Almost every American is in debt. In fact, the Pew Charitable Trust reported in 2015 that eight out of 10 adults in the United States are in some form of debt. Most of them are in debt because of a mortgage. However, many are in a combination of multiple sources of debt.
In another study, this one conducted by the Northwestern Mutual, as of 2018, an average American owes about $38,000, home mortgage loans excluded. That is $1,000 more compared to the year before which means that debt is growing among many adults.
It is going to be a struggle to pay off debt. Sometimes, it puts a person in a cycle where they borrow more money to pay off existing debt. This obviously can cause a lot of stress which would negatively affect their mental and physical health. Chronic stress can lead to serious illnesses, including cardiovascular disease. It can also lead to anxiety and depression.
How Debt Can Affect an Employee’s Performance at Work
Employers expect their employees to leave their personal problems at home. They should go to the office with a clear head so that they can complete their tasks without a hitch.
However, that is not always the case. More often, employees bring their problems at work, not because they want to but because they cannot help it. This affects their productivity. They may have less interest in their tasks, and they may become withdrawn.
Illnesses caused indirectly by stress due to debt may result in absenteeism. When a person is stressed, they cannot sleep nor eat. They may lose motivation to exercise.
Why It’s Your Concern
Being in insurmountable debt affects performance at the workplace which, in turn, will negatively impact the company’s entire operation. Each member of the staff is a cog in the machine; when one does not move as intended, the whole thing malfunctions.
Absences cost the company money, too. The total loss from the reduction of productivity is $84 billion per year.
Firing an employee who fails to do their job as expected means that the company needs to hire and train a replacement. The process eats time and resources.
How to Talk About Personal Crisis
Managing employees who are going through tough experiences in their personal lives is a challenge that all employers will have to face at some point. It is not the employer’s responsibility to offer a helping hand or even just a shoulder to cry on, but showing empathy and care could go a long way.
When an employee is talking about a personal crisis, the role of everyone around them, including the boss, is to listen. Sometimes, people just want to vent or share their frustration. Not everything has to be solved right at that moment.
Most importantly, no judgment. It is not an employer’s role to provide a sermon nor make accusations. The employee is already struggling as it is. Any negativity will only make matters worse.
However, the employee should feel comfortable talking about their personal problems with their employers. If they aren’t, then the employer should step back. They would only be willing to talk about personal problems to their employers if there is a friendly and trusting bond cultivated over time.
How You Can Help
Provide resources for the affected employee and for the others in the office that might help their situation. For employees who are in debt, access to a financial expert who can help them determine which balance needs to be addressed first and how to budget their monthly income would be a good way to help out. It would also prevent another employee from encountering a similar issue in the future.
Companies can hire financial experts to come to the office and give a seminar about financial literacy. They can also offer one-on-one consultations to address the individual concerns of each employee. Or, simply share the contact information of non-profit credit counseling agency, so they can get help from experts for free.
Do not give paycheck advances. It would not fix the problem. It only offers a temporary solution. The real problem will continue to grow and become worse.
The company can also implement small ways to ease the daily expenses of employees. Free snacks in the pantry, team lunches paid for the employer once a week, or even pet insurance will significantly help those who are in debt to pay off their balances.
An employee’s personal problem can affect their job performance. That is why employers should make an effort to talk about these issues, including debt, and help out any way they can. It would benefit both parties if the employee can get out of debt.