Financial Stress on Employees can Cost Thousands
Financial stress on employees is a very large concern for employers. It not only causes stress for individual employees, financial stress on employees is also a noteworthy expense to companies, in the form of absenteeism, lack of focus while on the job, and lost productivity. John Hancock’s recent Financial Stress Survey revealed how financial stress on employees can cost an employer upwards of $2,000 per employee per year. That’s a sufficient amount for employers to take the expense seriously.
Employers should begin by taking note of workers’ money stressors and where possible, offer financial literacy and wellness support to help alleviate them. Doing so can help employers reduce costs related to financial stress on employees. Taking appropriate action can result in a happier, fiscally healthier workforce.
Willis Towers Watson also recently studied the impact of financial stress on employees in the workplace. The research firm’s 2017-2018 Global Benefits Attitude Survey shows a clear correlation between employees’ money worries and their workplace performance, engagement, and absence. Willis Towers Watson found that employees who are struggling financially:
- Lose 41% more work time due to absence than their peers without financial worries
- Have lower engagement at work than their financially sound peers (51% vs. 29%)
- Are less productive than peers without financial stress (32% vs. 5%)
Willis Towers Watson ranked employees’ financial stress levels by high, medium and low stress. The firm also analyzed the relationship between financial stress and lost work time due to sick days, unpaid leave, and non-pregnancy-related disability leave. Highly stressed employees took 1.75 absence days to every one day taken by employees with low stress.
Willis Towers Watson isn’t the only firm looking at financial stress in the workplace. PwC’s 2017 Employee Wellness Financial survey found that the majority of Americans are stressed about their finances. PwC surveyed 1,600 full-time workers and found that 53% report having financial stress; 65% of Millennials said the same. According to PwC, 46% of workers spend three or more hours during the work week thinking about or dealing with financial issues, and 47% reported their financial stress has increased over the last 12 months. What’s more, 44% of U.S. adults say they could either not cover an emergency expense costing $400, or they would cover it by selling something or borrowing money, according to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2016.
Clearly, financial stress on employees is a topic employers should be paying attention to. What can employers do to help? According to Willis Towers Watson, there is no one-size-fits-all solution to alleviating financial stress in the workplace. The make-up of an employee population, including education, income level, and life stage all play a role in how employers should approach building the financial well-being and confidence of their workforce. In addition, an individuals’ wants, needs, and values differ by generations as do their individual preferences. As we have written previously, it is important for employers to tailor benefits to individual generations precisely for this reason.
As a first step to addressing financial stress on employees, Willis Towers Watson suggests employers assess the level of financial stress among the workforce, determine which financial stressors are of most concern, and identify solutions to address those concerns on a broad scale. In short, employers who address financial stress in the workplace and devise solutions to alleviate or eliminate it will gain a competitive advantage by increasing employee engagement, reducing absenteeism and boosting productivity. Doing so will also help reduce the costs to employers related to financial stress in the workplace. In short, proactively addressing financial stress on employees is positive for both employers and employees.
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