Benefits Canada recently reported that approximately 56 per cent of Canadian employees say they’re less productive at work due to financial concerns. Nearly half (45 per cent) said they worry about their finances on the job at least 15 minutes a day, and one in 20 (about 5 per cent) reported worrying more than 90 minutes daily, representing about $53.9 billion in lost productivity each year.
A financial crisis for an employee can be defined by chronic monetary struggles that impede their ability to meet essential financial obligations. This can result in challenges meeting basic needs like food, housing, transportation, and healthcare, often resulting from insufficient income or unexpected expenses. It is also common, when a person reaches this point, to become overwhelmed by debt from credit cards, loans, or medical bills.
Fear of job loss, reduced hours, or pay cuts further contribute to financial instability and intensify stress. Unplanned costs like medical emergencies or urgent car repairs can disrupt finances, especially for those without savings.
Statistics Canada reported as recently as 2023 that 26 per cent of Canadians wouldn’t have the means to pay an unforeseen cost of $500. Based on the past 12 months, it is reasonable to assume this number has not improved and has likely worsened.
Financial tension can impact employees’ ability to perform to their full potential. The following are examples of the spillover effects of chronic financial stress to the point employees feel they are in a financial crisis:
Decreased Concentration: Financial anxiety and fear can make it difficult for employees to focus on their work, reducing accuracy and efficiency in completing tasks.
Increased Absenteeism: Employees dealing with financial stress may need time off work to handle their situations, leading to a loss of productivity and disruptions in workflow or projects’ timeliness.
Reduced Morale: Ongoing financial crises often drain employees’ spirits, reducing their motivation and enthusiasm to engage with their work responsibilities.
Higher Stress Levels: The chronic stress from financial troubles can increase fatigue and burnout risk and decrease creativity and task completion.
Interpersonal Tension: Financial stress can increase irritability or withdrawal from colleagues, impacting collaboration and team cohesion and disrupting the work environment.
Tips for supporting employees’ financial health
Working with individuals facing financial health challenges, one of the most significant issues is a lack of awareness of how daily micro-decisions contribute to their financial situations. Small choices, such as indulging in four cups of coffee daily or frequently dining out for lunch, can accumulate and create substantial financial strain over time.
Employers can help their employees prevent financial crises by fostering a proactive approach to money management and promoting financial health habits to support well-being. By guiding employees in balancing their finances across three essential buckets—bills, savings, and discretionary spending—they can empower them to make informed decisions that promote long-term stability. Sound financial daily habits are good for mental health.
One of the most impactful habits employees can adopt is paying themselves first. This principle encourages individuals to prioritize savings before spending on non-essential items, cultivating a sense of control over their finances. By instilling these preventive strategies, employers support their workforce in reducing financial risk and contribute to a more secure, focused, and engaged team. Investing in financial literacy and prevention can lead to healthier employees and a more productive work environment, ultimately benefiting the organization and its employees.
Employers who care about their employees understand that financial crises create considerable emotional and psychological burdens, leading to diminished job performance and well-being. Supporting employees in a financial crisis can improve their well-being and enhance their productivity and company loyalty.
The following are practical actions employers can take to support employees:
Financial Counselling Services: Ensure employees have access to professional financial advisors to help them manage debt, budget effectively, and plan.
Employee and Family Assistance Programs (EFAPs): Provide access to EFAPs offering confidential support and resources for handling financial crises.
Flexible Work Arrangements: When possible, allow flexible working hours or remote work options to help employees manage domestic responsibilities or reduce commuting costs.
Pay Advances: Offer the option for employees to request pay advances, which can provide immediate relief during an emergency.
Financial Education Workshops: Provide employees with educational workshops on managing financial stress, budgeting, saving, and investing.
Encourage Savings: Help employees set up automated contributions to savings accounts dedicated to emergencies.
Affordable Benefits Packages: Explore creating affordable benefits packages, including health and dental care options that ease financial burdens.
Regular Communication on Support Systems: Keep an open line of communication that continues to educate the workforce on the organization’s benefits and financial aid options available to employees.
Discount Programs: Partner with local businesses or offer corporate discounts for childcare, transportation, and bulk shopping services.
