How money worries can damage employee productivity
At the time of writing it appears that the initial (and hopefully only) peak of the coronavirus pandemic is now behind the United Kingdom, and accordingly many employers are already turning their thoughts towards achieving a return to work plan that is robust, practical, and above all safe for colleagues and customers alike.
Yet a return to work plan is only a small (if significant) step in what is likely to be a long road to economic recovery for the nation. A recent statement from the Bank of England suggested that the UK’s economic contraction is likely to be “faster and deeper than anything seen in the last century”, whilst Paul Johnson, of the respected Institute for Fiscal Studies (IFS), has said the nation’s Budget deficit is set to see “an absolutely colossal increase to a level not seen in peacetime”.
These statements are deeply sobering, and suggest that the recovery could easily take years not months to be fully realised. And during this period the need for each and every employer to bounce-back to maximum productivity quickly – and then sustain that output – will be very evident indeed.
But as ever there are potential headwinds to achieving high productivity, and one such issue might well be the personal financial challenges facing employees in the post-coronavirus world.
Stagnating and reducing incomes
Of course money-worries were present well before the crisis emerged, but they may well have been exacerbated by the last few weeks. At the time of writing millions of employees may be experiencing a period on furlough, with some losing up to 20% of their income during this period. Others workers have already been asked to take a pay cut, and research undertaken by REBA earlier this month suggests that many employers are expecting to reduce their overall pay and bonus spending this year too.
Such a sudden and unexpected drop in income will mean that many more employees will find that they are perhaps now living beyond their means, and others might even find that they are now earning less than their fixed monthly outgoings. This latter grouping is likely to include lots of households that are already burdened with significant amounts of personal debt. And, for the record, personal debt levels nationally were already extremely high indeed (see the UK debt levels section of this page from The Money Charity) even before the lockdown storm began.
It’s a major problem for the employer too
Whilst this might seem like a much bigger problem for the employee than the employer, the truth is that money worries can and do impact performance and productivity in ways that many employers often still don’t understand or fully appreciate. For this reason I think it’s important to list some rather alarming facts that were collated and published by the Financial Inclusion Alliance earlier this year:
- Employees living with constant money worries are 5 times more likely to have troubled relationships with colleagues at work.
- Employees with money worries are 6 times more likely to produce substandard quality work than their colleagues.
- Employees with money worries are 7 times more likely to have lower productivity or not finish their daily tasks than their colleagues.
- People who are experiencing money worries are 8 times more likely to be experiencing sleepless nights that are impacting their state of mind at work and cognitive capacity
The above facts are stark reminders that an employee’s workplace productivity is often correlated to some degree with their personal life and wellbeing. It follows that it is very much in the employer’s interests to provide support and assistance to financially stressed workers whenever it is possible to do so.
Establish some formal procedures and support
Another point worth noting is that Howden Employee Benefits & Wellbeing’s own survey at the end of last year highlighted that 40% of employers had no formal procedures in place to support workers with financial problems, whilst the same survey revealed that 96% of employers believed that at least some of their workers were experiencing persistent money worries. And again, these are figures collated before the coronavirus pandemic moved into view.
The sad truth is that money worries are likely to be much more widespread and intensely felt in the months ahead for many employees and their families. It follows that Human Resources professionals should be focusing on providing appropriate Financial Wellbeing support to assist both the welfare of their employees, and the productivity of their employer too.
For more information on any of the topics covered, please contact your usual Howden Consultant, or visit our website for further details and contact options.
Steve is Head of Benefits Strategy, Howden Employee Benefits & Wellbeing, and is an award-winning thought leader on Pensions, Employee Benefits, and Human Resources issues. He is occasionally accused of making Employee Benefits interesting.