Is financial stress a problem for your employees?
Can you do something about it?
According to a large survey by the American Psychological Association, 75 percent of Americans say that money is a great sources of personal stress. A widespread lack of financial security, say Gallup scientists, is one of the most critical factors influencing peoples’ quality of life and sense of wellbeing.
For most nonprofit leaders, the idea that financial stress is not just a personal problem but also an organizational problem—-an expensive one—might not be so obvious. But financially stressed workers are less productive on the job, and they’re on the job less.
People who have financial stress have higher levels of insomnia, ulcers, migraines, back pain, anxiety, depression, and heart attacks. Although it’s hard to monetize the links between money and stress, MetLife research estimates the incremental medical costs of a financially distressed employee at $300 a year.
According to the Gallup studies, the annual per-person cost of lost productivity is $28,800 for workers with the lowest wellbeing scores. For workers who are at the midpoint of what they call the “struggling” zone, the cost is $6,168. For employees with the highest levels of wellbeing, the cost of lost productivity is only $840 a year.
Another study, by the Personal Financial Employee Education Foundation (PFEEF), found that 30 to 80 percent of employees in financial distress spend time at work dealing with their personal financial problems, depending on the workplace. For this group, the average number of hours spent on dealing with financial problems at work is between 12 and 20 hours a month.
You might think the problem is simply pay—not enough of it. According to the research, however, wellbeing isn’t directly correlated with salaries or pay raises, but with overall financial security. Although salary is part of the equation, it’s this sense of security that is linked to fewer sick days and lower health expenses. Workers who feel secure also have less “presentee-ism,” the problem of being unwell, unfocused, and unproductive while on the job.
With mounting evidence that financial stress takes an enormous toll on workplace productivity, more employers are seeking ways to help their workers.
Employee wellness programs began as a way for employers to try and lower health care costs. Many organizations found that subsidizing gym memberships and smoking cessation programs and offering other preventive incentives improved workers’ health and decreased their medical expenses.
But as the definition of wellness expands to include financial security, wellness programs now include those that help employees budget wisely, build savings, and avoid crushing debt.
So what can employers do if financial stress is affecting employees and the bottom line?
1. Identify the problem. Survey employees about financial stress. PFEEF offers a free tool to measure financial stress.
2. Bring in information. Hold seminars to help employees learn the basics of financial literacy or learn more about specific topics such as managing debt and preparing for retirement. (Be careful whom you choose–presenters should not be from companies that want to sell you something!)
3. Introduce a financial wellness program. Once you understand how financial issues are impacting your organization, you may want to take a strategic, long-term approach to the problem. A financial wellness program provides multiple resources to help employees resolve and avoid financial stress. These programs include web-based education, live workshops, and one-on-one credit counseling and financial coaching. The following resources can help:
The National Endowment For Financial Education website features information about financial education programs and publications.
The Personal Finance Employee Education Foundation site includes extensive research articles, tools for assessing financial health, and resources for workplace financial wellness programs and services.
The National Foundation For Credit Counseling is a nonprofit providing credit management information, including a directory of nonprofit credit counseling agencies across the country.
America Saves is a national nonprofit that provides information about savings topics such as finding money to save, building wealth through homeownership, and compound interest.
The American Savings Education Council, a program of the Employee Benefit Research Institute Education and Research Fund, offers publications and interactive online tools such as a retirement savings calculation worksheet and the Retirement Personality Profiler.
The Certified Financial Planner Board of Standards provides consumer information about financial planning topics and information about how to find a certified financial planner.
Financial Security in Later Life is a site developed by the Federal government and many universities that includes a variety of online financial education resources, with a focus on planning for retirement and long-term care.
Investing For Your Future is a detailed online home study course in basic investing developed by a consortium of ten land-grant universities.