Financially "unfit" workers a business burden

Financially "unfit" workers a business burden - but solutions simple

10 July 2009 8:45am

Up to 80 per cent of Australian workers are "financially unfit", and it's costing employers big bucks in high turnover, absenteeism and even fraud, according to a financial advisor.

"People who are financially unfit will leave you for pennies, for a little bit more to spend," ipac principal consultant Paul Gordon told delegates at a Davidson Trahaire Corpsych seminar in Sydney yesterday.

He says they are more likely to take sick leave, suffer from mental-health issues, cause a workplace accident and - with the economy in a rut - defraud their employers.

Referring to independent research, Gordon says that financial stress within the workforce costs employers about $15,000 per employee per annum in terms of lost productivity.

"And that's probably understated."

Fitness shift caused by easy credit

According to Gordon, financially fit Australians - who make up about 21 per cent of the working population - are those who spend less than they earn, understand the tax system, avoid paying interest on credit cards and regularly re-assess their financial position.

Some 26 years ago up to 90 per cent of Australians were financially fit, he says - "and then Bankcard arrived".

With easy credit, Australians got into the habit of spending more than they earned, he says.

And with pay packets and other funds now transferred and stored electronically, he says, many workers have lost a "sense" of how much of their money is left or available.

Financial unfitness, Gordon says, is common across all income groups and at every level of an organisation. Some 70 per cent of families have regular conflicts over money, he says, and nearly 70 per cent of baby boomers lack the financial know-how to seamlessly transition to retirement.

Simple solutions

Increasing employee financial fitness is relatively inexpensive and simple, Gordon says.

He says there are a host of free or cheap, straightforward and effective online budgeting or money-management tools that are, in his experience, generally under-used.

Employers, he says, can use such tools to build a "money gym" on the company's existing intranet site. With company budgets tight, employers can "utilise existing programs in a more compelling format".

The "gym equipment" should include tools for budgeting, debt prediction and longer-term saving, and financial strategies for "life events" such as marriage, divorce, children, health, retirement and retrenchment, Gordon says.

Employees, he says, should also be educated on the value of their remuneration benefits, including super-fund and insurance benefits and corporate group-buying discounts.

And key performers - who are just as likely as other workers to be financially unfit - should be provided with even greater access to guidance.

Get "exit packs" right

Throughout the economic downturn, financial fitness is more important than ever, Gordon notes.

In the "new world" (as opposed to the pre-GFC "old world") HR must increasingly address reduced bonus and pay expectations, forced leave and reduced hours, new legislative regimes and downsizing.

Gordon says that with widespread redundancies and the looming exodus of baby boomers from the workforce employers must get their "exit packs" right.

For a retrenched worker, he says, there "are a hell of a lot of financial issues that are unknown".

He says that departing employees must be given access to all the information they need "to stretch their money".

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