How financial stress can be detrimental for employees’ productivity

Prior to the COVID-19 pandemic it was important for organisations and employers to create a workplace culture that supported the wellbeing of employees in a holistic fashion. This not only includes physical health but also mental, emotional and financial wellbeing.

The pandemic has placed even more pressure on employers to establish a workplace culture that considers the overall health of its employees and is more commonly being viewed as a baseline requirement. This has been fueled by the uncertainty of the last two years and evolving covid restrictions which have meant that employers are expected to adopt more flexible working arrangements.

A report by Gallagher Benefit Services found that 70% of employees are worrying about or dealing with personal finance at work. In fact, 20% of employees with a disposable household income above $150,000 and 21% of managers, directors and executives mull over or address their personal finances at work for 2 hours or more per week.

How stressed are Australian employees?

Financial insecurity refers to the ‘frequency of personal financial concerns and financial stress that interfere with work’ (Kim and Garman, 2004). The 2020 Gallagher Financial Confidence Report suggested that 70% of Australian workers have worried or spend time dealing with their personal finances at work, which is costing employers upwards of $47 billion dollars every year. It was found that only 4% of employees interviewed were had high levels of financial confidence.

What is causing the most stress?

Financial stress can vary from person to person, however 64% of respondents reported that unexpected costs and expenses were the predominant source of stress. This was closely followed by inadequate savings (62%) and the rising cost of living (57%). Despite the increasingly tight job market in Australia and employers offering appealing monetary benefits to attract workers, the disposable household income has only increased $44 per week over the last 10 years. With Sydney house prices increasing nearly $1,000 a day, rising 29.5% in 2021, it is no surprise that Australians are stressed about their financial security.

What are the implications of financial insecurity?

  • Distraction and productivity:
    • The most stressed an employee is about their financial stability the more distracted they will be at work, thus significantly decreasing their capacity to complete tasks and meet deadlines.
    • This also has repercussions on employee productivity as poor sleep and other negative health effects which can result in higher levels of absenteeism.
  • Physical and mental health
    • It is often said that the ‘body keeps the score’ which is particularly true in the case of stress. The Australian Psychological Society conducted a study which found that the number one cause of stress in Australians over the last 5 years were personal finances (49%).
    • In many cases this leads to increased irritability, mood swings, muscle tension and pain, fatigue and higher instances of anxiety and depression.
  • Mood and demeanour
    • It was reported that 63% of employees surveyed experiences a negative effect on their mood and demeanour.
    • Those who experience from financial stress are more likely to be emotionally exhausted and burnout, limiting their ability to form sound workplace relationships and may lead to further mental health implications.
  • Family and relationship commitments
    • Financial insecurity can also place a significant strain on an employee’s family and personal relationships.
    • Individuals who do not have supportive networks around them are likely to suffer more severe physical and mental health effects as a result of their financial insecurity.
    • Financial stress can also lead to relationship breakdown
  • Gambling, Alcohol and Drugs
    • Financial stress has also been associated with increased use of gambling to manage stress which has grown from 13% to 19% in just 5 years.
    • Of those who reported sever levels of stress, 41% gamble, 40% smoke and 31% take recreational drugs to manage stress.

 

 

 

 

This information is purely factual in nature. Please do not rely on this information to make any financial decisions as this information has not been tailored to your personal. circumstances. If you would like financial product advice or services please let me know and I will set up an appointment for you.

Any advice in this document is of a general nature only and has not been tailored to your personal objectives, financial situation and needs. Before acting on this advice, you should consider whether it is appropriate having regards to your personal objectives, financial situation and needs.

Before making a decision to acquire a financial product, you should obtain and read a Product Disclosure Statement (PDS) relating to that product, it is important for you to consider these matters and to seek appropriate advice.

The material contained in this document is based on information received in good faith from third party sources, and on our understanding of legislation and Government press releases at the date of publication, which are believed to be reliable and accurate.

 

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