Introduction
Post-pandemic inflation has single-handedly turned a cost-of-living crunch into a cost-of-living crisis for many Australians. Thankfully, Australian consumer prices are predicted to fall to around 3.5% pa this year.
But will an easing of inflation produce a meaningful reduction in financial stress for the average Australian employee?
Sadly, the answer is likely to be no as wage growth continues to lag behind inflation, meaning the real purchasing power of salaries is declining over time . According to statistics from HR Leader Australia, personal finance continues to be an acute pain point for the modern Australian workforce, with roughly 1 in 5 employees reporting money-related stress.
Financial worries impact both an employee and the business, leading to burnout, reduced productivity, lower engagement, deteriorating team morale, reduced job satisfaction and declining employee retention.
To counteract the impact of financial stress on businesses, financial wellness programs have cemented themselves as an important resource for employers to assist staff to improve their financial and workplace satisfaction.
Let’s look deeper at the connection between employee financial health and business performance.
The Impact of Financial Wellness on Job Performance
For employees grappling with money stress, those worries don’t disappear when they start their work day. The distraction bleeds into employee performance.
AMP’s recent study uncovered that almost 1.8 million Aussie workers struggle with financial stress. Between lost concentration, distraction, and absenteeism, productivity can reduce by up to a full workday of lost time per week per financially strained employee.
The business impact is too much for employers to ignore. Distracted employees impact the bottom line, but if left unaddressed, stressed employees can negatively affect interpersonal relationships, team culture and team morale.
For high performance companies, optimal performance is supported by the mental and financial health of their employees.
Financial literacy programs are an essential tool to support employees, productivity and culture.
Financial Wellness is a Key Factor in Employee Retention
To understand employee retention, we first need to understand why employees look to leave an organisation.
It should be no surprise that money is high up on the list. However if we drill a bit deeper, we find that financial stress relating to money is a far better indicator as to an employee’s propensity to leave. Which makes sense, most of us have stayed in a role that we liked rather than chase a higher salary somewhere else.
Now we drill a bit deeper on what we mean by financial stress. Stress is often the perceived or real absence of control. So if we provide the tools and knowledge to allow employees to feel more in control of their financial journey, we can reduce financial stress.
That’s why taking action to boost financial wellness is so important for employers wanting to hold onto their talent. Employees may be facing financial strain but if they have control over their financial future, they will likely be more productive, have better relationships both internal and external and will stay in their role longer.
The organisations that proactively support employees through financial wellness programs benefit from that investment. And importantly, it shows that an employer cares and is taking active steps to support their staff inside and outside of the office.
Final Thoughts
The data doesn’t lie—financial health and workplace satisfaction go hand in hand. When personal financial stress increases, workplace engagement and performance suffers. When performance suffers, absenteeism increases and team morale declines. All of these factors contribute to a staff retention issue for management. For Australian employers, prioritising financial wellness is a component of nurturing happy, productive teams.
Reach out to Australian Financial Wellness.
We offer customised financial literacy education programs to support your team