With one in five employees admitting that financial worries can be a distraction at work, more and more businesses are taking an interest in helping their staff to manage their personal debt. Doing so not only helps to keep productivity and morale of employees high, but it also inspires loyalty and confidence in current and future staff.
Of course, the big question is not why businesses help their employees, but how. Paying off outstanding debts is hardly profitable and is unlikely to encourage the employee to change their behaviour. Fortunately, Sage have recently published advice on how to assist money-troubled employees with managing their personal finances, without resorting to hand-outs.
- Offer opportunities for employees to admit financial concerns
Admitting personal troubles to one’s boss can be embarrassing. However, providing an employee wellness programme, which includes encouraging employees to disclose any personal finance concerns, enables a safe and confidential space to voice worries.
- Educate on the benefits of checking credit reports
Credit reports are a great way to get a visual understanding of whether one is managing their finances sufficiently and, if not, where they are going wrong. What’s more, many credit companies offer at least one free report a year.
- Discourage the use of loan sharks
Loan sharks can be extremely tempting to those desperate to rid themselves of debt, often just making the problem worse with their high-interest rates.
- Educate on the dangers of “debt consolidation”
Debt consolidation can be a useful management tool when an employee has multiple debts and are struggling to keep up with payments, but they also can give the person a false impression that their debt isn’t as bad as they thought, leading them to repeat mistakes of the past.
- Empower employees to help themselves
It can be tempting to offer to pay your employee’s debts for them, especially in smaller companies where staff are close. Remember that it is often the employee’s bad financial management that got them in trouble in the first place, and education is far more useful in the long run.
- Employ a debt counsellor
A professional advisor that can take confidential calls whenever an employee needs it will not only give the employee help, but offers staff emotional security to know someone is there for them.
- Offer classes on financial management
Education is the best way to help employees to manage and avoid falling into financial trouble, and the first place to offer this is their induction programme. The earlier they know about the dangers, the more they can avert financial insecurity.
- Provide guidance and suggestions on low-cost bank accounts
Banks often try to sell people higher costing accounts to secure a higher return. Educating employees to avoid such seduction will ensure they only opt for the account they need.
- Encourage attendance to financial literacy courses
Not every business can afford to run their own educational courses, but there are plenty of courses out there that offer sound and practical advice. Some are even free! Alternatively, provide software at your company to help your employees manage their accounts.
The key to helping employees avoid or escape personal financial trouble lies in encouraging honest admittance and by providing reassuring and reliable advice. Businesses don’t just protect their productivity, but make their employees feel valued.