Ease Employee Financial Worries

Reduce Lost Productivity

Is it really possible more than 75% of American workers in the private sector are bringing distractions into the workplace that result in an average of 22 minutes of lost productivity in every eight-hour workday? According to surveys conducted by Money Magazine, USA Today, the University of Mississippi, American Demographics magazine and many others, these are conservative estimates. Experts suspect it is much higher for government workers.

Over half of the concerns are financial in nature. One study found that 44% of the respondents said it was necessary to take time off from work to handle a financial crisis. Few of us are immune from financial concerns. Another survey among workers revealed nearly two-thirds worry about their money and financial situation.

An informal study conducted by the Institute for Consumer Financial Education (ICFE) among people enrolled in their six-week personal finance course indicated money concerns cause distractions from work objectives almost every day. Nearly 85% revealed they spend an average of 10 minutes each day discussing concerns with fellow workers, a spouse, financial advisors or others.

CURRENT COST TO EMPLOYERS

Just ten minutes a day devoted to personal concerns can cost an employer a week’s pay per employee in a year’s time. If the average paycheck is $500 a week, times 100 employees, the annual loss in productivity is about $50,000. However, most experts agree the average individual devotes more than 15 minutes a day to personal objectives, making the employer’s losses average out to two week’s pay per employee annually. Salaried employees may tend to spend even more than 15 minutes a day on personal things.

It is clear that employees without a basic financial education, or those knowing the basics but lacking in financial self-discipline, simply do not reach their full potential. The need to spend better, obtain a greater value for one’s dollar, rely less on credit and regularly save a portion of all income received is greater in the new millennium. The increasing need is partly because of the continual spending orgy over the past thirty years and because of America’s low savings rate.

Consider all of the changes in the economy. The USA has gone from the largest creditor nation to the largest debtor nation. Interest rates on savings products have dropped from double digits to an average of less than six percent. Consumer installment debt and expensive credit debt ballooned faster than the national debt. Sadly, credit card issuers, banks and other forces in our society that influence people to spend are throwing billions of dollars into their advertising campaigns. The result urges Americans to borrow and spend, even beyond their incomes.

In addition, deregulation in financial services has resulted in nearly everyone from Wal-Mart to the corner market offering banking services and other financial products. A liability insurance crisis has affected almost every industry, as well as homeowners and motor vehicle owners. A high inflationary period boosted home prices and opened the way to adjustable rate mortgages, in addition to another consumer bane, home equity loans. Catastrophic illness and long term healthcare will continue to devour savings accounts in the early 2000s, and far too many citizens will slip into retirement, becoming dependent upon an already over burdened Social Security system.

Furthermore, the growing number of people calling themselves financial planners (whether or not they are professionally certified, offering financial advice and selling investment products) only adds to the difficulty of making important decisions about one’s financial future. Is it any wonder many workers are confused about their finances?

However, more than any investment decision we will ever make, everyday spending decisions have a far greater impact on our financial future. Spending decisions are largely made out of habit, such as how often we are going to eat out this week, whether or not to take advantage of grocery coupons and rebates, paying others for services we could easily do ourselves, how much to spend on clothing, how extravagantly to furnish our home and how much to borrow for a new car. It is much easier to reach retirement goals by deciding how we spend every day rather than how we invest.

Another revealing indicator in the studies was that the majority of respondents said feeling secure in money matters helped their own self-esteem. Self-esteem is directly related to productivity. People work to earn an income and when they fail to earn an adequate income, turmoil results. People report an increase in marital discord, substance abuse, dishonesty and inter-personal problems. Even health and safety become an issue. Also costly to the employer is time spent dealing with angry creditors, collection agencies and wage attachment or the last resort, personal bankruptcy.

ONE POTENTIAL SOLUTION

The Institute for Consumer Financial Education (ICFE) has been helping employers ease employee financial worries through a unique six-week educational program that even encourages spouses to play a part. The ICFE, a non-profit group based in San Diego, California, has been espousing better spending, regular saving, adequate insuring, wise investing and proper planning for one’s financial future, importantly without product recommendation.

The primary focus is on developing financial self-discipline. Because when it comes to spending money, most people will stop at nothing. Folks learn how to keep more of the money they make and do more with the money they keep. The instructors also motivate by placing emphasis on the positive. (Positive attitudes, spending smarter and obtaining a greater value, etc.) They avoid talking about such things as budgeting, cutting back and doing without, topics nobody wants to hear anyway. Employees who handle finances well are better employees. More time is spent on company objectives and less time on personal ones. There are plenty of in-class activities and even homework, such as figuring net worth and doing a cash flow review. All are part of the dynamics designed to maintain interest both during and between classes.

The ICFE financial education approach is the acquisition of knowledge and skills, leading to developing that all-important financial self-discipline. In addition, people learn to resolve present problems and prevent future ones from arising.

If the ICFE program can help minimize employee distraction in the workplace by just six minutes a day, employers could see a return on their investment in about four months. More information is available by writing to: ICFE, P.O. Box 34070, San Diego, CA 92163-4070 or on the web at www.icfe.info.

Source: www.icfe.info