High stress levels among employees can cost companies hundreds of thousands of dollars each year. The Canadian Payroll Association has calculated the cost of financial stress to be nearly $16 billion dollars per year. Those costs take the form of low productivity, high absenteeism, and health care expenses.
By recognizing financial wellness as part of overall health, employers can reduce employee stress levels and ultimately derive benefits that help organizations reach their goals.
What are the costs of employee financial stress?
Money is one of the most common sources of anxiety, and it can take a toll on an individual’s mental and physical well-being. Late nights staying up feeling anxious about paying bills or reducing debt can translate into poor performance at work.
According to a 2018 report from the Financial Planning Standards Council, 48 per cent of working Canadians say they’ve lost sleep due to financial stress. Meanwhile, a National Sleep Foundation study found that poor sleep can lead to a hard-to-break cycle: Employees lose hours of sleep and are unable to finish their work during the day, so they take that work home and lose out on more sleep.
Over time, this vicious cycle drops productivity levels and makes employees feel more anxious. When they feel like they can never catch up on sleep or work, employees are more likely to call in sick.
What does employee financial stress look like?
Lost sleep isn’t the only way that financial stress manifests. When employees are worried about unpaid bills, student loan debt, and emergency expenditures, they can act irritably at work. In addition to losing interest in their assignments, employees may misdirect their frustration at co-workers, causing conflicts in the office.
Common signs of employee financial stress include:
- Poor working relationships.
- Low morale.
- Low engagement.
- Lack of focus.
- Increased use of sick leave.
Each of these indicators can cause a negative impact to the organization. Stressed-out employees provide poor customer service, cause production errors, and are more prone to accidents.
How can employers support employee financial wellness?
Recognizing the negative impact of financial stress is the first step toward combating it. Understanding the underlying causes of money worries can be more complicated, though.
For some employees, stress may come from low financial literacy, while others may be dealing with unexpected expenses.
Financial stressors may vary by generation, too. Millennials are more likely to worry about student loan payments while baby boomers are likely to focus on their retirement plans. Bringing in a financial coach or establishing a training series can help demonstrate financial practices applicable to all employees.
Helping employees to understand their current financial situation can be highly illuminating. Some employees may feel stressed about money but not know exactly what’s causing their anxiety. They know they should be doing something differently, but they can’t put their finger on it. Coaching and training can uncover these issues and help employees make plans to better their financial health. But first an employer needs to understand what the needs are of its employees. Is it budgeting, retirement, how to save, how to invest? This can be done through a survey to inform the needs, followed by the launch of programs to fulfill employee needs.
Investing in employee financial well-being has many benefits
Along with physical, mental, and social health, financial well-being is directly related to employee productivity, job satisfaction, and many other factors. When employees become financially literate, confident in their ability to manage their money, and have objective measurements of their financial situation, everyone wins.
Benefits for employees include:
- Improved mental health.
- Peace of mind.
- Greater self-confidence in financial matters.
- Better support for financial needs.
Benefits for employers include:
- Reduced employee turnover.
- Improved productivity levels.
- Higher employee satisfaction.
- Improved morale.
These examples are just a sample of the benefits organizations can gain from a comprehensive wellness program. Addressing each aspect of employee wellness leads to greater levels of success.
Get your free copy of our Financial Wellness Standard to learn more about what great employers do differently.