How personal finances impact the employer

1 Feb    Public
Feb 1

How personal finances impact the employer

Personal finances are a top-of-the-mind issue for most employees but why should employers care? Employers should care because the personal financial issues of their employees manifest themselves in lower productivity, higher costs and poor financial culture in their organizations. In short, it affects their bottom line.


People spend a huge portion of their lives and resources getting education that will enable them secure employment and become an asset to their employer thereby earn a comfortable living. However, it is ironic that none of that time spent acquiring these productive skills is spent on learning how to manage the earnings generated. The unfortunate result of this oversight is that many people earn a good income yet often find themselves in a financial bind. Over seventy eight percent of the working population is afflicted by one or more of the following; lack of money to take care of financial emergencies, inability to provide a quality education for offspring, inability to provide quality healthcare for the family, heavy and growing debt load, inability to purchase a home and ultimately, abject poverty in retirement.

Businessman Reading Document ca. 2003

These are the personal problems your employees face every day. Unfortunately, you cannot afford to remain aloof and detached as your employees struggle to solve them because they affect your bottom line everyday. Finances are an issue in most people’s lives that cause stress, hence lowering productivity than most other issues. An employee who is facing an emergency but lacks the money to solve it can hardly be expected to be focused and productive at work. Nor can one who is being hounded by creditors or has been evicted, or one whose child has been sent home from school for lack of school fees. Such employees will spend a lot of your time, and your resources (telephones, vehicles etc) trying to sort out their issues. They will feign illness to get time off from work and even if they do not, many will be there physically but distracted and unproductive.


There is a high correlation between financial distress and family instability and the household problems of unstable families may spill over into the workplace. Many HR professionals find themselves spending time on issues which have to do with employees’ financial and family affairs, time which could have been spent more productively. Most financially illiterate people see only one solution to financial challenges; more money. So employers find themselves inundated with demands for higher pay and salary advances and some employees engage in moonlighting in an attempt to increase their income. A moonlighting employee cannot focus all their attention and energies to the job you have given them. The most dangerous possible effect of craving for more money is criminal behavior. Inside jobs are sited by police authorities in many cases and some employees even go to the extent of using their employer’s facilities to engage in drug smuggling, tainting their employer’s image.


You can help your employees improve their financial lives and avoid these problems, and help yourself avoid their negative effect on your bottom line at the same time by tackling the root cause of these maladies; lack of financial literacy. Financial education is a basic life management skill that every employee should be equipped with to help them manage their finances better. A quality financial education program is one which addresses the needs of the various income and educational levels of your people, imparts knowledge that is practical and that can be applied in their situation and in a manner that inspires them to take action.


The personal financial training can be structured as a voluntary one-day course and even spouses can be encouraged to attend for maximum impact. As HR professionals though, you need to be careful that what you give your employees is unbiased financial education presented by professionally trained and accredited personal finance consultants rather than expose them to a sales pitch from financial product sellers. No matter what they say, financial product providers’ ultimate agenda is to sell their specific products. These may or may not be appropriate for the individual participants who unfortunately have no way of determining that. A good way to vet financial education providers is to ask for testimonials or speak to HR professionals who have used their services.


Financial education is a powerful benefit that is bound to produce both quantifiable and non-quantifiable benefits for your organization and your employees. Consider is as one other tool to attract, retain and reward quality employees.


By Manyara Kirago

Financial Counselling

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