The ripple effect of financial stress can be more profound and intractable than most want to admit to themselves or others. It not only affects your ability to pay bills or keep your family fed – given today’s higher prices and supply chain issues, this continues to be a real challenge for many – the ripple effect touches everything in one’s life, from sleep to relationships. That stress also can present itself at work. For example, a formerly high-performing individual begins showing up late to work or calling in sick with stress-related ailments, has a shorter attention span or pays less attention to detail, displays impatience or has a “shorter fuse” when dealing with co-workers. According to Fearless Finance Founder Lori Atwood, CFP®, an HR professional can better support their organization by learning to identify when employees are experiencing financial stress and ways to provide support that does not necessarily require pay increases.
“Understanding how financial stress affects people is important because it can manifest in lower productivity, retention, satisfaction and workplace harmony,” Atwood explained. “Knowing that this other thing – financial stress – might be a cause of poorer performance allows you to find ways to open the conversation and help,” Atwood said. “Only approaching the symptom such as ‘Team Member, you need to come into my office. You have been late too many times in the past few weeks, so we need you to do a better job of making it in when your shift starts,’ adds to Team Member’s stress levels.
As Atwood pointed out, that approach may have the unintended effect of prompting a Team Member to leave the company for a better salary, a real possibility in today’s job market, because she thinks a few extra dollars will solve the problem. As most HR recruiters will tell you, even with slower hiring trends and the threat of a potential recession, many companies are desperately looking for employees. “A Team Member may be willing to make a lateral move for better pay to try to relieve her financial stress, even if she loves working at your company,” Atwood said.
So, how can an HR professional identify the key factors that may indicate that employees are in financial distress in their personal lives? “Listen for murmurs of things like changes in housing,” Atwood said. “This is not necessarily, ‘Oh, we are having a baby and we bought a bigger house. Instead, it is other types of changes in housing, such as downsizing or moving further away from the workplace to find affordable housing.
“It could be discussions about things being put off, such as vacations or buying a new refrigerator. You are also looking for instability in the nuclear family, such as an employee who has an elderly relative who is not doing well, a spouse who has been laid off or a child who has special needs or needs inpatient mental health support,” Atwood explained. “Ask any parent who has a child with a mental health emergency – it can be a bankrupter.”
When you hear the murmurs that lead you to believe that an employee needs extra support, you need to not only understand when it could be appropriate to approach an employee about financial distress but also how to discuss financial distress to help the employee triage the situation, Atwood said.
“There’s an emotional component to all of this, which I'm not going to speak to, but the examples I have given have a real, painful financial component, regardless of whether your employee is highly compensated or making minimum wage,” she said. “And even if you approach the employee from a nurturing standpoint of ‘Hey, are you doing, okay? Is anything going on that I can offer help with?’ the finance thing may not come up at all. Employees do not necessarily think of sharing their financial stress with an employer, or they may not know it is the root cause of problems with a spouse or sleepless nights.”
By including financial wellness in a benefits package or as a regularly discussed topic in the workplace, you may be able to help your employees ahead of the issue. According to Atwood, if you are already talking to your employees about financial wellness, you may never have to help them triage a problem. Offering seminars, resources and education on what financial health looks like – at every level of income – is an essential tool for your employees that they may not likely have ever been offered before.
“We want employees to come from a place of abundance, not scarcity, so they're better colleagues, community members, spouses, and everything else,” she explained.
Many HR professionals and employees may look to their EAP offering to see if that includes help with budgeting. Still, Atwood warns that most EAPs offer coaching and counseling, mostly for when things have gotten pretty bad. Counselors also may not be regulated. Offering your employees access to a registered financial planner means that your employees are accessing someone who is regulated by the Securities and Exchange Commission and is a high-level resource.
“Most companies pay quite a bit for their EAPs, but their utilization rates are very low, and most of us think of the EAP when looking for health or mental health benefits,” Atwood said. “Finding a CFP to provide financial advice for your workforce and educate them about financial well-being is a great benefit. People can read Suze Orman until they are blue in the face, but it is just a book if you do not know how to relate her advice to your own lived reality.”
By offering financial wellness seminars, access to registered financial planners and other financial well-being resources, you are strengthening your employees’ abilities to recognize what they need to do to be financially healthy, positioning your company with a competitive advantage and introducing your employees to a trusted advisor.
“Financial planning is not just for Jeff Bezos. Everyone should have a plan, and you can show your employees where to go to get one,” Atwood said. “When my team works with a company to enhance employees’ financial wellness, we work with people at all levels of the company and after a seminar or course, our utilization rate for planning is about 80%. That is because employees know how financial wellness relates to the rest of their lives and they know they have a place to go to get unbiased financial advice.
“Big companies like Goldman Sachs will not talk to someone who makes $120,000/year. But we do because we know how important it is for employees to have someone to turn to for financial advice that helps them plan and reach their goals, whether it is putting a pool in the backyard, replacing a car or paying for braces,” Atwood concluded.
Learn more about Identifying Financial Stress in Employees from Lori Atwood, CFP® , on Alchemizing HR on Thursday, September 22. Register here