October 23, 2023 All Articles

Financial Stress – Is it Contagious?

Just like the common flu, financial stress and poor habits can be caught by those that we work with, are related to, or are connected to. If left unchecked, it can have a significant impact on our mental health and our productivity at work.

Progressive organisational leaders are taking concrete steps to increase financial literacy support and create a safe environment to improve discussions around managing money.

The last 12 months has seen a significant increase in the headlines and commentary relating to financial pressures and the impact this is having on so many households.

In a conversation recently with a respected colleague of many years, we explored the conundrum that currently exists where we know that health and wellbeing professionals are increasingly aware of the impact this is having and the need to provide support to employees, but there still appears to be a lack of urgency and organisations taking meaningful action in this area.

We applaud those who have prioritised this support and secured budget and we encourage those that have not yet done so to act now. The window of opportunity is now, whilst in the middle of a cost-of-living crisis for many, and it would be a real shame to let the moment pass.

Most organisations have good intent for their teams, and they do lead with company straplines and values statements that indicate a genuine recognition of the importance of their teams and their wellbeing.

Common statements include:

  • Our people are our greatest asset
  • We are focused on our team’s holistic wellbeing
  • We want to support a diverse and inclusive culture
  • We want to support our teams with the immediate pressures of cost of living

Despite these statements, there are so many organisations that are not yet prioritising support.

In a tight labour market where retention and attraction of talent is competitive, those organisations that do rather than just say will be rewarded.

The only tangible truth is what action you take. Despite these words being loosely used and proclaimed to be important by many organisations many safety, wellbeing, and HR leaders are not being resourced to deliver real support on financial wellbeing. This can be so much more than a brochure, a help line, an app, or a generic presentation from a superannuation service provider.

Financial literacy was, for so many years, seen by organisations as a nice thing to have. In many respects, employers regarded this as something that the employee needed to sort for themselves. There was no real interest in getting into the complicated and sometimes messy personal lives and finances of team members. There was also some reservations around minimising risk from introducing providers into the workplace.

However, organisations at the C Suite and board levels can no longer ignore the research and overwhelming need for support.

Well published and reputable research exists and shows a strong link between those that suffer financial stress and poor mental health. Research suggests those who have mental health issues are twice as likely to suffer from financial stress, and those that do are twice as likely to suffer from poor mental health (Beyond Blue., 2022).

Also released in the Australian State of Financial Wellbeing report in 2022, it highlights the financial reality for many employees and the potential impact on retention and engagement, such as:

  • Almost 30% of employees run short of money for food and regular expenses, under 50% can save regularly, and almost 40% struggle to meet bills and commitments from time to time
  • 58% of employers believe they offer financial wellbeing tools, but only 36% of employees believe they receive them
  • One in two employees would “think more favourably of my employer” and “be more likely to stay with my employer” if they were offered financial wellbeing tools

There is also well circulated research around the impact on productivity from financial stress.

According to AMP’S 2020 Financial Wellness research, the cost to Australia’s economy is $30.9 billion annually due to employee distraction and absenteeism – those severely and moderately financially stressed are ineffective at work for approximately 7.7 hours a week and absent for a further 1.2 hours a week through sick days. Leaders within organisations are also very aware that circa half of their team will be experiencing some level of hardship with cost of living and rising interest rates. So, given the above and its importance, why are more organisations not further advanced in supporting their teams? Prioritisation, politics, and budget are common responses, and I would suggest not understanding fully the impact on their people. There are also those who believe generic material provided by a service provider is enough. The reality is employees have different expectations.

Organisations have a great opportunity to create a safe space for the conversation to happen more often. They need to provide access to a variety of resources and providers who can help people navigate the challenges. Creating that safe environment is so important, and solutions offered to employees need to provide choice, access, and mindfulness of some of the common reservations surrounding talking about money in the workplace.

Creating that safe environment is so important, and solutions offered to employees need to provide choice, access, and mindfulness of some of the common reservations surrounding talking about money in the workplace.

Over the last 7 years, we have gained lots of insights into employees’ reservations with speaking about money. The words and references that most often come up are:

  • Fear of embarrassment
  • Fear of being seen as weak
  • Fear of being compared to others
  • Fear of lack of privacy and my employer and colleagues knowing about what I do outside of work
  • Fear of judgement
  • Shame
  • Cultural reasons – it’s just not what we do
  • My employer does not care
  • My employer expects me to do this in my own time
  • Concerns over been sold to from a product provider

Lifting the veil on talking about money really does get to the central role that it plays in our lives and the impact it can have. If we share stories, experiences, etc., it will provide insights into how we live, how we spend, and how and who manages the money in our personal relationships. In some respects, it is a lens into our good and bad habits or behaviours.

As employers and as a community, we need to help educate and raise awareness on the basics. We need to create an environment of trust and empathy where we can increase confidence. Whether that be confidence to do it themselves, confidence to ask further questions, or where to go for further help.

Whilst more needs to be done by so many more organisations, we do need to acknowledge that several organisations have taken steps in the right direction. Many have valuable resources available for their team and are embracing the opportunity.

Once organisations take the first step, they become more aware of scalable solutions in existence and their programs evolve and adapt over time.

As one size does not fit all, we have seen through our engagements a combination of broader based support blended with some tailored programs targeted at specific employee segments. This includes those new to the workforce who may not have a lot of experience in managing money, to those who are close to retirement and planning what will follow. We have also seen some programs extended to family members which made a real difference.

In some cases, it has led to more support around onboarding employees and explaining financial options and terms like salary sacrifice and salary packaging, rather than just providing a brochure and considering the job done.

Whilst organisations will bring together a range of providers and solutions, we have seen an increasing number create a central source of storage or access for employees. This has then led to better engagement and usage of resources, even those that have existed for some time.

Solutions have included static data and information sharing, interactive workshops and video content, and peer group discussions. They have utilised all forums of media in terms of sharing these resources with the intent of increasing engagement. It is also about grouping information into life stages, not ages.

Regular activity and effective communication leads to stronger engagement.

Clear sponsorship for these programs within an organisation at an executive level, middle management, and with wellbeing champions on the ground, leads to sustainable solutions that will make a difference. It is also a clear signpost to all involved that the organisation sees this as an important support mechanism.

It takes time, respect, and effort to create and build that safe environment to encourage and support conversations. The reward will be more team members feeling more supported and connected with the organisation and its values.

For a relatively small investment, the tools are there for you to support your teams now.

As a leader or influencer, please empower your teams to make this a priority and make a start on this journey. Involve your teams in shaping where the programs evolve to and make them inclusive. I welcome and look forward to supporting more organisations making a start and supporting their teams in 2023.

Sources: AMP’S Financial Wellness research, 2020, Australian State of Financial Wellbeing report, 2022, Beyond Blue, 2022

You can meet Darren Smith and the Financial Wellness Matters team at the Wellbeing at Work Australia Summit on 14-16 November in Sydney and Melbourne. Further details on the Summit here.

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