The lack of recognition of financial stress is costing employers billions in lost productivity
We all know what it feels like to worry about money. More than half (58%) of employees admit they’re stressed about their finances, according to PwC’s 9th annual Employee Financial Wellness survey (2020).
With money worries taking up such a large part of life, it’s no wonder that they can have an impact at work.
A survey from Buck found that, while 30% of employers recognise the negative impact of financial issues in the workplace, not one of the respondents was actively measuring this factor within their workforce.
Productivity
We’re all familiar with stories about declining productivity levels in the UK. Gaining a better understanding of how financial worries fit into the productivity puzzle may make the issue easier to quantify and address:
- 48% of people are distracted by their money worries at work, according to PwC’s 8th annual Employee Financial Wellness Surve
- 38% of workers can’t sleep at night due to money worries, found YouGov research commissioned by Equifax in 2018.
- 28% of people spend time at work dealing with their finances, found the Money and Mental Health Policy Institute
- Financially stressed employees are 5x* more likely to take time off to deal with personal issues, found PwC.
By helping employees to tackle their money worries, you’re going to be able to reduce financial stress and keep more minds on the job.
The impact of money worries on productivity is so significant that CEBR found that businesses are losing up to £1.56 billion a year due to absenteeism and presenteeism caused by financial issues.
Any improvement made to employees' financial resilience could be hugely beneficial not just to employees' lives, but to improving productivity, a long held challenge for employers.
Retention
Workforce management company Deputy, put the average attrition rate for businesses in the UK at 15%. To put context to how much this is costing, we’re going to calculate the cost of attrition for a business with 5,000 employees.
With a turnover rate of 15%, a business with 5,000 employees will be losing up to 750 of their employees every year.
A study by Oxford Economics found that the average cost of recruitment per member of staff in the UK to be a whopping £5,433. This may seem high, but when broken up by advertising for the role, using a recruitment agency, employing a temp, and the cost of interviewing and training that member of staff, it becomes a lot more reasonable.
That means for a business with 5,000 members of staff, losing 750 people, recruitment is costing them, on average, £4,074,750 every year.
What part does financial resilience play in retaining staff?
There are many reasons why employees leave their jobs, often largely unknown to the employer, and this is part of the reason why long-term retention is so hard to get right.
What we do know is that 75% of employees say that they are more likely to stay with their employer for better benefits, found Willis Towers Watson. What’s more, 70% say that they would like more support from their employer when it comes to their financial situation, according to Aon.
By focusing on the financial issues that cause employees the most stress in their lives, employers can look to build a stronger relationship with staff, hopefully stemming the tide of employees leaving for other organisations.
And we’ve found this to be true. Organisations supporting the financial resilience of their employees have seen up to a 16% reduction in the number of leavers from their business compared to the previous year.
For a business with 5,000 staff and average turnover of 15% per year, they could save up to £651,960. That’s £1,786 every day.
With the potential for such results, the financial wellbeing of your staff should be at the top of your agenda.
This article is provided by Wagestream.
In partnership with Wagestream
Wagestream’s financial wellbeing platform makes work more rewarding for 3 million people.
