Although many of us will deal with debt at some point in our lives, it’s regarded as an extremely private matter. In fact, research from the Money Advice Service discovered that almost a third of individuals don’t tell their partners about the money they owe. Furthermore, the organisation revealed the average amount of ‘hidden debt’ stands at more than £4,000 per person.
Consequently, if so many people hide debts from their loved ones, the chances of an employee discussing debts with you are quite slim.
Despite this, financial troubles are perhaps one of the largest aspects impacting workplace productivity – and helping your employees with their debts could help resolve it.
How debt affects workplace productivity
The extent of how money affects people at work was revealed in a survey published by asset management company Close Brothers. According to the firm, more than 90% of employees worry about money while more than three-quarters of these people state this affects their performance in the workplace.
At the very least, money worries generally harm a person’s mental health, potentially leading to depression, anxiety, and other negative thoughts. As well as this, a variety of issues can occur:
- Additional demands. When money is tight, many of us might try to gain additional income through a second job. The same is true of your workforce. However, as their attention might be focused on another company, this could affect how they complete their regular workload.
- Daily interruptions due to phone calls. Creditors seeking payment may call your employees during business hours. Even if a phone call lasts just a few minutes, this is enough time to cause a distraction and affect their focus.
- Tiredness and additional sick leave. Money worries can prevent an employee from getting a good night’s sleep. In turn, this can result in them being more distracted or less able to focus on the task at hand. Although this increases the chance of them suffering a workplace accident, the additional stress can also lead to ill-health – preventing them from coming into work at all.
- Reduced morale. An employee with mounting financial demands may demonstrate reduced morale. As a result, this can prevent them from adequately working with their colleagues or diminish the quality of their work.
Would I have to fire an employee in debt?
If an employee chooses to act on their debts, there are solutions which can bar them from certain forms of employment. You can find out which professions may be affected on the guide; What is an IVA.
In most occupations, solutions such as IVA or bankruptcy won’t have much of an impact. However, those traditionally in the finance or legal sector may be affected. It’s worth reviewing contracts to determine whether debts or insolvency would influence employment.
Should I help employees in debt?
Although you can’t resolve their debts for them, there are several ways you can help. For example, you could:
- Implement an employee counselling service. Regardless of whether you tackle the issue of debt or not, a counselling service – preferably from a third-party – can allow employees to discuss their problems and obtain financial advice.
- Consider offering overtime. Although this is something which should be implemented sparingly to avoid burnout, offering staff the opportunity to work additional hours and gain extra cash could really make a difference.
- Organize financial workshops. Perhaps one of the simplest ways to help staff members in debt could be to offer workshops into financial matters. In many cases, those in debt might not know the options available to them and you could help with this blind spot.
- Adopt an ‘open door’ policy. Finally, sometimes the best thing you can do is just be approachable. Debt is a very difficult topic to discuss and it’s even harder to do so with someone who isn’t friendly. Furthermore, ensure that HR staff can provide the help necessary to those who ask for it.
Providing help is the right thing to do
Financial well-being is an important factor for all of us. However, as employers, we are perfectly suited to tackling the issue. After all, not only is this the right thing to do but it can also take away some of the distractions preventing staff members focusing at work.
In short, if we make resolving employee debts a priority, everybody benefits.
This article was provided by Tom Chapman, content manager at National Debt Service. The organisation is an established debt solution provider and strives to get people talking about debt.