Employees’ Financial Issues Affect Their Job Performance

Employers can help by offering education and counseling to increase financial literacy

By Stephen Miller, CEBS Apr 29, 2016
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When employees are stressed financially, their health and productivity can both suffer. Fortunately, organizations can ease some of that stress by helping employees manage their personal finances and prepare for retirement.

Two-thirds of North American employers offer their workers financial education, according to a new report from the International Foundation of Employee Benefit Plans (IFEBP) in Brookfield, Wis.

“Nearly half of organizations rate their workforce as only a little bit or not at all financially savvy,” said Julie Stich, CEBS, IFEBP’s director of research. “Employers are also reporting more financial challenges among employees today than five years ago and are seeing these challenges reflected in the day-to-day operations of their workplace.”

The IFEBP report, Financial Education for Today's Workforce: 2016 Survey Results, includes responses from organizations in the U.S. and Canada. Employers—typically, HR benefit managers—revealed that their workers are struggling and stressed over:

  • Debt (66 percent of respondents).
  • Saving for retirement (60 percent).
  • Saving or paying for children's education (51 percent).
  • Covering basic living expenses (48 percent).
  • Paying for medical expenses (36 percent).

Another new study further shows the extent to which financial stress affects employees. As reported in Finding the Links Between Retirement, Stress and Health, Lockton Retirement Services, a benefit brokerage and consultancy based in Kansas City, Mo., found that one in five workers reported feeling extremely stressed, mostly because of their job or finances. Those reporting high levels of stress were more than four times as likely to suffer from symptoms of fatigue, headaches, depression or other ailments. They were also twice as likely to report poor health overall, leading to more sick days, increased absenteeism and decreased productivity.

“In our work with clients and their employees, we knew financial stress was impacting health and productivity, but we didn’t realize how much,” said Donn Hess, Lockton’s senior vice president and director of marketing and communications.

How Jobs Are Affected

Four out of five employers report that their employees’ personal financial issues are impacting their job performance somewhat, very much or to an extreme degree, according to the IFEBP survey. This is resulting in:

  • An increase in stress among employees (reported by 76 percent of employers).
  • Workers’ inability to focus at work (60 percent).
  • Absenteeism and tardiness (34 percent).

Workplaces are also seeing stress within the “sandwich generations.” Over a quarter of employers reported that a significant portion of their workers are challenged by both supporting their children (sometimes grown) and aiding elderly parents.

How Employers Can Help

To help combat these issues, IFEBP found that employers are offering:

  • Benefits literacy education (49 percent).
  • Retirement security education (45 percent).
  • Financial literacy education (23 percent).

Topics covered in these trainings include investments, savings, insurance, budgeting and identity theft, as well as retirement-focused issues such as retirement plan benefits, preretirement financial planning, retirement plan distributions and retiree health care.

The most popular education methods include voluntary classes, projected account balance statements, retirement income calculators, online resources and free personal consultation services.

Debt counseling—whether provided by an independent financial planner, through an employee assistance program or as a service within an employee wellness program—can be a central part of securing an employee’s financial outlook, Carla Dearing, CEO of financial advisory firm SUM180 in Louisville, Ky., told SHRM Online earlier this year.

“Effective counseling often starts by helping employees to clean up their credit cards, because that waterfall of debt is the absolute enemy of savings,” she noted. “Helping employees to live within a budget and to make a financial plan can take away the stigma and stress” associated with financial uncertainty.

In the IFEBP survey, two-thirds of organizations offering financial education rated their programs as successful, with free personal consultation services, voluntary classes and online resources reported as the top three successful methods. Fourteen percent of employers noted having a financial education budget, and 22 percent are considering establishing one.

Personalized Approaches

“Workplace education programs are the most successful when an organization identifies the unique concerns of their workforce and tailors the message to fit that audience,” said Stich. “Employers should ask their participants what they want and consider what topics would be the best fit.”

Employers report several ways they are taking personalized approaches to reaching their employees, including providing education in languages other than English, providing education to retirees or workers’ spouses, and providing targeted education based on age or income.

“We are seeing more companies step up their efforts to integrate financial and emotional well-being, social connectedness, and job satisfaction with their more traditional efforts to support physical health,” said Brian Marcotte, CEO and president of the Washington, D.C.-based National Business Group on Health. These holistic approaches to well-being “play an important role in employee engagement,” he added.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.

Related SHRM Articles:

‘Wellness’ Programs Embrace Financial, Emotional Well-Being, SHRM Online Benefits, April 2016

Financial Planning Tackles Gender Savings Gap, SHRM Online Benefits, March 2016

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