5 Ways Financial Stress Impacts Your Business
There’s no way around it: if your employees are stressed about their finances, it’s going to negatively affect your business’s bottom line. But, why is that the case? We’ve got five reasons why it’s your best interest to help your employees tackle their financial stress head-on.
1. Reduces productivity
Research shows that employees who are stressed about money are more likely to spend time at work focused on their financial issues instead of working, negatively affecting their productivity. A 2017 report by PwC estimates that 30% of employees are stressed about money, and that an employee that’s concerned about their finances spends an average of 3 hours per week distracted by their issues when they’re supposed to be working. This can amount to a major amount of money spent on lost wages for you and lower output for your business overall. According to calculations from the same PwC report, this can amount to $3.3 million in lost wages per year for a business with 10,000 employees. This number may be even higher for a large company comprised mostly of Millennials, as they’re more likely to be stressed about money than employees from older generations.
2. Affects team dynamics and culture
Anyone who’s had a personal experience with someone who didn’t want to be a team player in the workplace knows that it can make every shared task difficult. Employees who are stressed out are more likely to disconnect from their professional responsibilities and co-workers, making it harder for the entire team to do their jobs effectively.
Beyond that, difficult team dynamics can have a seriously negative impact on the overall culture of your business. If your employees become accustomed to dealing with a disconnected team, it may make them feel uncomfortable at work and like they don’t really have a place within your business. This can create a culture where employees don’t take pride in their work or feel the need to push themselves beyond the bare minimum level of effort.
3. Impacts your employees’ health
Stress of all kinds can be extremely damaging to a person’s physical health. Financial stress can cause your employees to experience an increase in ailments such as headaches, sleep problems and high blood pressure. Even worse, extended periods of stress have been shown to contribute to the development of more serious illnesses like cancer. According to the Government of Canada, those who are stressed about their finances are twice as likely to report poor overall health. These effects can even end up increasing your employees’ levels of financial stress in the long run, as dealing with the costs of regular prescriptions or treatments can add an additional financial burden on those who are already struggling.
Beyond just affecting their physical health, financial stress also affects your employees’ mental health. Whatever the root cause may be, financial stress can make people feel shameful and as if they’re inadequate. As financial problems can have very serious consequences (for example, failing to pay rent on time can result in eviction), financial stress is often ever-present and can be severe. This kind of overarching stress makes it hard for people to enjoy the things they love and focus on anything but their issues. This contributes to increased levels of burnout, as even when employees’ aren’t at work, they don’t feel like they can adequately relax.
4. Increases turnover
Financial stress can be a major contributor to increasing turnover within your business. Research shows that employees who are stressed out are less engaged with their daily responsibilities and more likely to leave their job in favour of a newer, “more exciting” opportunity. This often has less to do with your business and more to do with the effects of the stress they’re feeling. Employees may also be forced to leave your business for a higher-paying professional opportunity if it arises, even if they prefer the work they do for you.
5. Reduces the quality of work your business provides
Finally, financial stress has a real impact on the level of service your business provides. A stressed-out employee is more likely to make mistakes on the job, treat customers poorly or cause an accident on the job while distracted. While these types of events are inevitable on a small scale, a stressed-out employee is going to cause many more of them than you’d want to see your team producing. You work hard to ensure that your business attracts customers, serves them well and keeps them coming back a repeat basis. If your employees are stressed about their finances, they can play a major role in derailing all that effort.
Final Thoughts
If your employees are able to manage their financial needs effectively, they’re more likely to be engaged at work, keep their productivity level high and stay with your business for a long period of time. Though traditional benefits and raises can be helpful, they don’t help employees get to the root of financial stress and prevent it from becoming a perpetual cycle. A financial wellness program including educational resources, tools, support and programs that encourage employees to take action in growing their savings can help ensure that your team learns to make smart, confident decisions with their money on a long-term basis.