How Addressing Financial Worry Can Improve Workplace Productivity

Employees across America are losing focus and making costly mistakes due to anxiety over “financial precarity,” but employer assistance programs could make a big difference.

It’s no secret that a focused employee likely will be more productive than one who is distracted or worried. But the real surprise is the outsized impact that employees’ financial worries are having on their focus, decision-making skills, and productivity across all sectors of the American economy—and how detrimental the effects of these worries are on their employers’ bottom lines.

The name for these fears is “financial precarity,” referring to the looming sense of uncertainty or instability surrounding one’s own personal or family finances. My colleagues and I at the University of Pittsburgh have conducted research over the last several years that shows financial precarity is a major worry—not just among the least-compensated or least-secure employees we surveyed, but also among long-time, well-regarded, and well-compensated employees. Financial precarity is found to be associated with lower accuracy and a higher incidence of mistakes from workers in sectors as disparate as transportation and health care. Even college freshmen, whose career paths have just begun and whose academic performance may seem unrelated to the circumstances of their finances, were found to perform better in their classes when they experienced lower levels of financial precarity.

In short, a financially worried employee is operating under a higher “cognitive tax,” which leads not just to distractions but also to potentially costly mistakes, reduced productivity, and employee burnout. The reasons behind these fears largely come down to one simple problem: the inability of most Americans to comfortably handle even a minor financial emergency.

As a 2016 report by the Federal Reserve Board revealed, most people in the United States would not be able to cover an unexpected $400 expense, such as a car repair, without either selling something or borrowing that money and incurring additional debt. According to 2017 research from Experian, the average American household has nearly $17,000 in credit card debt, and about half of these households are unable to repay this debt within two years. All of these financial worries add up to serious distractions at work, with PwC reporting that more than half of surveyed employees say they experience stress about their finances at work. Mercer found that people spend about 150 hours per year, on average, thinking (and often worrying) about their finances while they’re at work.

How Employers Can Help

Instead of losing almost three weeks of productivity each year to employees’ financial fears, employers have an opportunity to help reverse this situation by offering meaningful programs to address financial precarity as part of their professional development programs. This investment could potentially have a significant impact on the state of financial precarity in America, not just in terms of employee well-being but also with regard to their productivity and outcomes. 

But what would such training need to include in order to make an actionable difference?

First, it’s important to acknowledge that information alone does not alleviate the problem of financial precarity. Many Americans are all too aware of their own financial instability; what they don’t yet know is how to fix it.

Make employees aware of the resources they already have available. Do employees know about the full extent of their available benefits, including paid time off, retirement accounts, stock options, and more? Is financial planning offered as a company-wide service? Just because these options may exist doesn’t mean workers know about them, especially if they haven’t been reminded of them since their first day of onboarding. If a solution already exists to help mitigate their situation and they’re not taking advantage of it, that’s a wasted opportunity for them and for their employers—so be sure to remind employees of the resources they have available on a regular basis.

Rather than just passively reviewing information, guide employees to be proactive and take action. This approach helps employees take a more hands-on role in their own finances and feel as though they have more direct control over the outcome of their situations. It also can help them connect the dots of financial cause and effect in a way that an abstract academic overview may not. In our own research, we found that employee participation in problem-solving activities led to decreases in feelings of financial precarity, while their participation in information-focused activities were far less impactful. In turn, their reduced financial worry was associated with performance-improving factors, such as getting better sleep, having more energy, and experiencing more positive mood states.

Reconsider the company’s benefits programs. Of the 35 Organization for Economic Cooperation and Development (OECD) countries, the United States ranks near the bottom in terms of governmental spending on labor programs and benefits. As a result, the responsibility for much of what constitutes a “social safety net” is placed onto employers. Given that the relative insecurity of these resources at the governmental level is a contributing factor to employees’ financial precarity, re-evaluating the benefits an organization provides may be its first step toward alleviating some of that insecurity, reducing worry, and offering a competitive advantage in recruiting and retaining employees.

Include financial wellness training as part of standard onboarding for new hires. Not only do many college students graduate without a clear understanding of how personal finance works, even some career professionals never receive clarity on the subject. Rather than presuming all employees have their financial houses in order, or that they already possess or have access to all the financial education they’ll ever need, consider including such training as a default for all new hires and as part of the team’s ongoing professional development.

Lastly, consider how employees’ likelihood of financial precarity affects their performance and their ability to learn. For example, holding cognitively intense trainings when employees are worrying about making ends meet at the end of a pay period may not be as fruitful as holding that same training right after a pay period, when employees may be less distracted by “what if” and better able to focus on the present.

By incorporating financial issues into employee training and development programs, employers can help reduce the stress and the cognitive impairment of financial precarity among their workforces. Acknowledging the importance of this topic within a training process also will help employees see that their companies are invested in their long-term well-being, which is a helpful differentiator in retaining talent. Such training also may send a positive signal, indicating that the company’s culture offers a safe space to have these types of financial conversations more openly, rather than employees feeling as if they need to bear the burden of their financial stress alone.

Carrie Leana is the George H. Love Professor of Organizations and Management at the University of Pittsburgh, where she holds appointments in the Joseph M. Katz Graduate School of Business, School of Medicine, the Graduate School of Public and International Affairs, and the Learning Research and Development Center. She is also director of the University of Pittsburgh Center for Healthcare Management, is academic director of the Executive MBA Healthcare Program, and serves on the Boards of Directors of the Aging Institute and the Albert Shanker Institute. Leana has published two books and more than 100 papers on authority structures at work, employment relations, human and social capital development, and more. Her field-based research has been conducted in steel mills, public schools, insurance firms, aerospace contractors, police departments, childcare centers, and nursing homes. Her book, “Coping with Job Loss” (with D. Feldman), was shortlisted for the National Academy of Management’s Best Book of the Year Award. She is currently writing a book about financial precarity. For more information, visit:


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