Financial wellbeing measurement is often about using proxy measurements because it’s hard to measure it directly (if you do want to you can use a financial wellbeing survey for employees). One common proxy is absenteeism, because financial stress is linked to absenteeism.
Why absenteeism is a good proxy for financial wellbeing
Absenteeism is a good way to get data-driven about financial wellbeing at work. This is because financial stress is correlated with absenteeism and high absenteeism – especially if out of the ordinary – could be an indicator of acute financial stress or chronic financial stress causing acute issues.
A study from the Center for Retirement Research at Boston College found that employees suffering financial stress miss close to twice as many days each year as colleagues not suffering financial stress. And CEBR research (PDF) estimated the cost of absenteeism and presenteeism due to poor financial wellbeing at £1.56bn a year in the UK.
And with regard mental health more generally, the costs of absenteeism and presenteeism are estimated at £14bn a year in the UK. Financial stress is a huge driver of poor mental health, so the figure of £1.56bn above may be an underestimate.
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How to use absenteeism data to gain insight into financial wellbeing
Absenteeism data should be analysed across cohort/demographic slices to ensure that patterns are picked up – for example, high absenteeism may point to a need for better financial wellbeing in certain groups with specific vulnerabilities with regard financial wellbeing.
It’s also important to tie in external metrics with absenteeism data to see if insights can be drawn. The obvious (non-wellbeing) example is higher absence the morning after big sporting occasions: when it comes to financial wellbeing, Covid-19 comes to mind – or changes to the funding of provisions, such as childcare support.
And as with all proxies for measuring financial wellbeing, absenteeism data becomes powerful when paired with an evidence-based financial wellbeing survey to get regular quantitative and qualitative insight into the financial wellbeing of your team. If you know that absenteeism is going up at the same time as self-reported financial stress is going up, that’s a strong mandate to act.