Financial stress hurts everyone in the workplace

One in five employees fears they won’t make ends meet by the end of the month, which impacts their performance at work, says HR professor Bert Schreurs of Vrije Universiteit Brussel. “Some people are no longer focused on their job at all.” 

In a study, VUB surveyed 2,000 employees about their financial wellbeing. Who are these one in five workers who worry about making ends meet? 

“You find them in all categories. In the study, we looked at household income, but you also have to consider individual spending. Some people with high salaries also spend a lot and perceive that they don’t have enough. It’s the balance between income and expenditure that leads to concerns, not income itself. The worry about ‘will I be able to make ends meet’ can affect anyone. However, there is obviously a link between having a more difficult financial situation and experiencing more financial stress.” 

Are there typical times when people are more concerned about their finances? 

“We’re currently researching that, but there are studies suggesting that worries are less severe when we receive our salary, and they increase as the month progresses. We also see differences across life stages. Young people who are just starting to earn a salary and still have major purchases to make – unsurprisingly – have more financial worries than people further along in their careers who are more settled.” 

"If you’re unsure about your financial future, you may also feel ashamed"

Why is this research the domain of an HR professor? Do people bring their financial worries to work? 

“Yes, absolutely. If you’re struggling with financial worries, it directly impacts your job. In the United States, recent research found that truck drivers with financial concerns had trouble concentrating, resulting in more avoidable accidents. That’s not surprising. If you’re preoccupied with your finances and trying to come up with solutions, it comes at the cost of other tasks you should be focusing on, such as paying attention to the road in this case. But it goes beyond an attention problem. If you’re unsure about your financial future, you may also feel ashamed. That can lead to isolation at work. You don’t talk to your colleagues about holiday plans because you don’t have any. There’s also an emotional aspect to it. Currently, we’re also investigating the impact on motivation with American colleagues. Initial findings suggest that financial worries diminish interest in work. These employees just want to put food on the table; the rest no longer matters. They no longer work because they enjoy it or find it meaningful, but simply because they need to earn money.” 

"What interventions can help coach and inform employees who feel uncertain about their financial situation?"

The research is still in its early stages. Are employers paying much attention to financial wellbeing? 

“That’s starting. The difficulty is: who’s responsible? It’s about household income, so there are multiple people involved. Financial stress can also be about debt or significant expenses. Is the employer responsible for that? Probably not. But the business case is clear. Worrying about your financial situation impacts your work performance. That should be enough of an argument for employers to take action. That awareness is growing. But then the question is: who should do this? Is it HR, or is it more a matter for the prevention service? And what interventions can help coach and inform employees who feel uncertain about their financial situation?” 

Is there a danger that employers might do the opposite? If financial worries negatively impact job performance, some employers might be tempted to discriminate based on that. 

“That’s a valid point. That could happen. One study showed that financial concerns not only lead to lower performance but also to counterproductive work behaviour. Employees were cutting corners, skimping on their hours, and displaying behaviour that went against the organisation’s goals. If an employer knows you have a lot of financial stress, they might treat you differently based on those results. That’s a real risk.” 

Let’s assume that’s not the case. How can companies positively address financial wellbeing? 

“They can try to reduce their employees' financial uncertainty. That starts by asking to what extent the company contributes to this. Take the salary system, for example. One of my hypotheses is that employees who are part of a variable pay system, and therefore not sure how much they’ll have at the end of the month, experience more financial uncertainty. That system can be reconsidered. 
Additionally, employers can ensure that employees feel less of the negative effects of financial uncertainty. You’re best off doing this proactively. People who are in financial trouble don’t have the cognitive capacity at that moment to follow a demanding course on financial literacy and then put that information into practice. 
More structurally, companies can organise information sessions or support the development of financial skills, like learning how to budget. But I mostly believe in having a contact point where employees can safely discuss their financial situation and get targeted advice. What works and what doesn’t is a topic for further research.” 

"We need to collectively break the taboo so that it’s okay to talk about money worries"

Won’t employees be too embarrassed to reach out for help or attend an information session? 

“I do fear that some interventions won’t work because of this. The taboo around financial worries has to be broken first. The employer can play a role in that, but it’s also a societal issue. We need to collectively break the taboo so that it’s okay to talk about money worries. Because it can happen to any of us. It can be due to so many things: chance, what you’ve been taught at home, bad luck... If the employer can help bring this topic out of the taboo zone, all the better, but I don’t think it will be enough.” 

If variable pay causes stress, are entrepreneurs the most at risk? 

“That’s right. This group hasn’t received enough attention in our research yet. I hear from many entrepreneurs that they strongly identify with this. It’s not just about their own wallet but also the financial state of the business and the impact that has on operations and employees. If a company is struggling financially, it affects leadership and how work is done. We also shouldn’t forget students. They, too, are increasingly worried about money, and that affects their study behaviour and results. These are two groups I’d like to study further.” 

Finally, do you have any tips for VUB employees to improve their financial wellbeing? 

“I want to be cautious here. I find it difficult to place the responsibility on the employee. The only thing I’d advise is to seek help in time. Otherwise, you risk getting caught in a vicious cycle. You have financial worries, your performance suffers, you start cutting corners, and as a result, you miss out on a promotion, leading to even more financial concerns. You want to avoid that. So raise the alarm in time and don’t hesitate to ask for advice. But for that, you obviously need a point of contact. And a very practical tip for emergencies: check with your employer whether you can get an advance on your salary. If necessary, that can take away a lot of uncertainty.”