Wounds in the Workplace: How Do You Stop the Bleeding?
Companies everywhere are now being quietly — and sometimes, not so quietly — undermined by the financial stress that employees experience every day. That stress is a key factor in employee turnover — an issue that’s having a tremendously negative impact on many businesses.
Indeed, it’s a wound that simply won’t heal on its own.
Typically, it shows up in terms of workplace distractions, errors, absenteeism, even accidents. Costs mount in terms of lost productivity. What’s more, it’s costing employees their health, financial penalties, and missed opportunities to grow in their jobs. It undermines their future.
Whether the industry is retail, restaurants, healthcare, manufacturing, government or some other, the pattern repeats itself again and again.
Consider first the wound experienced by the employer.
Recruitment and retention challenges are a particularly huge source of pain for many organizations. You can spend vast sums on recruiting and training only to lose your employees for a one dollar hike in pay offered by an alternative employer. According to the Center for American Progress, the direct cost of turnover is 16% of annual salary for hourly workers and 60% for salaried workers. Many employers add a series of benefits — employee of the month programs, lunch stipends, paid time off, etc. — and still lose their people in alarming numbers.
There are many ways that employee turnover, which can be as high as 150% annually in some sectors, harms the employer:
- Excessive Training and Onboarding Expenses. There are clear costs associated with training new workers. You bear those costs directly every time you bring on a new person. And then, there are the added management expenses incurred as employees are coached and developed to a productive level.
- High Recruitment and Advertising Costs. When new employees must be constantly sought, fees must be paid to attract them and encourage them to apply. Considerable time and attention must be placed on the recruiting and hiring process itself.
- Low Engagement and Productivity. When turnover is high, employers are likely to become less attentive or motivated to perform well. Unsurprisingly, productivity takes a hit — largely because many workers are not up the learning curve.
- Team Morale Problems. When employees leave for a higher salary or other reasons, existing employees may be forced to work longer hours — reducing morale and leading to workplace culture issues.
- Declining Customer Service. When staff turnover is high, skill levels, team cohesion, and worker experience are naturally lower. When customers begin experiencing the effects of these dynamics, they, too, are increasingly likely to defect. There’s a proven correlation between employee turnover and customer turnover.
If you’re an employer, you should consider what such factors are costing your company. You can even calculate employee turnover costs in your organization to clarify whether it’s time to revisit the status quo.
Now consider the wound that afflicts financially stressed employees.
Employees working paycheck to paycheck periodically may find themselves in a financial bind. They can face unexpected financial problems due to an automotive repair issue, a winter heating bill, unpaid child support, or an unexpected medical expense.
And, last year, 25% of them admitted they were not making routine monthly expenses. But that implies late fees, disconnect fees, reconnect fees and more. When funds are not available in the account, you can end up facing overdraft fees of $25 to $40 per month with no guarantee that your check will be cleared by the month.
It’s a sizeable portion of the budget for most hourly workers — and a source of ongoing concern and distraction at work. If you’re late on rent, you might face even deeper penalties, not to mention the threat of eviction. Imagine being at work while being constantly fearful of having yourself and your family thrown out of your home.
When financial setbacks do occur, employees have a few choices. None of them good.
They can seek payday loans. They can sheepishly ask for a loan from friends or family. Or they can go their employers, which is typically an awkward conversation for both parties.
None of these “band-aids” are addressing the deeper need for financial security and dignity that this situation requires. These are short term options but these are not a long-term solution to the financial independence and security of employees. And none of them address the employee distraction and uncertainty that end up harming employers in the form of lost productivity and high turnover.
Let the Healing Begin…
Happily, there’s an easy-to-implement, holistic alternative that’s now available to employers. It’s one that can support employees in difficult financial circumstances — and even promote greater financial health — without making significant demands on employers.
What does this holistic, financial wellness solution cover?
- Timely, debt-free access to funds for specific needs. It’s now possible to give employees rapid access to wages they’ve already earned — all without any impact on cash flow. This helps employees eliminate dependence on predatory loans.
- Budgeting and savings capabilities to build financial resiliency. Employees can save as they earn by calculating savings in units of time. For instance, they can allocate an hour a day towards an upcoming expense or towards a savings goal like rent, childcare, vacation, or an emergency fund.
- Employee guidance and counseling to encourage healthy financial practices. Of course, it’s critical to also get a handle on key issues like budgeting, debt reduction, and smart savings practices. It’s by supporting and reinforcing these practices that a financial wellness solution becomes complete.
Studies show that financial wellness programs produce greater employee engagement, loyalty and productivity. In fact, such programs represent a source of advantage at a time when competition for people and customers is intensifying.
They say, “Time heals all wounds.” But is that always true?
We’ve called this newsletter “About Time” to put a focus on the real-world, human and business implications of time when it separates employees from the wages they’ve already earned. It also speaks to the time (and by extension, money) that employers must spend on hiring, retaining and developing their people. Bottom line: It pays to ensure they are financially healthy as opposed to financially distressed.
So, what if you — as an employer — could stop the bleeding and help restore the financial health of your people? And what if you could accomplish this goal without bearing any financial expenses of your own?
You can. Just take the first step and find out how. Isn’t it about time you did?