to their jobs such as talking to creditors. The Integrated Benefits Institute has declared that presenteeism can account for three times more lost work time than absenteeism;

Health concerns – unhealthy workers produce lower quantity and quality of work and bring higher health insurance costs;

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Work conflicts – tardiness, incomplete work tasks and accidents result when workers’ personal issues interfere with their jobs;

Dissatisfaction and lack of commitment – studies show that financially distressed workers are less satisfied with their pay regardless of the amount they make; their disenchantment with work can lead to lack of pride in their jobs and negative feelings about employers.

How can employers address the various problems that financially distressed employees bring to the workplace?

The Personal Finance Employee Education Foundation (PFEEF), a non-profit organisation that educates employers on the benefits of workplace financial education, declares that companies should provide basic financial training for their employees to help change their money behaviours and increase their financial literacy.

Financial Education At Work

Some employers believe that their workers’ financial issues should not be their concern. However, PFEEF has carried out extensive research that proves that these problems pose a serious risk to company profitability. PFEEF studies have also measured the return on investment attained from workplace financial education at 3:1.

Another reason for companies to offer this assistance is that responsible employers should be the stewards of their workers’ well-being. Providing financial education will show employees that the company cares about them, and this will help to recruit and retain quality staff.

Financial challenges can be a pervasive problem, as changing negative financial habits takes time. Since many people spend most of their time at work, it is the best place to accomplish this. A 2000 Fannie Mae Study confirmed, “Workplace financial education is the venue for reaching most people.”

However, providing meaningful financial education can be challenging for employers. Firstly, it may be difficult to determine the true underlying causes of employee distress. Some persons may hide their problems due to shame or ignorance, and employers may even face resistance from the workers who need it most.

Another problem is that many human resource practitioners lack knowledge of the correct procedures to address their employees’ financial issues. In fact, some of those who should be assisting are also facing financial challenges.

Designing A Financial Wellness Programme

There are several steps to starting a financial education programme in the workplace. Employees must firstly be sensitised about the need for this assistance, and employers should get buy-in from trade unions and associations to promote it as a worthwhile employee benefit. Ongoing research should also be conducted to gauge its effects on the bottom line and employee well-being.

A comprehensive financial wellness programme should include carrying out assessments to ascertain the financial education needs of the employees, offering financial presentations and workshops on company time, and retaining financial counsellors for confidential individual coaching. Longer-term strategies should consist of training of human resource personnel to assist workers with financial problems, and developing structured financial wellness company policies.

Financial education programmes will bring tremendous improvements in employee well-being. Participants will learn how to make better financial choices and carry out appropriate strategies to improve their finances and achieve their goals; they will want to continue learning more about money; and they will feel less stressed and unsure about their financial situation.