Sealund’s Serious Games Blog

I was surprised to discover how much work time employees spend on personal financial issues during times of financial stress, like the situation in which many of our employees find themselves today. How are my investments doing? What can I do to improve their performance? What advisors can I trust?  If I or another working adult in my household loses a job, what will we do? How can we cut expenses now “just in case”?  These thoughts alone, plus the work-day activity required to resolve such issues, can erode employee productivity significantly. And that erosion can be measured in dollars and cents.

The value of time lost in worry about financial matters

A 1998 study by So-hyun Joo and E. Thomas Garman of Virginia Technical University, Personal Finances and Worker Productivity, identified and attempted to quantify the effects of personal financial wellness on employee productivity. Financial stressors showed a statistically significant correlation with absenteeism and work time use. The time a financially stressed worker loses from productive work is calculated conservatively: “A conservative estimate is that a worker with financial problems spends 15 minutes per day dealing with personal financial matters, or 75 minutes per week, or 62.5 hours in a 50-week work year8. The relationship between personal financial wellness, especially behavioral assessment and overall satisfaction with financial situation, and work time used for personal financial matters has some practical implications. … [E]very 1-point increase in the behavioral assessment index corresponds with 0.0265 decrease in work time used for personal financial matters. Consequently every 1-point increase in behavioral assessment, on a 48-point scale, can reduce 111 minutes of work time used for personal financial matters annually (0.0265 x.75 minute/week x 50 week).”

Is my company losing dollars because of financial illiteracy?

The study provides an illustration of the employer cost of employees’ lack of financial literacy for a company with 1,000 employees, 15% of whose workers have poor financial literacy, and that a modest two-thirds of those workers can benefit from financial education if the annual cost of 62.5 hours of work is $405.94 (approximately $6.50/hr). “[T]he employer may realize a savings of $40,594 ($405.94 x 1,000 x 0.15 x 2/3).” Plug in your own average hourly cost per employee and number of employees to determine a conservative estimate of your corporate savings from providing a Financial Literacy program.

What do you think? Please share your comments.