Recently, I have had an influx of questions related to finances from our employees at MINES. This makes sense as it is January: Employees are re-evaluating their W-4s, discussing concerns about paying into taxes, and determining their 401k deductions. Though January is typically a heavy-hitter for financial questions, these concerns are present in our employees’ lives throughout the year, whether they are related to a life changing event (buying a house or getting married) or an untimely garnishment.
Financial problems don’t just affect the employees, but also the employer. It is estimated that about one-quarter of the workforce are affected by financial problems and financial stress is often cited as the biggest stressor in employees’ lives. This is big news for employers as it costs companies approximately $15,000 per affected employee per year![i]
So, how exactly does financial stress negatively affect the company’s bottom line? Decreased productivity is certainly a concern; employees with financial issues are more likely to be distracted either through arranging deals with creditors or just thinking about their financial woes. These distractions can also lead to an increase in workplace accidents and an increase in worker’s compensation claims. Employees battling financial insecurities also face numerous health and wellness issues. They tend to get sick more often, abuse substances, have insomnia and digestion issues, and are plagued by mental health concerns including anxiety and depression. For employers, these issues pile up into sick days or lack of productivity even when the employee is present. It may be surprising to some that an employee who is facing financial hardships is more likely to turnover than one who is not. Employees in financial distress are always looking for better financial opportunities, therefore, they seek out positions that pay better. Overall, the costs of employee financial stress affect the bottom line in many ways.
As an organizational leader, how can you help your employees manage their financial stress?
- Implement a robust Employee Assistance Program (EAP) with built-in financial resources including a financial advisor for your employees to work with and a website full of resources.
- Always be available as a resource but don’t overstep. You may feel that you can help your employees figure out their finances but ask yourself if it’s appropriate. Typically, it’s best to send them to an outside resource such as a financial seminar, advisor, budget calculator, 401k planning tool, etc.
- Always be kind and gentle when discussing sensitive financial concerns such as a garnishment. Typically, when a company is served with a garnishment, the employee is unaware and it may be very difficult and embarrassing for the employee. It’s also important to note that it is illegal to discharge an employee for a garnishment.[ii]
- If you notice a common theme in financial concerns among your employees, consider holding optional financial training on-site or online. Some common ones include boosting your credit score and budgeting.
You can’t fix your employee’s financial problems but you can certainly support them!
Dani Kimlinger, MHA
Human Resources Specialist
[i] Lenhart, Ned. (n.d.) Employee Financial Stress is Costing Your Company a Bundle – And How You Can Stop It Now. Retrieved from Financial Literacy Partners website: https://www.takefinancialaction.com/upload/Is_Employee_Financial_Stress_Costing_Your_Company_A_Bundle.pdf
[ii] United States Department of Labor. (n.d.). Garnishment. Retrieved from http://www.dol.gov/dol/topic/wages/garnishments.htm