Financial Health Straining Physical Well-Being

A new report finds the No. 1 stressor for workers is money, but experts say HR is well-positioned to both allay workers' worries and bring down healthcare costs for the organization.

Monday, February 20, 2012
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It appears there is now proof that helping employees deal with their finances can help companies cut healthcare costs and boost productivity.

A recent study from El Segundo, Calif.-based Financial Finesse lists money worries as the No. 1 source of stress among employees. It also shows significant differences in company healthcare savings between employees considered heavy users of financial education (three or more interactions with any of the financial services available within a year) and those considered light users or non-users.

The study, conducted at a Fortune 500 healthcare company that prefers to go unnamed, shows 22 percent healthcare-cost savings for heavy users, 9 percent for all users (heavy and light) and 4 percent for non-users from 2009 to 2010.

It also includes an intriguing graphic based on a recent poll of AOL employees showing the toll that owing money takes on people, even on different parts of the body. Stomach ulcers, for instance, occurred in 27 percent of people with high levels of financial stress as opposed to 8 percent with low levels.

Likewise, migraine and other types of headaches occurred in 44 percent of people with high financial-stress levels versus 15 percent with low levels. For stomach ulcers, the breakdown was 27 percent versus 8 percent; muscle tension, 51 percent versus 31 percent. And the widest gap -- for severe anxiety -- reported in at 29 percent of those with high stress levels versus 4 percent of those with low levels.

Clearly, says Liz Davidson, founder and CEO of Financial Finesse, financial stress is unhealthy, financial education improves health and "one of the lessons of this study is that it doesn't take an everyday use [of financial education] to make an impact. That was a little surprising."

Also key among Financial Finesse's findings, she says, is how effective financial help can be in changing behaviors over the short term. Thirty days after participating in the financial-wellness program introduced to the healthcare company's 35,000 employees, more than 90 percent had taken at least one step to improve their finances and 78 percent had taken two or more steps.

"We found if companies can get people to address basic money-management skills, to simply get a handle on their finances," says Davidson, "it translates into significant personal and organizational health -- even workplace performance, [the confidence gained] in taking control and being proactive;" all that translates to greater productivity and a boost to the bottom line.

The most physical -- and mental -- damage among workers occurs around what she calls the "out-of-control feeling, nearing foreclosure or being unable to come up with next month's mortgage payment."

The majority of sufferers, she says, aren't stressing so much "about the long-term concerns, like, 'Can I afford retirement?' or 'Can I put my kid through college?' but are in a constant state of panic, the pressure is mounting and getting worse, they're getting further and further behind, and they have no way out."

In fact, Davidson says, this high-level panic over a sustained duration releases a hormone from the adrenal glands called cortisol, which the body is "only supposed to have in small doses." She considers cortisol to be the "dark side of adrenaline," which, secreted in small doses around finite crises, can help propel people toward safety or solutions. Cortisol, on the other hand, can cause weight gain, a slowing of the metabolism, high blood pressure and other physical ailments.

"We're not designed to be in flight-or-fight on a regular basis," she says. "When you're in a sustained state of financial crisis and stress, it's a feeder stress, feeding other breakdowns. It's a significant contributor to divorce. You're not going to be performing well at work, so there's the stress over that inability to perform. It can feed family crises and family-related stress. And all of this can lead to physical ailments and cortisol buildup ... and that's not something you want to be releasing into your system."

Just how worried are workers over money? According to a poll conducted in late January by the Alexandria, Va.-based Society for Human Resource Management, one in five of 458 randomly selected HR professionals said employees' personal financial challenges are having a "large impact" on their work performance. Sixty-one percent said they're having "some impact" and 16 percent said "slight impact." Only 2 percent observed "no impact" at all.

"The source of money woes is unsurprising, but the toll it's taking on both workers and their employers, in addition to the persistence of the weak economy, are all troubling issues," says Mark J. Schmit, vice president of research at SHRM.

Details of the study include:

* 47 percent of HR professionals noticed employees' struggles with their ability to focus on work,

* 46 percent noticed issues with overall employee stress,

* 26 percent observed a negative impact on overall employee productivity,

* 24 percent said money woes are leading to employee absenteeism and tardiness,

* 20 percent are concerned about overall employee morale,

* 12 percent noticed a negative impact on overall employee health, and

* 7 percent said working relationships with other employees are the least impacted.

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The study also found more than half (52 percent) of organizations currently provide financial education to their employees and 79 percent offer access to an employee-assistance program that includes financial counseling and resources.

"Employers are absolutely waking up," Davidson says. "We get regular requests from companies wanting to implement financial wellness. It was barely on the radar screen in 2010, but in 2011, 80 percent [of clients] were saying they wanted to talk about putting a program together."

The Washington-based National Business Group on Health also sees a rise in the number of "large employers offering financial education as a component of their total rewards programs," says LuAnn Heinen, vice president of the NBGH.

"Stress is a top-of-mind concern in the workforce today," Heinen says, "and the identification of strategies to improve employee well-being, including approaches to reduce financial stress, is an important component of any wellness program."

One important thing employers need to understand, says Judith Cohart, president and CEO of the Alexandria, Va.-based Personal Finance Employee Education Foundation, is that before many employees can start boosting their retirement, "they have to get a handle on their finances."

"Most companies [still] just try to get their employees into 401(k)s" or increase their contributions, she says. But, until they can address their chaotic money situation, "they have no ability to put money aside in a 401(k)" or any other savings vehicle.

What should employers and their HR staff be on the lookout for? In Cohart's estimation, when an otherwise-high-performing individual shows a shift in productivity, performance or uncharacteristic absenteeism, "don't rule out financial distress."

If a full-fledged financial-education program is not currently feasible, experts say, employee-assistance programs should be in place and should now have financial-counseling components. Whatever help is offered at an organization, HR and benefits professionals should be communicating its availability thoroughly and regularly right now, especially in a still-shaky economy.

Perhaps the one good thing to come out of the 2008 recession and current aftermath is an "acknowledgement and focus that never existed before on just how poor people really are at handling and organizing their money," says Cohart.

"I'm even getting calls from financial advisers who have gotten clients who simply need help getting control of their basic finances," something financial advisers haven't traditionally addressed, she says.

In terms of corporate health, she adds, it's now pretty clear that helping individuals sort through their money messes "is a benefit to the organization."

"There really is a return on their investment," says Cohart, "when they invest in financial education."

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