6 ways to help your employees manage financial stress

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RobertSinclair

Helping your workers through tough times can help your company’s bottom line

 

According to the American Psychological Association (APA), each year Americans list money, work and the economy as among their highest sources of stress. The APA list also includes several other stressors that have financial implications, including health care, family concerns and housing costs. The Partnership for Mental Health in America lists four main causes of financial stress: significant life events (e.g., major medical expenses), low financial literacy (e.g., ability to manage/save/invest money), psychological causes (e.g., impulsive spending) and income stagnation (e.g., in inflation-adjusted wages).

As a professor of industrial-organizational psychology at Clemson University since 2008, my research focuses on personal and organizational factors that contribute to occupational health, employee resilience and retention. I am a founding member and past president of the Society for Occupational Health Psychology and a fellow of the American Psychological Association and the Society for Industrial-Organizational Psychology.

Concerns about financial stress have been heightened by the economic downturn and slow recovery since 2008. However, even as the economy increasingly shows signs of recovery, financial issues are still a top concern, and employers should consider whether they are doing all they can to help employees manage financial stress issues. These are some of the steps employers can take to help employees manage their financial stress.

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1. Offer financial counseling/education programs

 

Many Employee Assistance Programs (EAPs) include financial counseling; other supports may be available through financial advisors associated with retirement programs. Financial education/counseling can help employees resolve current difficulties as well as assist with future planning (e.g., retirement, college funds). Employees may not realize such programs are available or they may be hesitant to use them, so it is important to ensure that employees are aware of and encouraged to use all available resources.

Employers can also supplement their programs with online resources to help employees with financial planning and management, such as those offered by the Partnership for Workplace Mental Health. Employers also should explore the Obama administration initiative to increase financial capability. This program includes a tool kit with resources for both employees and employers and is intended to improve employees’ ability to manage financial issues.

 

2. Provide support

 

Social support can involve providing information and assistance or even just being there to listen when someone has financial problems. The American Psychological Association offers several other tips to help employees manage financial stress, including trying not to focus on negative issues, developing concrete plans to deal with problems, recognizing unhealthy ways people cope with financial stressors (e.g., drinking, smoking or overeating), asking for help and finding ways to turn challenges into opportunities for financial growth. Supportive leaders may be able to help with all of these issues.

Efforts to offer support pay off: Many studies show that employees who feel their supervisor and co-workers care about their well-being also report higher levels of engagement, commitment and stress tolerance.

 

3. Consider alternatives to layoffs

 

Layoffs are a common “belt-tightening” response to financial difficulties. However, layoffs often fail to attain their intended goals for the organization. Moreover, layoffs increase job insecurity and workload for layoff survivors and undermine their trust in the organization. An article in the Wall Street Journal listed several alternatives to layoffs, including asking employees for cost-cutting ideas, cutting extras such as travel or office perks, offering extra unpaid leave days and instituting shorter workweeks.

 

4. Review your compensation plan

 

While it is easy to say that employers should pay their employees more, this is obviously not always feasible. However, employers should make sure their compensation programs are aligned with their strategic goals and maintain a sense of equity. This might include paying market-competitive salaries or adjusting benefit programs to keep pace with the changing workforce needs.

Although employees have become increasingly aware of the importance of their employer-provided benefits package, they may not realize that benefits can comprise as much as 30 to 40 percent of a company’s labor costs. Companies should communicate the total value of their compensation program to employees.

 

5. Recognize individual differences

 

Decades of research have established that people often differ dramatically in their reactions to stressful situations. Regarding money, these differences include personal values about money (e.g., materialism), family background, level of concern for the future and styles of coping with stressors, to name just a few. Thus, “one size fits all” strategies probably will not be universally effective; different groups of employees may require different policy responses, and leaders should expect that no program will be universally successful or appreciated.

 

6. Be proactive

 

Many people are hesitant to talk about their finances, particularly when they have problems, and they may not seek help until a situation becomes difficult to manage. Employers therefore need to be proactive rather than waiting until employees identify problems.

Managing wellness begins with the on-boarding process and should continue throughout employees’ careers, ensuring that they have access to relevant resources at each career stage. Organizations also should be data-driven when possible, conducting routine needs assessments to identify employees’ concerns and to evaluate possible solutions.

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5 signs your employees may be financially stressed

 

  1. Withdrawing multiple loans against retirement savings
  2. Asking for payday advances
  3. Unexpected absences
  4. Spending time dealing with personal finances while at work
  5. Medical issues that could have been avoided through preventive care

Source: BenefitsPRO.com

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