Financial Stress increases employee turnover, what can employers do?
Businesses want happy employees. They want happy employees for all the normal, humane reasons—no one wants to be a boss out of Dickens—but also because happy, un-stressed workers make for a better company. Furthermore, a financially stressed employee is more likely to be on the look-out for a better paying opportunity. This is one of the underlying causes of employee turnover: After all, if workers are worried about money at this job, they’ll jump ship the moment something better comes along. A 2010 Federal Reserve study showed that employee financial stress costs employers about $5000 a year, per employee. Some contributors to this figure include employee replacement costs, lowered productivity, increased absenteeism and increased health care costs. These variables should be familiar to anyone who has ever been short of money (or employed someone who had chronic financial stress): Workers field calls from creditors, are more vulnerable to accidents due to distraction, suffer from hypertension and insomnia, and make more work for HR departments.
According to the CFPB, cash flow challenges can create all sorts of financial hurdles for employees. These include incurring overdraft fee, missing critical purchases or having to make difficult alternative financial arrangements. When employees do not have access to funds at the time they are most needed, they have to pay the penalty – which is extremely stressful to manage. That means that PayActiv’s employer-sponsored financial wellness benefit, which allows employees to access their already-earned wages ahead of the two-week pay period, can be a significant source of financial stress reduction. If employees can withdraw part of their paycheck a week early and pay the gas or daycare bill on time and avoid late charges, they can take steps to break the paycheck-to-paycheck cycle. Breaking that cycle means reducing stress for the employee and creating a positive impact on the business.
When businesses alleviate employee financial stress, they are also directly reducing employee physical and psychological stress levels. In short, any steps that an employer can take to help financially stressed workers better manage their money will benefit both the employee and the business.