Inflation, high interest rates, labor trends, soaring housing costs, potential replacement by automation — it’s no wonder employees are worried about their financial futures. Indeed, the current financial climate even has some executives stressed about their personal finances.
But CFOs and their fellow executives may be missing a potential consequence to their organization: an employee’s financial problems can become an organization's productivity problems if employee financial wellness isn’t proactively addressed.
Distracted and Demotivated
In SoFi's recently released "The Future of the Workplace Report,” a quarter of the 750 full-time employees surveyed said stress affects their workplace productivity.
The time spent worrying about finances during the workweek could arguably equate to a part-time job. According to the survey, employees spend nearly 14 hours a week stressing about finances, over half that time (8.2 hours) during working hours. Additionally, one-third (33%) said personal financial stress inhibits their ability to focus on their job.
Financial stress may also diminish employees' desire for career growth and dampen any personal initiative to pursue upskilling independently. Over a quarter (26%) of employees said financial stress makes them less motivated to pursue their professional goals.
CFOs Want to Help
In a CFO LinkedIn survey on Monday, finance leaders made it clear there is a desire to assist employees in dire financial need, but not necessarily as part of a benefits package. While more than a quarter (28%) stated their company offers employees access to a hardship fund, nearly half (48%) said they would assess the situation's circumstances and possibly offer informal, quiet assistance.
Employees may be better prepared now to avoid this situation entirely. SoFi reports that among workers surveyed, nearly half (47%) prioritize establishing an emergency savings fund, a figure that has nearly doubled since SoFi’s 2022 report.
However, achieving this goal may prove difficult, given the number of employees also reporting the need to withdraw from retirement savings or borrow to balance their finances.
Nearly one-quarter of the full-time workers surveyed have cashed out investments, up 9 percentage points since last year. One-fifth (20%) of the employees have withdrawn from retirement savings. More employees seek to borrow, with 37% taking on more credit card debt, a 12 percentage point jump from 2022. Almost a third (30%) hope to get loans from family and friends.
HR’s Misperceptions
As part of the report, 750 human resource leaders were separately surveyed. They appeared overconfident in their employees' perception of their personal finances. While more than three-quarters (76%) stated that employees’ financial well-being is good, only 59% of employees categorized it as such.
There were also notable disparities regarding employees working second jobs. Forty-one percent of HR personnel said employees at their organization earned additional income, while only 26% of employees confirmed this.
A potential, partial solution may lie in collective efforts to upskill employees; an initiative HR can take on in collaboration with finance. In SoFi’s 2022 report, less than a fifth of employees expressed interest in improving their financial literacy. This time around, that number doubled to 35%.
CITE Research conducted the SoFi survey in the U.S. between September 28 and October 13, 2023. The study targeted full-time employees between 18 and 70 years of age. They were invited to participate via email and respondents received a small monetary incentive for participating.