How Financial Stress Affects Employees: 3 Things to Watch For

by David B. Coulter on Apr 09, 2021, 05:10 AM

How Financial Stress Affects Employees: 3 Things to Watch For

Can employers quantify the effects of employee stress? According to a survey of more than 10,000 Americans by Salary Finance, U.S. businesses lose $500 billion per year due to employees’ personal financial stress. Nearly one in two U.S. employees are worried about money, leading to depression, panic attacks, sleepless nights and distractions at work; this lost productivity comprises 2.5 percent of U.S. GDP. 

This data was collected in March 2019 and while grim, it’s most likely worsened under the current conditions of the COVID-19 pandemic, which has seen the loss of 22 million jobs. Even for those who found new jobs, it’s safe to assume many people suffered financial setbacks. And the weight of them may carry into the coming years.

Increased Absenteeism

One study from the Center for Retirement Research at Boston College found that financially-stressed employees miss almost twice as many days (3.5) each year compared to their unstressed counterparts. Unfortunately, in today’s team-based environments, if one worker is out, the rest of the team has to shoulder the burden. This puts more stress and pressure on other employees, and missed deadlines, failed deliveries or incomplete deliverables result.

Lower Productivity

Personal financial issues can also affect an employee’s ability to focus while at work. Financial problems also hurt an employee’s ability to get stuff done when they are at work. According to a PwC Employee Wellness Survey, 34% of Generation X, 16% of baby boomers and 37% of millennials say they’re distracted by their finances at work. 

The PwC report also notes that nearly half of employees spend more than three hours per week distracted by personal finances. This means that employees may be on the job but, because of illness from financial stress or other medical conditions, they are not fully functioning. Harvard Business Review calls this phenomenon presenteeism.

Increased Healthcare Risks

According to the Mayo Clinic, stress that’s left unchecked can contribute to many health problems, such as high blood pressure, heart disease, obesity and diabetes. Additionally, employees may put off visits to the doctor because they do not want to risk being perceived as hypochondriacs looking for an excuse to disappear from work. Working from home, employees want to appear healthy and present. In the time of a pandemic, fear of unemployment is real and healthcare may be a lesser concern.

However, without addressing healthcare needs, or even utilizing annual checkups for preventative care, employees’ health can quickly deteriorate, not only affecting their performance but the business’ bottom line. 

Next Steps

Clearly, there is a correlation between financial stress and workplace performance. It might be awkward to ask your employees to participate in a financial wellness program, but everyone benefits in the long run. More than simply discussions about how to contribute to the company’s 401(k) plan, financial wellness programs can include several additional components:

  • Access to or information about tax-advantaged investment accounts, not just those that are employer-sponsored.
  • Tuition reimbursement and student loan repayment programs.
  • Credit monitoring and education, including credit score improvement (learn how ScoreMaster can be a valuable tool for your team).

HR leaders must also find ways of communicating the availability of these additional benefits to employees in order to promote participation. They may be slow to start, but eventually, they will gain more assurance that their employer truly has their back.

References:

https://us.salaryfinance.com/us/blog/half-of-us-workforce-suffers-poor-mental-health-due-to-money-worries/

https://www.forbes.com/sites/jonathanponciano/2020/11/30/it-could-take-4-years-to-regain-the-22-million-jobs-lost-during-covid-19-pandemic-moodys-warns/

https://www.pwc.com/us/en/private-company-services/publications/assets/pwc-2017-employee-wellness-survey.pdf

https://hbr.org/2004/10/presenteeism-at-work-but-out-of-it

https://www.fastcompany.com/3057317/how-paying-off-all-my-debt-changed-my-life

https://www.mayoclinic.org/healthy-lifestyle/stress-management/in-depth/stress-symptoms/art-20050987