Chances are at least some of your employees – possibly many – are struggling financially. Seven out of ten Americans say that finances are their most common source of stress. Half say they find their current financial situation stressful, and fewer than 40 percent of households have three months of savings put away.
Those numbers may be surprising to you, as financial stress is hard to talk about in general, let alone in the workplace. Although employees may not come to you directly to discuss their personal financial situation, if they are under inordinate amounts of financial pressure at home, chances are those stressors are already spilling over into the office:
Challenges focusing: Employees under great financial strain may have difficulty focusing at work. They also may be taking some time away during the day to address their financial issues. One worker in four reports that their personal financial situation has distracted them at work. Out of workers who report they are concerned about their finances, 39 percent of them say they spend at least three hours every week dealing with financial problems or thinking about them while on the job. And 61 percent of HR professionals surveyed report that they believe that employee financial stresses were having a negative effect on their performance.
Presenteeism: Employees who are struggling with finances at home may not be able to afford to take unpaid sick days – even when they aren’t fully healthy. This could lead in lost productivity for the sick employee, as well as significant costs reduced productivity and attendance if the employees’ sickness is contagious.
Chipotle Mexican Grill experienced some significant costs earlier this year when a number of food poisoning outbreaks could be traced back to workers who came to work sick. Many part-time employees, or low-wage restaurant employees, don’t qualify for paid sick leave from their employers. It’s easy for an executive or even an HR staffer to type out a requirement that a sick employee bring a doctor’s note to miss more than three days of work, or receive paid sick leave. But many times, hourly workers can’t afford the $100 or so it costs to see a doctor at a local urgent care clinic. For someone making $10 per hour, that’s more than a day’s take home pay.
Depression and anxiety. As anyone who has struggled to live pay check to pay check knows, financial hardship can lead to severe depression and anxiety. A recent study published in Health Affairs looked at 92,000 employees over a three-year period. The study found that employees who reported they were under significant amounts of stress were, on average, $413 per year more expensive than their less-stressed peers. 
Employee Theft. Employees facing tremendous financial pressure at home are more likely to engage in employee theft or embezzlement. Problems may start small – employees “borrowing” from the till or cash office to get them through a tough week – and they quickly find themselves in over their heads, owing more than they can pay back.
Retention. Most employees who are under significant financial strain are basically good and don’t want to steal from anybody. But cash compensation becomes critically important to them. Which makes it very easy for other employers to hire your top talent away from you. If you can’t afford the same pay package as your competitor, an employee who is under significant financial strain, no matter how loyal they may feel, and no matter how positive the other elements of your employer value proposition may be, they may simply be unable to stay with you.
All these things cost employers money.
So how can you help your employees prevent or at least mitigate the financial stress, while protecting your interests as an employer? Other than granting an out and out pay increase (which presumably we’d all love to do if only it were that simple!), here are a number of options:
- Introduce an employee wellness program or EAP. These are services that provide employees counseling, or referrals to counseling, for any number of personal issues, including financial stress. The employee pays a small monthly fee to the benefits company, and in turn any employee can call a toll-free number to get the help they need. This may include referrals to local counseling organizations, charities, mental health professionals, bankruptcy attorneys, marital counselors and other professionals as appropriate.
Tell your employees that calls to an EAP are totally confidential. The EAP vendor will never share employee personal information with the employer. So they should feel free to use the service in full confidence that their privacy will be respected, and anything they may say to the EAP representatives or anyone the EAP refers them to will not affect them at work in any way.
- Make financial education available to employees. Many people are desperate for help and guidance when it comes to making financial decisions. Not everyone likes to read about the optimum asset allocation in their 401(k) plan on the weekends, and not everyone likes to think much about life insurance, disability insurance and basic budgeting in their spare time. Many people may not have the skills on their own.
Employers can bring in financial counselors, or make discounted or free services available as an employee benefit.
Be sure to match the financial counseling services available with the employees. Not every financial education program is the same. For example, some programs may concentrate on preparation for retirement planning, pension optimization, or long term care. Others may focus on help with basic household budgeting and recognizing financial scams. Match the help available with what your employees actually want and need.
- Offer financial wellness benefits. More and more employers are offering benefits that help employees improve their financial situation.
How can offering employer student loan payments as a benefit help your company attract and retain top talent? Download our Guide to Student Loan Contributions as an Employee Benefit to learn more!