Personnel(ly) Speaking
Personnel Management Systems, Inc.
Helping Employees with Finances
While employers do not manage their employees’ money, the way that money is managed can affect job performance. Employees with financial problems are less productive on the job and have higher levels of absenteeism.
According to E. Thomas Garman, professor emeritus at Virginia Tech University, and other researchers, one in four American workers are seriously distressed about their personal financial situation. The 2005 report by Garman, Financial Distress Among American Workers, found that up to 80% of financially stressed workers spend time at their jobs dealing with or worrying about money issues. This financial stress affected all income levels. The report notes that financial worries negatively affect:
Organizations that employ individuals overwhelmed by financial pressures in positions where that employee has access to company bank accounts, checkbooks, or inventory may also be concerned with the very real risk of theft or embezzlement.
Of course, not all employees are in financial distress; many are handling their money well. Even these employees, however, could benefit by learning more about retirement income planning, using flexible spending accounts, and receiving budgeting assistance.
To improve the financial health of employees, some companies incorporate programs to assist employees with their finances into workday training, seeing the long-term benefits of a more informed, financially-savvy employee base. In some cases, this type of training is available at no cost to the employer from current vendors and community organizations. You may be amazed at what is available.
If you are interested in providing tools and/or training to improve your employees’ chances at financial health, look into these options:
Employee Assistance Programs (EAP) – It is common for employers and employees alike to think of their EAP as simply a place to call when substance abuse or mental health issues arise. While EAPs are certainly available for this type of counseling, they also can provide stress reduction guidance and, in some cases, direct financial counseling. If you have an EAP, ask them what is available.
Local Banks and Credit Unions – Some banks and credit unions offer free classes to community citizens and businesses. They may even present on-site at your company location. We have found local institutions that offer seminars on personal budgeting, home buying basics, and retirement planning. Many banks and credit unions can educate employees on such basics such as the different types of bank accounts available, the benefits and logistics of direct deposit, and how to transfer money between accounts.
Non-Profit Agencies – Many non-profit organizations and agencies are available to help consumers understand and manage their finances. Organizations that focus on job training and food assistance do not just serve the unemployed. Many also help those people currently working to better manage their finances so they can be productive, keep a job, and build credit. To find agencies that offer services related to credit counseling and other financial issues start by contacting your local United Way.
401(k) Provider – If you have a 401(k) plan for your employees, your provider typically is available for group and one-on-one counseling for investors. Encouraging saving by your employees helps them provide for their own retirement and can give a feeling of greater stability and less stress. If your company does not offer a 401(k) plan, it may be worth the time to look into its implementation.
Flexible Spending Account Provider (FSA) – An FSA helps employees by allowing them to pay for qualifying out-of-pocket health care and/or dependent care expenses with pre-tax dollars. If your company offers this benefit, the FSA will generally offer guidance on how to determine the amount to set aside for this use. By paying for prescription and over-the-counter drugs, child care, eyeglasses and many more everyday expenses, with pre-tax rather than post-tax dollars, participants are able to save a significant portion of money each year. This is an easy way to increase your employees’ financial health.
Providing access to this type of financial health training and relevant literature does not have to be difficult – think about bringing in your banker for a lunchtime session on savings accounts; your FSA account manager to discuss qualifying medical expenses; or your local non-profit for a session on building a good credit history. Service providers with whom you work regularly should be pleased to educate your workforce on their services; those with whom you do not have an established relationship should be pleased to share information with you so you can feel comfortable with their services.
While you may consider this type of training to be something that should be handled outside the work environment, remember that with the impact on productivity, when employees can focus on their job without the distraction and worries of personal finances, everyone wins.
Personnel Management Systems has assisted several companies in bringing in resources to help employees with financial issues. If you would like help in learning how your workforce can be financially educated or how to set up an EAP, 410(k) plan, or FSA – or with any other Human Resources issue – please call.
Personnel(ly) Speaking is a monthly comment on HR issues of importance. It is intended to provide general information and must not be construed as legal advice. Reproductions are allowed as long as credit for this information is given to PMSI. We welcome your comments, questions, and concerns. © PERSONNEL MANAGEMENT SYSTEMS, INC., Corporate Office (425) 576-1900, Colorado Office (720) 497-0200, www.hrpmsi.com.