Are the profits of your booming business being constrained by a tight labour market? If so, improving the productivity of your existing team may provide more effective relief than hiring a new employee. After all, your existing team already know how to generate profits for you. But did you know that approximately 15 percent of your team is underperforming because they are stressed about money? Remove their stress by helping them learn better personal financial management and both you and they will profit.
Personal financial stress reduces productivity
Most Australians do not feel financially secure and their preoccupation with their financial situation reduces their capacity in all other areas of their life, including their jobs.
There are lots of little things in people's lives that cause stress about money:
- Paying bills on time
- Meeting repayments on spiralling property and personal loans
- Affording holidays and home improvements
Stop and think for a moment - how often do you hear people around your office talking about money? They may be talking about their lack of it, the next gadget they're going to buy "when they've got the money", or the latest wealth creation scheme they've discovered. How much is that time costing you?
Landmark research by Dr Thomas Garman from the United States found that "approximately 15 percent of workers... are currently experiencing stress from poor financial behaviours to the extent that it negatively impacts their productivity".
The productivity cost is higher than you think
If just those 15 percent of workers improved their productivity by 15 minutes per day, how much employment cost would you save? Indulge yourself using the calculation below and find out. (15 minutes per day is approximately 3.13 percent of an eight hour day.)
Productivity Cost = 15% x Number of employees x Average salary p.a. x 3.13%
For example, if you have 100 employees where the average salary matches the average earnings in Australia of $55,000 per year then the productivity cost of personal financial stress is approximately $26,000 per year. In this example, you could say that removing your team's personal financial stress is like adding another half an employee to your team. The larger the workforce, the bigger the potential gain.
Personal financial stress actually costs you even more
Financially stressed employees actually cost you a lot more than just productivity. They are also far more likely to be absent from work (by telephoning in "sick") to attend to money matters.
Further, it is their poor financial behaviours, not the amount of their salary that causes their financial stress. But they don't realise that, so they are more likely to try to solve their problem by demanding higher wages from you. And since money, not the work environment has become their major focus if they don't get a higher wage from you, they will change jobs to get it. That is certainly not the outcome you want in a tight labour market - hiring and training new staff is very costly.
Financially stressed employees are constraining the profits of your business in many ways including:
- Lower productivity
- Higher absenteeism
- Wage pressure
- Increased staff turnover
Remove their financial stress with financial education
You can reduce your people's financial stress by improving their personal financial management and by helping them become independently wealthy. This will help them feel more secure so that when they are at work they will be better able to focus on their job.
Investing in a workplace financial literacy education program will improve the financial literacy of your people, thereby increasing their financial security and reducing their financial stress.
A considerable body of research from the United States of America demonstrates that workplace financial literacy education pays for itself. One study placed the benefit at over $400 per employee, while another analysis by Dr Thomas Garman showed a return on investment of 300 percent or more.
How to design a workplace financial literacy program
The key elements of the education process are:
- Raise awareness
- Give immediate relief
- Teach preventative skills
- Continual reinforcement
- Provide a "done-for-them" solution
The employees costing you the most may not realise that financial stress is not a standard part of life. Use regular newsletters and introductory seminars to raise staff awareness that there are plenty of options for easily improving their financial situation.
It is important that those introductory articles and seminars also provide immediate relief in the form of some easy to implement tools that take the sting out of their pain. Successful outcomes from the "quick tips" also encourage people to continue learning and improving.
For you to maximise the rewards of the financial literacy education program the reduction of people's financial stress has to be sustained. This is achieved by teaching them preventative skills that enable them to create and keep wealth. Host detailed seminars and provide toolkits like books and audio programs to achieve this deeper learning and improvement.
Continual reinforcement of the new financial behaviours is a second essential element to maximise the benefits of your financial literacy program. Therefore, at least quarterly ensure that you release new newsletter articles and host seminars in your workplace.
For staff who are already in financial crisis you may like to provide a "done-for-them" solution like a financial plan from a licensed financial adviser. This option is more intensive but accelerates their change and your benefits by holding their hand as their entire situation is sorted out. A "done-for-them" solution is also a fantastic benefit to offer very valuable employees that you want to retain.