The Link Between Compensation and Employee Mental Health
They say that money makes the world go round. It drives industries, controls trade, funds research… When you think about it, there isn’t a lot money doesn’t do in our current world order. Therefore, it should be no surprise to anyone that money has the power to impact one’s mental health.
Money plays a significant role in our lives, impacting the way we interact with one another in both seen and unseen ways. Going out with friends, seeking new experiences or trying out a new restaurant are all determined by the coins in our pockets. Our modes of connection have become so entwined with money that they are almost impossible to pry apart. This is why compensation is an essential factor in employee well-being.
Your employees are people with thoughts, feelings and needs that go beyond food, shelter and clothing. Providing a workplace that sets them up to thrive involves providing a livable wage, cognisant of the current financial state of the world and your locale.
A Vicious Cycle
A leading cause of stress and anxiety for most adults today is financial problems. Everything seems to cost more and yet, for the most part, wages haven’t increased as significantly. Rising inflation also means significantly reduced purchasing power, and thus once affordable things are now becoming almost impossible to afford, leading to unanticipated lifestyle changes that might further impact mental health.
Studies have shown that financial distress can have far-reaching consequences on a person. Problems like excessive debt cause shame, anger or fear and can even lead to anxiety, depression and social withdrawal. These issues may then exacerbate the existing financial stress by leading one to impulse buy, make late payments on bills or rack up even more debt.
As you can see, the two situations feed on each other depending on existing stigma and shame around financial challenges to isolate a person and use this self-isolation to further plunge them into a worse mental state.
This particularly manifests in employee misconduct displayed through high absenteeism, lower productivity, increased tardiness and compromised work quality. This in turn leads to, increased turnover and lower profits. Therefore, while not all your employees’ mental challenges will stem from financial distress, a good place to start your investigation would be with the compensation packages you offer and how up-to-date they are.
Where To Begin?
So far we’ve established that your employee’s financial well-being is crucial to your organisation’s success due to its impact on their mental health. It is therefore essential to direct some of your wellness efforts to financial well-being. While companies have a personal stake in investing in the financial well-being of their employees, they also have an ethical responsibility to their employees to create a healthy workplace.
You can take charge of your employees’ financial well-being by designing and implementing a financial well-being program. A well-designed program can significantly impact job satisfaction, increase employee loyalty, raise employee engagement levels and enhance recruitment and employee retention. This then has the effect of increasing productivity and lowering costs as team disruptions decrease.
A well-thought-out financial well-being program contains the following elements to prime it for success:
1. Financial Education and Literacy
Investing in your employees’ financial literacy can equip them with the knowledge necessary to make informed financial decisions. This then empowers them to take charge of their finances alleviating some of the financial strain that stems from poor money management.
2. Debt Management Assistance
Rather than let the stigma and shame of debt fester within your workforce, offer support and guidance on matters such as student loans and mortgages. This alleviates the mental pressure and feelings of hopelessness that are generally brought on by debt.
3. Financial Planning and Goal Setting
Sometimes, we are more susceptible to bad habits, not because we lack willpower or self-discipline but because there is no established or dedicated path for our earnings. Creating a financial plan can help your staff set achievable financial goals such as saving for retirement or to buy a house. This gives them a sense of purpose and allows them to take control of their financial future, alleviating some of the mental stress of the unknown.
4. Flexible Compensation and Benefits
Instead of simply handing over salaries at the end of the month, create Employee Stock Saving Plans (ESPPs). These are company-run programs that allow employees to purchase company stock at discounted prices. Not only does it empower them to take control of their finances, but it also enables them to make tangible and visible contributions to the growth of the company, engendering them further to your company and its goals. After all, their success is now directly tied to your company.
5. Access To Financial Tools and Resources
Some employees might buckle at having to disclose their financial details deeming them too personal. This shouldn’t deter you from ensuring you cater to their undisclosed needs. Providing resources that edify them on financial skills such as budgeting and investing or tools that help them track their spending and manage their budgets, greatly contributes to a sense of financial security and well-being.
In Conclusion:
To create a healthy workspace, employers need to prioritise the four greatest aspects of their employees’ health: mental health, physical health, financial health and social health. Your employees will do their best work in an environment that caters to all four of these aspects. We have seen just how closely tied they are and how a negative impact on one can lead to the steady decline of the rest. It is therefore crucial for you to continuously assess the nature of the workspace you’ve provided otherwise you stand the risk of aiming for greatness and never getting anywhere due to a workforce that cannot perform as desired.
