Financial Data
Updated 26 Feb 2020


The journey to financial freedom

Financially distressed employees can affect your bottom line.


24 July 2013  Share  0 comments  Print


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South Africa has R1,5 trillion in household debt. This can be divided into good debt, like mortgages, and bad debt, like clothing accounts and loan sharks. As a business owner, are you aware of the financial situation of your employees?

“From a business threat perspective, financial distress amongst employees can lead to fraud, theft, absenteeism, corruption and ‘presenteeism’, employees who are at work, but through stress, depression or simply because they are looking for another job they are completely unproductive,” explains Nigel Willmott, founder of financial wellness company Motivate Today.

“Many employees who are financially distressed believe that if they are just paid more, they’ll be financially free,” says Willmott.

“The reality is that simply earning a higher salary will seldom solve a severe debt situation. Financial freedom isn’t about how much an individual earns. It’s about how much they have left at the end of the month.”

According to Willmott, when there isn’t enough left, and that individual has serious debt issues, the ramifications will very quickly spread to the work place.

Mitigate the risks

To mitigate these risks, employers should encourage their employees to address their financial realities through education.

“I’ve never met a business owner who doesn’t know that at least some of their employees are in financial distress. In some cases they offer loans, which doesn’t actually solve the situation.

In others they ignore the fact or believe it doesn’t concern them. In most cases however, the results of financial distress, like theft, fraud and absenteeism are dealt with, but not the root cause.”

So what can you do? “The first step is recognizing that your company as a whole will benefit from a financially well work force, from upper management right down to wage earners,” says Willcott.

“Start small. Get each employee to work out their net worth, their income to debt ratio, find out if they run a budget and if they’ve accessed a free credit report in the last year.

This at least allows them to evaluate whether they are low, medium or high risk, and to start the path of determining shortfalls.”

Follow through

“Within one to two years any business can take their workforce from financially distressed to financially free,” says Willmott, “simply by assisting employees to manage expenditure versus income, plan their finances, limit credit dependency and encourage a culture of saving.”

But remember that this isn’t a once off. “It’s a continuous process that helps people take control of their finances.

Don’t make assumptions about who is and isn’t financially distressed in your work place. Instead, foster a system that allows people to evaluate their spending habits, and help them put a system in place that demands accountability of actions, but is also supported by the business as a whole.

Make it clear that what happens to your employees outside of the workplace concerns you,” concludes Willmott.

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