Financial Stress- Impact on Employee Performance a SHRM Research Report.

SHRM Survey Findings: Employee Financial Stress

In collaboration with and commissioned by

June 25, 2014

• How do HR professionals rate the overall financial health of their employees? Roughly three-fifths (61%) of HR professionals consider their overall employees’ financial health to be no better than fair (50% fair, 10% poor and 1% very poor), and 38% describe it as “very good” or “good.” Organizations with greater proportions of hourly employees were more likely to indicate that their employees’ overall financial health was "fair," whereas organizations with fewer hourly workers reported better financial health among staff.

• What age group is most likely to experience financial stress? Fifty percent of HR professionals indicate that people in the 25-34 age range experience the most financial stress. Twenty-nine percent of HR professionals reported employees between 35 and 44 years as the age group to experience the most financial stress.

• How financially literate are employees? The majority (70%) of HR professionals report employees as being “somewhat financially literate.” Thirteen percent describe their employees as “very financially literate,” but 17% are considered to be “not at all financially literate.” Organizations with a smaller proportion of hourly employees were more likely have employees rated as “very financially literate,” whereas organizations with a greater proportion of hourly employees were more likely to have employees rated as “not at all financially literate.”

SHRM/Elevate: Employee Financial Stress ©SHRM 2014 2

Key Findings

• What financial benefits do organizations offer their employees? Nineteen percent of organizations offer employees loan products from a third-party provider, and 18% of organizations offer payroll advances.

• What impact do financial benefits have on employees’ overall ability to manage their financial difficulties? Nearly three-quarters of HR professionals indicated that offering third-party provider loan products has a positive impact on employees’ overall ability to manage their financial difficulties, and slightly over one-half of HR professionals reported pay advances having a positive impact.

• What types of services are organizations offering to help employees manage their finances? The most common financial services that organizations offer employees are retirement planning and consultation (81%) and financial literacy training for investing (42%). Less prevalent financial services include financial literacy training for basic budgeting (25%) and credit score monitoring (8%).


Key Findings (continued)

• Employees’ struggling to gain control of their finances may have significant ramifications in the workplace. A combined 61% of HR professionals describe the overall financial situation of their employees as no better than fair (50% fair, 10% poor and 1% very poor), signaling that financial issues could be a growing challenge for employees in many workplaces. Anxiety related to finances could be a growing source of employee stress that has a direct impact on health care costs, absence and productivity. Thus money management strategies, including budgeting and investing, may increasingly be considered as a part of workplace stress management and wellness initiatives.

• Undoubtedly, one major area of discussion for organizations will involve employees’ compensation. Though wages have not grown significantly in recent years, high levels of financial stress could eventually give way to greater wage pressure, especially for jobs that are difficult to fill. In addition, increased financial stress among the rank and file could influence the debate on executive compensation.

• Organizations may want to reevaluate their benefits program to fit the needs of their staff. HR professionals report that a portion of Millennials are the employees most likely to experience financial stress in their organizations. Demographic differences in the financial challenges of employees could potentially be a source of intergenerational tension or conflict and could affect how financial benefits are tailored to different age groups within the workplace.


What do these findings mean for the HR profession?


The State of Employee Financial Stress

Overall Employee Financial Health


Note: n = 383. Respondents who answered “don’t know” were excluded from this analysis. Percentages do not equal 100% due to rounding.

Organizations with greater proportions of hourly employees were more likely to indicate that their employees’ overall financial

health was “fair.”

Organizations with fewer hourly workers were more likely

to rate their employees’ financial health as “good.”

Employee Financial Health Rating: Fair and Good Ratings (by percentage of hourly employees)


Note: Respondents who answered “don’t know” were excluded from this analysis.

Most Financially Stressed by Age


Note: n = 409. Respondents who answered “don’t know” were excluded from this analysis. Percentage do not equal 100% due to mu ltiple response

options.

Overall Employee Financial Literacy


Note: n = 391. Respondents who answered “don’t know” were excluded from this analysis.

Employee Financial Literacy (by percentage of hourly employees)


Note: n = 378 Respondents who answered “don’t know” were excluded from this analysis. Percentages may not equal 100% due to rounding.


Financial Stress in the Workplace

Financial Stress and Employee Absenteeism


Note: n = 352-396. Only respondents who answered “strongly agree” and “agree” are shown. Respondents who answered “don’t know” were excluded

from this analysis. Only statistically significant differences are shown.

59% HR professionals agree that employees at their

organization have missed work due to transportation

issues in the last year.

37% HR professionals agree that

employees at their organization have missed

work due to a financial emergency in the last year.

Larger organizations are more likely than smaller organizations to agree that their employees have missed work due to a financial

emergency in the past 12 months.

500 to 2,499 employees (40%)

1 to 99 employees (17%)

Employee Termination Due to Employee Financial Issues


Note: n = 189. Respondents who answered “”I’m not sure, but I don’t think so,” “I’m not sure, but I believe yes” or “don’t know” were excluded from this

analysis.

Employees Seeking Assistance from Their Employer


Note: n = 349-374. Only respondents who answered “strongly agree” and “agree” are shown. Respondents who answered “don’t know” were excluded

from this analysis. Only statistically significant differences are shown.

47% HR professionals agree that employees have approached a manager or supervisor for personal financial advice in

the last year.

53% HR professionals agree that employees have approached

a representative of the organization asking for a pay

advance in the last year.

Larger organizations are more likely than smaller organizations to agree that their employees have

approached a representative asking for a pay advance in the

past 12 months.

500 to 2,499 employees (63%) 1 to 99 employees (25%) 100 to 499 employees (34%)

Organizations Providing Annual Cost-of-Living Raises to Employees to Keep Up with Inflation


Note: n = 416. Respondents who answered “don’t know” were excluded from this analysis.


Financial Benefits:

Pay Advances and Third-Party Provider Loan Products

Does your organization offer the following financial benefits?


Note: Respondents who answered “don’t know” were excluded from this analysis. Only respondents who answered “yes” are shown. An asterisk (*)

indicates that these data were taken from the SHRM 2014 Employee Benefits Report.

What impact does offering financial benefits have on the overall ability of employees at your organization to manage their financial difficulties?


Note: Only respondents whose organization offers loan product(s) from a third-party provider and/or pay advances as employee benefits were asked

this question. Respondents who answered “don’t know” were excluded from this analysis.


Employee Financial Literacy and

Employer-Sponsored Financial Services

Does your organization currently offer the following services to its employees?


Note: n = 398-405. Respondents who answered “don’t know” were excluded from this analysis. Percentages may not equal 100% due to rounding.



Note: Only statistically significant differences are shown.

Comparisons by organization sector

Publicly owned for-profit (39%) > Privately owned for-profit (17%)

Comparisons by organization sector

• Publicly owned for-profit organizations are more likely than privately owned for-profit organizations to offer their employees financial literacy training for basic budgeting.




Comparisons by organization staff size

500 to 2,499 employees (32%) > 1 to 99 employees (14%)


• Organizations with 500 to 2,499 employees are more likely than organizations with 1 to 99 employees to offer their employees financial literacy training for basic budgeting.


2,500 to 24,999 employees (41%) > 1 to 99 employees (14%)

100 to 499 employees (15%)

• Organizations with 2,500 to 24,999 employees are more likely than organizations with 1 to 499 employees to offer their employees financial literacy training for basic budgeting.





500 to 2,499 employees (54%) > 100 to 499 employees (32%)


• Organizations with 500 to 2,499 employees are more likely than organizations with 100 to 499 employees to offer their employees financial literacy training for investing.


Demographics

Approximately what percentage of your organization’s employees are paid hourly?


Note: n = 395. Respondents who answered “don’t know” were excluded from this analysis. Percentages do not equal 100% due to rounding.

Demographics: Organization Industry


Note: n = 396. Percentages do not equal 100% due to multiple response options.

Percentage

Manufacturing 25%

Professional, scientific and technical services 20%

Health care and social assistance 11%

Finance and insurance 9%

Educational services 9%

Government agencies 6%

Administrative and support and waste management and remediation services 5%

Retail trade 5%

Transportation and warehousing 5%

Information 5%

Accommodation and food services 4%

Demographics: Organization Industry (continued)


Note: n = 396. Percentages do not equal 100% due to multiple response options.

Percentage

Construction 4%

Repair and maintenance 3%

Utilities 3%

Wholesale trade 3%

Real estate and rental and leasing 3%

Religious, grant-making, civic, professional and similar organizations 3%

Mining, quarrying, and oil and gas extraction 3%

Arts, entertainment, and recreation 2%

Agriculture, forestry, fishing and hunting 2%

Personal and laundry services 1%

Other industry 4%

Demographics: Organization Sector


Note: n = 391. Percentages do not equal 100% due to rounding.

Demographics: Organization Staff Size


Note: n = 388. Percentages do not equal 100% due to rounding.

n = 408

Demographics: Other


U.S.-based operations only 72%

Multinational operations 28%

Single-unit organization: An organization in which the location and the organization are one and the same.

27%

Multi-unit organization: An organization that has more than one location.

73%

Multi-unit headquarters determines HR policies and practices.

58%

Each work location determines HR policies and practices.

4%

A combination of both the work location and the multi-unit headquarters determines HR policies and practices.

38%

Is your organization a single-unit organization or a multi-unit organization?

For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both?

Does your organization have U.S.-based operations (business units) only, or does it operate multinationally?

n = 406

n = 308

Corporate (companywide) 69%

Business unit/division 16%

Facility/location 15%

n = 309

What is the HR department/function for which you responded throughout this survey?

31

SHRM Survey Findings: Employee Financial Stress

• Response rate = 14%

• 419 HR professionals from a randomly selected sample of SHRM’s membership participated in this survey

• Margin of error +/-5%

• Survey fielded May 9-June 2, 2014

In collaboration with and commissioned by

Survey Methodology

SHRM/Elevate: Employee Financial Stress ©SHRM 2014

For more survey/poll findings, visit shrm.org/surveys For more information about SHRM’s Customized Research Services, visit shrm.org/customizedresearch Follow us on Twitter @SHRM_Research


About SHRM Research

http://www.shrm.org/surveys

http://www.shrm.org/customizedresearch

http://twitter.com/SHRM_Research

Founded in 1948, the Society for Human Resource Management (SHRM) is the world’s largest HR membership organization devoted to human resource management. Representing more than 275,000 members in over 160 countries, the Society is the leading provider of resources to serve the needs of HR professionals and advance the professional practice of human resource management. SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China, India and United Arab Emirates. Visit us at shrm.org.


About SHRM

http://www.shrm.org/

Elevate’s innovative online credit solutions provide immediate relief to customers today and help them build a brighter financial future. The company’s products are more responsible and transparent and cost less than the alternatives available to the millions of consumers not well served by traditional credit providers. Elevate is committed to rewarding borrowers’ good financial behavior with features like lower interest rates, free financial training and free credit monitoring.

The company’s suite of groundbreaking credit products includes RISE, Sunny and Elastic. Elevate is privately held and is backed by respected Silicon Valley venture capital firms including Sequoia Capital and Technology Crossover Ventures.


About Elevate

Financial Stress- Impact on Employee Performance a SHRM Research Report.

Recruiting & HR

Transcript of Financial Stress- Impact on Employee Performance a SHRM Research Report.