How to assist employees' financial well-being

The effects of the global financial crisis on organisations have impacted a lot of owners and investors but since then, employees were partly the victims of job lost, scaled down income and still plays a major part of it today in some organisations especially for small medium enterprises thus limiting their chances to develop and grow.

But beyond the evident effects of unemployment on individual workers, what are the consequences of the credit crunch for those still in work and are there any issues that employers need to think about? Some of my findings throw a light on the connections between the economic downturn, employer' struggles and employee performance in the workplace by assessing individual ‘financial well-being’.

I have conducted a survey around the main island, Tongatapu with around 200 employees in the public and private sector, rather than the general public. The research defined ‘financial well-being’ as a mixture of behaviours that showed people were handling their finances effectively, and attitudinal measures about savings, credit and risk. The findings showed a direct connection between financial health and individual performance, in that employees who reported better financial well-being were more likely to report increased productivity.

However, some findings were more disturbing and suggest a need for action. At least a quarter of employees are worried about debt, with one in five reporting they are being kept awake at night by financial worries and over ten per cent saying their health was suffering as a result. This does not bode well for optimal performance at work during the day.

Additionally, over one-third felt they were not in control of their finances and less than a quarter think they will have sufficient savings for retirement either through their own personal savings and the current government retirement scheme. This is unsurprising when we look at some of the evidence on employees’ financial behaviours. Two-thirds of employees were attempting to budget but only half managed to stick to their budgets and budgeters were most likely to be vulnerable to debt.

So can and should employers get involved to help employees manage their personal finances? Employers are increasingly turning towards financial education programmes, run independently by organisations such as the local Training Providers, banks and  experts consultants from outside of Tonga. My research showed that employees who participated valued these programmes. But only a minority of staff were attending the workshops, and employees from groups most vulnerable to debt such as those with a serious health condition or disability and those working shorter hours were least likely to attend. My findings suggest that employers may need to market financial education more prominently and ensure they are accessible to employees who might most need advice.

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