Debi O’Donovan, editorial director at Employee Benefits: Debt worries among employees will be a major issue in the year ahead. This is a depressing prospect to consider so early in the New Year, but there is no hiding from the fact that the credit crunch, falling property prices, tougher mortgage requirements and credit card debts are having an impact on many employees.
And if staff are worried about their mounting debts, or are unable to meet mortgage repayments, they are not going to be able to concentrate on their work. Their stress levels are going to be sky high, leading to higher absence, poor concentration and productivity levels that are rock bottom.
As much as employers would like to hope that personal employee debt problems are nothing to do with the organisation, the fact is that if an employee is worried about their finances there can be a major cost to business productivity. Frequently employers are in a position to help at little cost to themselves. The very least they they can do is help staff avoid becoming the victims of loan sharks or poor debt advice.
There are several ways that UK employers tend to tackle the employee debt issue. Some opt to offer financial education and advice in the workplace – by bringing in financial advisers. A number of these advisers include debt management workshops as part of their workplace programmes. This tactic makes sense if you consider that everyone is better off when employees finally get out of debt and are able to start considering saving into ISAs, pensions or other financial products.
Some employers choose to concentrate on using their workplace health and wellbeing programmes to help staff cope with debt issues. In the Employee Benefits Voluntary Benefits Research 2007 published in December 2007, 43% of employers say they offer debt counselling or helplines. A number of employee assistance programmes (EAPs) have reported over the years that their debt helplines get more calls from employees than their other services – indicating that this is a valued, long standing benefit.
Other firms, particularly those with a paternalistic nature tend to opt for a more hands on approach. For example, John Lewis offers its staff interest-free loans based on need to get them over the tough times. While many employers are prepared to give an advance on salary help staff through a temporary short-fall.
Being prepared to cope with staff debt in 2008 is not simply about being altruistic, it will be a business imperative for many employers.