How employee financial wellbeing affects your business


In a poll by BusinessTech.co.za, 76% of 3307 respondents indicated that they had not saved up for the Black Friday specials on 24 November 2017. While this pseudo-holiday may have little to do with your long-term profits; your employees’ financial wellness could affect your company’s earnings.

In a study on financial stress and absenteeism, Kim and Garman found that “Those who were more financially stressed were more frequently absent from work.” Moreover, frequent absenteeism could lead to increased debts and increased financial stress.

Employees experience a range of stressors which predominantly include personal, family, health, financial, and work stress, with financial and work stress often going hand-in-hand. It’s easy for an employee to blame his financial deficits on a poor salary and for that employee to develop a negative attitude towards his employer. This is even easier when that employee feels overworked and stressed.

The Black Friday BusinessTech poll is a glimpse of how consumers do not save for a national commercial event such as Black Friday in the hopes of, ironically, saving money. This behaviour can further be applied to the festive season, where credit card spending increases. It’s concerning that South Africans are not saving for large annual commercial events, and moreover, they are getting themselves into debt by overspending on credit facilities.

The biggest result of these trends is financial stress. This is possibly impacted by an employee’s expectation of receiving a bonus or a raise in the new year – which, in our economic climate, is not always a realistic expectation. The combination of feeling under-valued and being over indebted place enormous strain on the employee.

While employers may not be able to afford to pay out bonuses or give increases, there are smaller gestures they can do to help reduce the burden of financial stress. This in turn will help prevent employee burnout and absenteeism.

 

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Empower your employees

Garman et al. found evidence that “workplace financial education is effective and resulted in better financial wellness for workers.” This doesn’t necessarily mean giving them more money. A meta-analysis of the relationship between pay and job satisfaction by Judge et al. found that there is “little relationship between level of pay and satisfaction with one’s job or one’s pay”.

When studying workplace financial education, Garmen et al. also found that employees who had attended financial education workshops reported that they:

  • made better financial decisions,
  • made investment decisions with confidence,
  • made changes to their investment strategies and choices, and
  • improved their financial situation.

Better financial health means less financial stress, which has a direct impact on work motivation, absenteeism and performance. It goes without saying, absent employees cost companies thousands of rand – the same applies to unmotivated employees and employees who aren’t performing.

In an ideal world, running employee wellness and financial education programmes would go a long way to ameliorating the work-life stress factor, in reality, these programmes are costly. That said, employers can still be proactive in addressing the financial stress of their employees.

One of the first steps to financial wellness is knowing what your financial status is. This doesn’t only include what you have in your bank account, but also what you owe. A full credit report indicates accounts and payment history, current balances and instalments, and missed payments or defaults. This is valuable information when managing debt and finances.

When in financial turmoil, the last thing an employee wants to do, is spend money on a full credit report. With Compuscan’s My Credit Check Manager, companies can invest in their employees by providing them with their full credit report and credit score.

While this might not resolve their financial problems immediately, this gesture has a three-fold effect:

1. As mentioned above, it is the first step in employees improving their financial status and mitigating their financial stress.
2. It shows employees that their employer is interested in their financial wellbeing.
3. Less stressed and happier employees means better work performance, less absenteeism, better customer experience and a potential increase in your bottom line.

The above solution is definitely not the panacea to financial difficulties nor to solving the workplace issues associated with employee stress and absenteeism. It is, however, the start of an employer-employee interaction that proactively addresses work- and finance-related stress on a productive and practical level.

If you are interested in using My Credit Check Manager to support your employees, email info@compuscan.co.za or call +27 21 888 6000 to get in touch with one of our expert consultants at Compuscan.

Further Reading:

[1] https://businesstech.co.za/news/business/208805/what-sa-retailers-need-to-know-about-black-friday/

[2] Kim, J. & Garman, E.T. (2003). Financial stress and absenteeism: An empirically derived model. Financial Counseling and Planning, 14(1), 31-42.

[3] http://quintuswealth.co.za/saving-money-for-christmas/

[4] Garman, E.T., Kim, J., Kratzer, C.Y., Brunson, B.H. and Joo, S.H., 1999. Workplace financial education improves personal financial wellness. Journal of Financial Counseling and Planning10(1), p.81.

[5] Judge, T.A., Piccolo, R.F., Podsakoff, N.P., Shaw, J.C. and Rich, B.L., 2010. The relationship between pay and job satisfaction: A meta-analysis of the literature. Journal of Vocational Behavior77(2), pp.157-167.

[6] https://www.compuscan.co.za/invest-employees-wellbeing-credit-check-manager/