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ICAS – Working Better Together

1817 days ago
Money matters

image

‘No provider should be offering any financial products that may cloud their objectivity, or market their products under the auspices of financial wellbeing.’ The service should be seen as pre-emptive rather than reactive. This means that it should be able to assist employees long before any true crisis arises. 

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It may be a cliché, but smart employers know that their employees are their biggest and most important asset. Put simply, a major factor in increasing and maintaining high levels of productivity, efficiency and employee satisfaction and retention is ensuring that your employees are happy and healthy.

A smart employer provides employees with various benefits, from healthcare to employee rewards programmes – and the occasional team-building workshop or mid-year office party. Such companies also ensure their staff salaries are market related and in line with their expertise, effort and industry standards. However, one area that is often overlooked is their financial wellbeing. It is important for employers to pay added attention to the financial needs of their teams because employees who are having financial difficulties experience high levels of stress and inevitably underperform at work. The stress of managing personal finances pervades all other aspects of an employee’s life and may even manifest itself in physical side-effects. All this can disadvantage the business. Many negative effects result from an employee’s struggle with debt, says Clark Gardner, CEO of Summit Financial Wellbeing, which facilitates financial wellbeing through workshops and mentoring programmes. Companies not only have a responsibility to ensure their employees’ wellbeing, but also need to understand that financial difficulties result in undesirable employee behaviour.

Financial stress can lead to employees:

  • resigning to access retirement funds required to settle unaffordable debts,
  • stealing in desperation to ensure food is on the table,
  • running away from garnishee deductions,
  • exerting pressure for a salary raise to maintain current standards of living, or
  • being absent or less productive.

Gardner says such behaviour has a signifi-cant impact on a company’s bottom line, and it is an impact that could easily be prevented and corrected.

An holistic approach
What kinds of debt-counselling services are available – and how should a company make them available to its employees?
Gardner advises that employers should seek holistic solutions for their employees as ‘not all situations warrant debt counselling’. A simple solution can often be found through tackling cash-flow discipline, challenging deductions from lenders, negotiating reduced instalments from lenders, and so on.
However, as a statutory solution, debt counselling provides court protection from credit providers and is an accessible solution for all employees. ‘Once they understand the consequences, sacrifices and expectations, they should apply accordingly,’ says Gardner.

Choosing a service
When choosing a debt-counselling service that’s right for their employees, Gardner recommends that employers should look for service providers who offer all-encompassing solutions that address both preventative and reactive measures. ‘No provider should be offering any financial products that may cloud their objectivity, or market their products under the auspices of financial well-being.’ Service providers should start with financial literacy education workshops, followed by tools to help employees stick to best-practice guidelines. ‘The focus should be on measuring employees’ actual cashflows ,’ says Gardner.

Implementation
Gardner makes several implementation recommendations for maximising the service’s effectiveness. ‘Ongoing communication using simple language or infographics is certainly the most effective,’ she says. Such communication and trigger referrals should be plugged into the existing processes and mediums used by the employer.
Furthermore, the service should be seen as pre-emptive rather than reactive. This means that it should be able to assist employees long before any true crisis arises. Prevention is definitely better than cure in this case.
Of course, as with any other private employee matter, confidentiality is key. When dealing with sensitive and often very personal financial circumstances, it is imperative that employees feel they can trust their counsellor to respect their privacy.
Finally, an employee’s use of the service should not negatively affect any personnel review outcomes. Having a clear and achiev-able plan of action to deal with debt will
reduce employees’ stress levels, thus enabling them to perform to the best of their ability. Their need for debt counselling should never be allowed to tarnish the relationship between employer and employee.

♦ End

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