It takes a lot of different elements to create a successful business, but there is one constant across all industries: the importance of human talent. Employees say a lot about a business and have plenty of influence on the success or failure of projects. Knowing this, many companies have instituted programs to support the physical and mental health of their staff. It’s an excellent concept that can have a positive impact on the lives of employees, subsequently creating a stronger team at work.
While this attention to wellness is becoming commonplace, one element still seems to be neglected is the financial wellness of employees. A recent study of 2400 Canadians indicated that 45% of employees felt like they had a low level of financial well-being. Of that 45%, nearly half felt that financial stress distracted them at work.1 Furthermore, an overwhelming 93% of Canadians felt that financial stress could affect work and productivity. This is arguably true, as 70% of disability costs are associated with mental health issues and related illnesses.2
What is financial well-being?
It’s important to note that financial well-being doesn’t necessarily correlate with income. A person can have substantial annual earnings and still score low in financial well-being (and conversely, individuals with modest earnings can feel financially secure). What matters more than income seems to be one’s emotional relationship with money; their sense of security about the present and future, their confidence in their financial knowledge and abilities, and other factors that add or remove money-related stress.
Common issues in employee financial wellness
The previously mentioned research looked at six areas of financial wellness: budgeting, retirement, investments, debt, protection and stress. The mean age of participants was 47 and respondents were divided equally by gender. Common issues relating to financial stress included challenges or uncertainties in retirement planning, poor budgeting and inadequate insurance. These stress points were linked to distraction, anxiety and poor mental health, all of which can lead to disengagement and a lack of productivity. Perhaps most concerning, it was also revealed that people with financial worries are unlikely to share them due to feelings of embarrassment or shame. This creates a hidden problem among employees with overt consequences for businesses.
Solutions and results
It was discovered that financial success has momentum. When a person achieves success in one segment of their financial life (i.e. budgeting), they are more likely to address other areas of their finances. As they achieve higher satisfaction in a variety of segments, their stress is lowered and their performance at work improves.3
There are ways to help employees achieve this financial satisfaction and therefore perform better on the job. Businesses can provide support by offering funded retirement savings plans (a pension or RRSP matching, for example). Providing a comprehensive benefits package can help lower stress and anxiety. It also aids a team to have financial education seminars available in office or even mandated as a requirement for staff. By empowering employees through financial education, businesses can lower stress, increase engagement and see improvements on multiple levels.
The bottom line
Employees must feel supported and empowered in order to achieve financial well-being and avoid money-related anxiety. When employers take action to help create financial well-being for their team, a business will see better productivity and less time loss due to distraction and/or stress-related disability leaves. Financial education in the workplace not only improves a person’s financial situation, it can benefit their mental health, improve quality of life and make them a more effective part of a team.
1 Employee Wellness and its impact on Canadian businesses (report by Manulife, 2016)
2 Clearing the path to financial wellness (infographic by Manulife, 2016)
3 Employee wellness and its impact on Canadian businesses (Manulife, 2016)