Employees in debt, or otherwise struggling to make ends meet, are a more significant issue than we may initially imagine. While staff’s personal lives are considered separate to an organisation, and rightly so, there is a clear overlap between personal financial stress and the workplace. Financial stress is a prevalent problem that plays itself out at work, reducing performance, increasing distractions and potentially rubbing off on other employees.
It’s not just limited to lower-paid blue collar staff either; no matter an employee’s financial position or goals, there is still a likelihood of financial stress creeping up if they don’t have the tools to manage their money effectively. The fact is, many high income workers experience financial stress too, the more people earn the more they spend and often they are the worst budgeters too. Employers have the power to help address the issue for the benefit of the employee, as well as the company’s bottom line and operational wellbeing.
How financial stress impacts employees
We are finding that many HR managers, including the Head of People and Culture etc (in large corporates) have simply not joined the dots that employees experiencing Financial Stress have a direct effect on other areas of their life, including work. Financial stress can seriously impact Mental Health. Mental Health is spoken about all the time, and is embraced by many, but the link between Financial stress and Mental Health still seems to be a little way behind.
Financial stress will almost certainly make it harder for an impacted employee to focus at work and collaborate effectively with their colleagues. A person’s focus shifts to the immediate issue, worrying about their personal finances. It’s not limited to income levels either, with higher-earners often carrying proportionate debts and the pressures of maintaining higher spending. Almost everyone is susceptible to financial stress if a poor situation is left unaddressed, this will invariably lead to Mental Health disorders.
The effects of financial stress on the organisation
Financial stress impacts employees, which of course then impacts the workplace – the two are not inseparable. We know that in Australia, financially stressed workers spend almost 10% of their paid working hours thinking about financial issues. That is bound to decrease productivity and reduce focus and engagement with their employer’s goals.
Furthermore, any material health issues as a result of chronic stress will naturally lead to more days absent or fewer hours present at work as they attend medical appointments or take care of their family. It’s also not uncommon for financial stress to result in workplace accidents and demands on HR.
What can an employer do to help
Employers can, and should, have many tools in their arsenal to combat poor employee wellbeing, whether financial or mental. A wide-ranging and holistic employee benefits program is critical to supporting your workforce in more ways than just their take-home pay.
To combat the mental aspect of stress, an effective and accessible EAP (employee assistance program) can play an important role. Anonymous and seamless access to mental health and financial assistance services can help employees take action. However, they alone cannot be relied on to be effective. Many employees will resist using them for fear of judgement, even if they are anonymous. Such solutions also do not attend to financial stress issues that employees could be experiencing. Managing Mental Health goes hand in hand with managing Financial Stress.
Earned wage access (EWA) is a far more sustainable method to enable employees with the financial flexibility they need to make a change in their lives. EWA, offered by providers such as Paytime, allow your employees to access their earned pay at any point of the pay cycle without having to wait until their next payday. When an unexpected bill or expense arrives, instead of turning to credit; a consumer loan or a payday loan, employees can alternatively access a portion of their earned wages to cover any shortfall.
It’s easily worked into your existing payroll system, avoiding any disruption to your usual processes. When an employee wants to access some of their earned income, they will be charged a small, fixed fee (less than the cost of a cup of coffee), and Paytime will deduct the amount from their next paycheck. This charge can be directed to the employer, should the employer wish to provide this solution as an Employee Benefit for their staff. It is a solution that is used only if or when needed.
Your company can empower your employees to take control of their financial wellbeing and reduce their financial stress by offering an EWA solution. Get in touch with Paytime today to arrange a free consultation.