Financial Stress in the Workplace
Financial stress has been known to result in businesses losing over $200 billion dollars every year in lost revenue. However, there are things that employers can do to help combat financial stress in the workplace.
Are your employees financially stressed?
Financial stress can affect more than just the personal life of an employee. If something isn't done to try to help relieve some of this financial stress, it can become a major factor in the decline of the company's productivity and revenue. Financial Finesse recently reported (click here for report) that almost 70% of workers deal with some type of financial stress in their lives. These stressors can range from day-to-day finances, meeting financial goals, the current state of the economy as a whole, or simply not being able to find reliable assistance with important financial decisions.
The repercussions of financial stress in the workplace can be extremely detrimental to the company. Due to stress, employees could have a higher absentee rate in order to deal or cope with their financial situation. Depending on the nature of the business, these absences could cause a significant loss of productivity for their employer. Stress is also known to cause several medical issues that could cause insurance rates to increase for a company if their employees are suffering from stress related illnesses. An employee that is constantly missing work, and possibly becoming ill due to stress, may consider leaving their current position in search of one that will allow them to fulfill their financial needs and relieve their stress. High turn-over rates cause the company to be in a constant state of adjustment. With new hires always coming in to replace former employees, the company is unable to form a strong bond with their staff.
A 2010 Federal Reserve study determined that financial stress costs an employer an average of $5,000 per employee per year. In total, it is estimated that businesses are losing $230 billion per year due to lost productivity. According to the Journal of Employee Assistance, several studies show that productivity could decrease by 20 hours per month per affected employee. Additionally, 60-80% of all work-related accidents happen due to the amount of stress that an employee is under. If 70% of our workforce is financially stressed, this creates a large liability for American businesses. Warning signs that employers can look for to determine if their employees are under financial stress are:
- High percentage of 401K hardship withdrawals
- Garnishments
- Requests for pay advances
These are all signs that employees could be struggling some way in their financial situations.
The attitude of the employer towards the financial state of their employees could mean the difference in their business succeeding or failing. While financial stress may be occurring in the personal lives of their employees, it should be the responsibility of employers to ensure their employees have the information they need to take care of their finances. While they are limited in what they can do, one way employers can help alleviate stress is to promote financial education programs to all of their employees. If implemented correctly, these types of programs could be the difference between productive employees and those who negatively affect the company's bottom-line.