The cost-of-living is top of household concerns now, having dethroned the pandemic. Considering the extent to which the pandemic has invaded our lives, this is not trivial – and shows just how worried people are. This worry, and the real-life effects of prices going up, are significantly impacting your staff. Let’s explore how.
Worry is spiking – and mental health is suffering
Before the cost-of-living crisis was a thing, our State of Financial Wellbeing research found that 24% of employees worried about money every day. That number is likely to be far higher now. If you employ 1000 people, that means 7,440 days of worry every single month across your organisation.
The impact of this worry on mental health is substantial. Close to half (44%) of those who had experienced money worries experienced stress and a further 35% had trouble sleeping. A further 24% have experienced a worsening of their mental health and 20% have lost some of their self-confidence.
Increased worry isolates individuals, which can reduce team unity
A study found that financial wellbeing is closely linked to perception of social relationships. It’s probably true that general wellbeing is linked to perception of social relationships, but it’s reasonable to think the effect could be stronger with financial wellbeing because the stigma associated with talking about money and poor financial wellbeing is unfortunately still strong.
Companies built around collaboration are therefore primed to suffer from the impact of the cost-of-living crisis, as are organisations that rely heavily on rostering as team unity and flexibility are key to optimised shift uptake and shift patterns that are acceptable and suitable to individuals.
Reduced productivity and performance in the workplace
A study from the Dutch National Institute for Budgeting Advice found that financial stress caused a 20% drop in productivity at work. Since the cost-of-living crisis is spiking financial worry at work, this is likely to be impacting UK employers across the country.
It’s part of a wider trend that preoccupation at work reduces productivity and performance. If you’re physically present at work but mentally absent, it’s impossible to fire on all cylinders.
Increased potential for absenteeism and presenteeism
Even before the pandemic and the cost-of-living crisis, the costs of absenteeism and presenteeism to UK workplaces because of poor financial wellbeing was estimated at £1.56bn [PDF]. Absenteeism is obviously detrimental to businesses through various effects: loss of productivity, reduced satisfaction with role, potential to impact relationships and more.
Presenteeism is equally as damaging, but in other ways – it can be guilt-inducing, for example, as well as increase the chance of serious mistakes when people continue to make decisions when near breaking point. Since presenteeism is hidden, it may also lead to employers being less sympathetic to reduced performance, increasing the chance of friction in the employment relationship. Several studies suggest presenteeism is, overall, more costly than absenteeism.
Worried the cost-of-living crisis is harming your staff? Download our State of Financial Wellbeing report, based on a survey of 5000 UK employees and 600 senior HR directors.