In line with PwC’s Annual Employee Financial Wellness Survey and a survey conducted by the Financial Health Network in 2018, personal finances are the number one source of stress for employees. This statistic further extends to higher-income employees, defined as employees who earn an annual household income of $100,000 and above, with 52% stating that they feel financially stressed. Indicating that financial stress can have an effect on employees of all income levels.
Therefore, the question is then posed, what is the impact of financial stress on an employee? And should this be a concern for employers and businesses?
To answer this, we will look at the issue through 3 focal points, Job Performance, Employee Mental Health and Job Retention.
1. The impact of financial stress on job performance
Generally, employees who are financially stressed, find themselves more distracted at work and less productive. To quantify this, the findings from the 2022 PwC Employee Financial Wellness Survey, showed that 76% of stressed employees stated that financial pressures and stresses have negatively impacted their productivity in the workplace. A further 25% of the group surveyed, stated that this impact can be classified as ‘severe’ or ‘major’.
Additionally, 55% of stressed employees have admitted to spending 3 or more hours each week dealing with their finances at work.
So not only is productivity being negatively impacted but employees who are financially stressed are distracted whilst working, both of which are undesirable for employers. Employers who look at increasing financial wellness resources for their employees, can see potential improvements in employee focus and workplace productivity.
2. The impact of financial stress on mental health
Money concerns play a significant role in promoting mental health disorders, which may have a direct effect on an employer’s bottom line in crucial areas like productivity, retention, attendance, and general engagement.
Six times as many employees who claim that money problems have a significant negative influence on their mental health indicate that financial stress has negatively impacted their productivity at work as compared to all other employees. These workers are also twice as likely to be searching for new work.
Financially distressed workers are seven times more likely to claim that their attendance at work has been significantly influenced by their financial situation, and these same workers are less likely to feel appreciated at work.
Along with mental health, there is still a stigma associated with seeking assistance; with 41% of employees who are experiencing financial stress, still feeling ashamed to ask for financial advice.
By highlighting employee success stories and results for individuals who use employer-provided financial wellness programs, employers may contribute to the de-stigmatisation of asking for assistance.
3. Impact of financial stress on job retention
Currently, 65% of the 29% of workers who are seeking for a new job do so for financial reasons. With 76% of employees who are stressed about their finances, being attracted to other companies that priorities their financial wellbeing.
Employers could demonstrate their concern for employees’ financial well-being by promoting benefit programs that enable employees to utalise their income effectively. This is important because of the high cost of employee turnover, which includes recruiting and training costs as well as the loss of institutional knowledge. According to the HR Industry Benchmark Study 2021 Australia and New Zealand, the average cost to find and acquire a new employee in Australia is roughly $23,000. Therefore, factoring in financial wellness into the workplace can therefore prove to have significant monetary benefits for the given organisation as well.
The bottom line is that employees experiencing financial stress is detrimental for companies. Steps should be taken or at the very least considered to promote a healthier and more profitable outlook for business, in the long term.
One way for employers to prioritise financial wellness for their employees is through providing financial advice as an employee benefit. Depending on the size of the organisation and/or their financial capacity, the company can provide free or subsidised advice for their employees. At the very least, financial wellness resources could be available to staff to alleviate financial concerns and pressures that employees may face.
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