Why your employees’ financial well-being matters
Money worries are the biggest source of stress for Canadians. Chances are many of your employees are struggling with their finances. Employees with financial stress say it affects their performance and ability to focus at work. This can lead to lower productivity. Did you know that financial stress could be costing your business thousands of dollars per employee each year? Helping your employees improve their financial well-being will reduce the negative impact of financial stress in your workplace.
Employees are stressed by their financial situation
For many Canadians, money worries are the greatest source of stress, more than work, personal health and relationships.Footnote 1
Sources of financial stress can include:
- managing household expenses
- dealing with high levels of debt
- living paycheque to paycheque
- difficulty saving money for short- and long-term goals
Financial stress affects working Canadians of all income levels and age groups.
Did you know
- 40% of working Canadians feel overwhelmed by their level of debtFootnote 2
- 48% say they’ve lost sleep because of financial worriesFootnote 3
- 35% spend all of their net pay or even moreFootnote 4
- 44% say it would be difficult to meet their financial obligations if their pay was lateFootnote 5
- 37% say they will have to delay retirement because they will not have enough money savedFootnote 6
Some working Canadians may have a good grasp of their finances. But many do not have the knowledge, skills or confidence to handle money matters or any unexpected changes to their financial situations. This may lead to financial stress and can affect their overall mental and physical well-being.
How employee financial stress affects your employees and your business
Impact on physical and mental health
Financial stress is closely connected to physical and mental well-being. Employees dealing with financial stress are:
- twice as likely to report poor overall health
- 4 times as likely to suffer from sleep problems, headaches and other illnessesFootnote 7
Financial stress can also lead to more serious health problems, such as:
- heart disease
- high blood pressure
- depression and anxietyFootnote 8
Impact on business
Financial stress doesn’t only affect your employees’ personal lives. It also affects their work lives because it isn’t something they can leave at home. It accompanies them to work and can end up negatively affecting their morale, the workplace culture and your organization’s bottom line.
Almost half of working Canadians admit that stress related to their personal finances affects their performance at work.Footnote 9 Worrying about money can distract employees and reduce their ability to focus on their work.
In fact, according to one study, financially stressed employees are 5 times more likely to be distracted at work and 46% spend 3 hours or more a week dealing with financial issues.Footnote 10
Based on a company with 200 employees, employee distraction due to financial stress could mean 7,912 hours of lost productivity in one year. That could cost the business $1,000 per employee or just over $200,000 every year. For more details on this estimate, view Infographic: calculating the cost of employee financial stress on productivity.
Employee financial stress can also lead to:
- more absences and use of sick leave
- increased turnover
- lower morale and engagement
- poor working relationships
- lack of focus and poor decision making
For businesses, this lack of focus can result in:
- administrative and financial errors
- more workplace accidents
- production errors
- poor customer service
The consequences of financial stress can be expensive for your organization. But helping your employees improve their financial well-being can reduce the negative impact of financial stress in the workplace.
What is financial well-being
There are different definitions of financial well-being. A commonly accepted one is:Footnote 11
- being able to meet your current and ongoing financial needs
- feeling secure about your financial future
- being free to make choices that allow you to enjoy life
Benefits of investing in employee financial well-being
When you invest in your employees’ financial well-being, both your employees and your business could see many benefits, including:
When your employees are less distracted by financial issues, they can be more focused and productive at work.
If your employees’ financial well-being improves, their physical and mental health will improve too. As a result, they’ll miss fewer days of work.
Attracting and keeping your talent
Your organization can become known as an employer that supports employee well-being. This can help you to attract talent. It can also help you retain staff, decreasing the costs and knowledge loss that come with employee turnover.
Employees retire when expected
If your employees have the financial knowledge and confidence needed to keep their debt under control and save for retirement, they will be more likely to retire when expected. This allows your business to continue to bring in new, younger talent.
Better use and appreciation of employee benefits and retirement savings
Some organizations may offer excellent employee benefit and retirement plans. However, employees don’t always know how to make the best use of these benefits. Greater financial knowledge, especially when customized with your benefit plan in mind, can help your organization and its employees get the best value from the benefits package. It will also help employees better appreciate the benefits provided to them.
Helping reduce your employees’ financial stress will make them feel like you support their financial wellness. This can lead to improved employee morale and a happier workplace.
Supporting your employees’ financial well-being
Many employers already recognize the advantages of providing pension and retirement savings plans, wellness programs and health and other benefits to their employees. Recently, mental health has become an important focus in the workplace too. A financial wellness program is a natural extension of these existing benefits and complements other employee programs.
More and more employers also understand the importance of addressing financial stress. Research shows that almost three-quarters of employers (73%) believe it is their responsibility to help employees with financial well-being.Footnote 12
Employees are also looking to their employers for support. Canadian research shows that:
- 70% of employees feel their employer should support employee financial well-beingFootnote 13
- 84% of employees would be interested in financial education programs in the workplaceFootnote 14
By implementing financial wellness initiatives in your workplace, you will be empowering your employees. They will feel more in control of their money and have improved financial, mental and physical health. This will lead to a more productive workplace and a more engaged workforce. It can also result in increased profits and lower costs for your business and enhance your reputation as an employer of choice.
The benefits are clear: offering financial wellness programs in the workplace makes good business sense.
Not sure how to get started? Find out how to plan your workplace financial wellness program.
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