Financial stress is a significant contributor to reduced productivity in the workplace. Stress of this kind has been heightened in 2020 by the economic challenges brought on by COVID-19:
- Market uncertainty and concerns about a potential recession
- Financial uncertainty resulting from reduced hours and salaries, layoffs, and possible job loss
- The new normal of business is not what we are used to
Financial stress ranks as the number one source of concern for Canadians, according to the Canadian Payroll Association (CPA). Also, 43% of workers reported that their work performance had suffered because of it.
How employee financial stress impacts your organization
HR professionals know all too well that when an employee’s performance suffers due to their stress level, your organization suffers as well, making it difficult for your business to reach its full potential.
The Financial Consumer Agency of Canada reports that employee distraction due to financial stress could cost, on average, $1,000 per employee per year. This large sum is based on distracted employees spending at least 3.5 hours a week on financial issues, which doesn’t include other potential impacts and costs like:
- Decreased motivation
- Increased health care costs
- Employees not retiring when expected
More broadly, it’s estimated that financial stress costs Canadian businesses over $20 billion a year from decreased motivation and absenteeism. (CPA)
How you can help reduce employee’s financial stress
If you offer an Employee and Family Assistance Program (EFAP), remind employees that this service is available to them. Most EFAP programs include tools to support financial literacy.
Businesses can also directly help their employees to save for the future by offering a workplace savings program that encourages saving by matching employee contributions up to a certain amount.
According to the CPA, over three-quarters of employees are interested in having financial education in the workplace, including information about budgets, debt control, and saving for the future. Over three-quarters of employees trust their employer and human resources department more than any other source for financial information and education. These results show it is important to include financial coaching as part of your overall employee education strategy. There are many tools and resources available to support this type of initiative, including:
Reach out to your Cowan retirement consultant to learn more about pulling all these pieces together and developing an overall financial wellness strategy that works for you.