In recent years, economists have noticed a worrying trend of poor productivity in industries across the UK. The effect of reduced productivity is having a detrimental impact on the UK economy in general and is now becoming a major concern for economists and policy makers.
Data collected from a variety of industries across the UK reveal a downturn in work performance. However, as productivity varies from sector to sector, it is difficult to analyse the data as a whole and work out the underlying causes. HR managers and economists are calling this problem the ‘productivity puzzle’.
Solving this puzzle will soon become more important when the last stage of the living wage increases comes into effect next month. Businesses will need to ensure that their workforce is performing to their optimum, to lessen the financial impact of a bigger salary bill for employers.
There are signs of management issues, particularly with mid-level companies. Creditfix, the UK’s largest provider of individual voluntary arrangements (a formal debt solution to pay back debts over a period of time), believes that the missing piece of the work performance puzzle is personal debt.
How personal debt is affecting workplace productivity
A recent survey undertaken by the Society for Human Resource Management, found 83 per cent of HR professionals said that personal finance problems are having some, or a large impact, on the performance of employees at work.
HR professionals are beginning to understand the negative impact personal debt can have on an individual’s personal and professional life. In the same survey, 26 per cent said they were seeing a negative impact on overall productivity from employees, while 24 per cent are aware that personal debt is leading to notable absenteeism and lateness. Furthermore, 47 per cent of HR staff surveyed noticed that employees are struggling to focus on work. This is a concerning trend for the HR sector, as this loss of focus not only affects productivity, but health and safety too.
It is no surprise that personal debt problems are leading employees to be less engaged with work and delivering a poor work performance as a consequence.
Impacts of personal debt in the workplace
Financial stress from personal debt can quickly seep into the workplace, regardless of how well paid your staff might be. Unfortunately, good wages do not mean you will not encounter employees who are struggling financially. Personal debt is an issue that individuals up and down the career ladder can be going through, thus potentially hampering productivity at every level.
Employees suffering from financial stress are often distracted, preoccupied and are likely to be suffering from a lack of sleep. All of these can amount to an increased risk of danger to the safety of that employee as well as others. In a place where injury is a risk, such as operating heavy machinery, personal finance problems can become physically hazardous.
The burden of personal financial worries can affect your staff in many different ways; they may suffer from depression, illness and psychological problems that will increase absenteeism and sickness leave.
Even if employees seem fit to work, it can lower job performance through:
- Lowering morale
- Lacklustre effort and ability
- Spending vast amounts of time dealing with debt issues while at work
- Fatigue and burnout
- Unable to think critically
- Reduced problem-solving skills and judgement
How businesses can help employees
One of the best ways to support employees who are facing personal financial difficulty is to offer education. While solving personal debt problems is never easy, offering training in money management can not only help to prevent financial trouble, but it can also help people to see a way out of their difficulties.
Many employees face issues from insufficient retirement savings, mounting credit card debt and frequent worrying about not having enough money to cover necessary personal expenditure.
Workplace financial education schemes are spreading fast, and it is entirely logical as they have the capacity to reach many people. With employers targeting debt stress, they provide support to employees, as well as helping to improve the productivity levels of the business as a whole.
It can be easy for businesses to tie in money lessons with materials provided by workplace health insurance and counselling services. Creating workplace saving schemes where money is stashed before the employee receives their payslip, similar to pension plans, can also enhance education schemes.
There are many ways that businesses can provide help for employees suffering from personal debt woes, and by helping employees, you can find the missing piece to the work performance puzzle.
For more information and advice on tackling debt, visit www.creditfix.co.uk.