How can employee debt affect you?
Despite most people getting into debt at some point in their lives, the issue is generally treated as a taboo topic. The reasons for this are unclear. Perhaps it’s the British attitude of ‘not wanting to cause a fuss’ or maybe those in debt feel ashamed or embarrassed by their situation.
There is definitely a difference between ‘good’ and ‘bad’ debt. The former allows us to move on with our lives; mortgages are often necessary for us to get homes, student loans are typically required for an education, and buying a car on finance is a common way of getting a vehicle.
Bad debt, on the other hand, usually occurs when repayments become unmanageable. However, ask anyone and they will probably tell you all debt is bad. Furthermore, when debts do start to build up, people will typically keep it to themselves.
Unfortunately, by keeping debt hidden and not discussing the matter, the situation usually gets worse. Not only does this cause financial hardship but it can have a detrimental effect on relationships and mental wellbeing.
As employers, we’re arguably responsible for everything that happens in our businesses. As the effects of debt can directly influence what occurs in the workplace, we have a duty to do something about it.
How can debt affect employees at work?
Generally, employees worrying about their finances become increasingly stressed. In turn, thinking about how to make ends meet can distract them at work. At the very least, this can result in lost productivity. However, when elements such as heavy machinery are involved, their distraction can put the lives of staff members at risk.
Furthermore, debt can affect people at work through:
- Interruptions in the form of Phonecalls. Creditors seeking their money probably operate under the same working hours as you. As a result, they will typically call their debtors to enquire about progress. This takes your staff away from their duties and creates a distraction.
- Increased tiredness. Although worrying about debt can lead to a lack of sleep, employees may feel the need to resolve their money troubles by taking on additional work. By concentrating on the next ‘shift’, staff will probably be less focused on the task at hand.
Every business needs staff members operating at their very best. Fortunately, there are several initiatives you can employ to help tackle debt in the workplace.
What can I do about it?
Initially, the best thing you can do is help remove the stigma surrounding debt. Your workplace should embrace this message and create an environment where the matter can be easily discussed. As well as ensuring that HR teams are welcoming and can be approached about this issue, you may wish to set up an assistance programme or offer counselling where requested.
Furthermore, as money is at the route of this, you may wish to determine:
- If you’re paying a fair wage. Although you can pay employees in line with the minimum wage, you might wish to increase this to the ‘living’ amount. Furthermore, if you employ people on zero-hours contracts, these individuals should be treated fairly.
- If pay has risen with inflation. With the costs of commuting seemingly increasing accompanied by rises in inflation, employers should ensure that wages keep pace with these changes.This will help ensure employees’ salaries keep pace with living costs.
Finally, there is education. Unfortunately, people aren’t generally taught how to manage their finances or what to do if they find themselves in debt. At the National Debt Service, we find people frequently come to us asking ‘what is an IVA’ or any number of other questions surrounding debt solutions. While we’re happy to discuss these queries, hosting workshops on the issue can help employees understand the finer points of money management.
Debt matters – Let’s discuss it
Debt affects us all in one way or another. Perhaps you’ve struggled with finances in the past or maybe a loved one has been in a similar situation. The important thing though is to ensure that we discuss it.
By removing the stigma surrounding debt, you can help make your workplace a much more positive environment – and boost productivity in the process.
This post was written by the National Debt Service – experts in debt solutions – they seek to make debt a normal part of everyday conversation.