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Is Your Employees’ Financial Stress Affecting Your Business?

Is Your Employees' Financial Stress Affecting Your Business?

More and more employees are worrying about their financial situation. This, according to the American Psychological Association, comes at levels that are higher than what is deemed acceptable. Younger people, parents, and those living on an income of less than $50,000 experience the most financial stress. If the describes your employees — then it’s something you should be concerned about as it affects your bottom line.

Negative Impact on Health

Not surprisingly, financial stress has a negative impact on health. On top of the list of many employee concerns is that to in order to make ends meet, many people no longer prioritize their healthcare needs.  Add this worry on top of medical conditions brought on by stress and it’s a self-feeding loop.

In a recent study, some have considered not seeing the doctor (9% of the respondents) when the need arises. The fact that a slightly higher number of people (12% of the respondents) have skipped going to the doctor altogether is even more alarming.

Stress also has repercussions on the social lives of people. In fact, 31% of adults with partners say that money is often a source of conflict in the relationship.

These numbers paint a telling picture. Despite recovery from economic recessions, many people still cite financial stress among their top concerns.

Income Gap Factor

Higher and lower-income households also experience a gap in the stress levels they experience. This is in stark contrast to stress levels a few years ago when there was nothing to suggest a significant gap was present.

But now, a clear gap has emerged with lower-income households citing higher stress levels compared to higher-income households.

Despite an overall reduction in stress levels, the average person still deals with higher levels of stress that is deemed healthy. This means otherwise productive members of the workforce may become a problem for businesses.

Negative Impact on Business

Beyond affecting their personal lives, financial stress on employees also have adverse effects on businesses. Among the negative implications are:

  • Absenteeism – Employees worrying about their finances tend to use  more of their sick leave and don’t go to work as often.
  • Lack of focus – Despite being present at work, they spend more time on unrelated activities such as talking to creditors and exploring their options. Moreover, many lose their focus and think about their finances up to three hours per day.
  • Low productivity – Several studies point out that companies stand to lose as much as 20 hours of productivity a month for every affected employee. This translates to around $5,000 of added cost per employee per year.
  • Health issues – As mentioned earlier, financially-stressed employees forego their healthcare needs. In turn, this leads to health issues that affect productivity and quality of work. This also contributes to fatigue, sleeplessness and anger.
  • Higher insurance rates – Stress in general can cause serious medical issues such as heart disease, eating disorders and substance abuse among others. For this reason, it is quite common for insurance rates to go up for companies with employees experiencing stress-related illnesses.
  • Workplace conflicts – Employees who are stressed out are less able to contain their personal issues at work. This results in incomplete tasks, tardiness and even accidents.
  • Dependence on employee benefits – Because of financial trouble, a significant number of employees may turn to the company’s benefits programs to help with their needs. Increased borrowing and frequent requests for pay advances are some of the telling signs of this. In turn, this could drive up costs for the company.
  • High turn-over rates – Financially-stressed employees may seek employment with better pay. This forces companies to get new hires that may not have the same experience and expertise. High turn-over rates forces the company to adjust constantly preventing them from relating with their staff.
  • Lack of commitment – Regardless of how much they make, employees experiencing financial stress are less contented with their pay. This could lead to a lack of commitment to their work and dissatisfaction towards their employer.

Financial stress isn’t just a stress for your employee — it’s  a stress on your bottom line as well. This issue should be dealt with sooner than later to improve their sense of well-being. An employee who feels secure tends to perform better and becomes a valuable asset to your company.

Business Interruption Insurance: The Basics

Business Interruption Insurance: The Basics

A windstorm causes major damage to your office roof. A fire destroys a portion of your warehouse. A flood reduces key pieces of your equipment to rubble. These and other disasters can strike your company at any time, preventing you from carrying on with business as usual. You now have a cash flow problem: you cannot sell goods or services until you’ve made necessary repairs and replacements, yet you still have to meet payroll and cover rent, taxes and other expenses. This is when you need business interruption insurance.

What is Business Interruption Insurance?

While your general business property insurance policy will cover the direct loss of property in the event of an accident or other disaster, it may not cover the income loss your business will experience while you’re making repairs and replacements. Business interruption insurance, on the other hand, will reimburse you for profits lost during a forced closing of your facilities.

Why do I need Business Interruption Insurance?

Losses without this valuable insurance product can be quite substantial. According to one small business insurance provider, the average claim is $1.36 million. That’s enough to put many companies out of business! The Federal Emergency Management Agency (FEMA) agrees. Its data shows 40 percent of small business owners never reopen after a disaster.

However, companies with business interruption insurance coverage can survive on the supplemental income they receive until their operations are back to normal. They can use this income to cover everyday expenses and operational costs rather than draining their bank accounts and—potentially—still coming up short.

Additional business interruption insurance coverage is available for companies who want protection from the costs associated with reopening their business after the disaster (such as overtime and extra equipment) and those who worry about interruptions caused by their suppliers. Insurers generally label this add-on product as contingent business interruption coverage.

Where do I get Business Interruption Insurance?

If you purchase an insurance package that bundles business property insurance and general liability insurance together, your insurer may include business interruption insurance coverage. Confirm with your insurance agent that this is the case for your company. If not, or if you need more coverage than what your business insurance package currently provides, consider prioritizing this investment. It could be the only thing standing between your company and bankruptcy should a disaster cause an extended emergency shutdown.

Remember, whatever your business insurance needs, we’re here to help! Please don’t hesitate to call or email us your questions and concerns.