Employee productivity… there has to be a plan

Loss of productivity in the workplace has a major ripple effect in the economy. It starts with a few people not being able to focus on their work or being absent excessively, which in turn impacts others and, over time, can eat significantly into a company’s bottom line.

The MMI Effective Employee Index (research providing insights into factors that contribute to workplace productivity) reveals that 60% of companies in South Africa have excessive loss of productive work time adding up to an estimated 93 million days. This could be costing the economy R70 billion annually (2% of GDP).

Unforeseen expenses

With this in mind, it’s crucial that employers and financial advisers find ways of counter-acting loss of productivity from controllable factors. Since anxiety about debt levels or ability to cover unforeseen expenses can significantly impact performance at work and cause absenteeism, this is one area to focus on.

Financial wellness is just as important as physical or mental wellness in terms of employee productivity.

Since employee benefits form a critical part of helping people to meet and manage unplanned expenses from health and other life events, every employee should clearly know what benefits they have, if and when these extend to their loved ones, when they can use them, and how they can access them. Without that level of understanding, the benefits serve no positive psychological purpose.

Delivering benefit clarity

One obstacle in achieving benefit clarity in the minds of employees is that there are likely to only focus on the benefits they need regular access to, like medical benefits, rather than those that relate to unlikely or distant future events.

Since part of being financially well means that a person is able to meet either his or her short and long-term expenses and goals, it remains vital that employees fully grasp how they will be covered when unplanned events like disability, death and illness occur. The reality is that they should also have a clear understanding of their retirement provisions.

One route to benefit clarity is to use the high interaction benefits like medical cover as a way to introduce discussions about longer-term issues.

Employee benefit clarity goes hand in hand with broader financial education. The MMI Unisa Consumer Financial Vulnerability Index (CFVI) (research tracking national consumer sentiment on personal finances) shows the country is currently at a ‘Very Exposed’ level in terms of indebtedness, with the lack of a proper financial plan identified as the main cause of this problem.

Employees can be assisted in getting a solid plan in place, which can include proper debt management. The establishment of that financial plan alone can give rise to a greater feeling of financial security and deliver greater productivity.

Solid plans in place

So the first question is: what should employers do?

• Use simple and clear language to explain benefits and their role in financial wellness;
• Make it salient. Frame the benefits offered by answering basic questions: “Why do I need this?”, “What events am I covered for?”, “What will my loved ones get?
• Run ‘goal-setting hours’ for employees to reflect on what is important to them and the role of financial planning in helping them to achieve their goals;
• Find creative ways to get employees to fill out their ‘beneficiary trees’;
• Send employees a contact card with the emergency numbers for each benefit; and
• Motivate, incentivise and encourage employees to update their information and inform their beneficiaries how to access the benefits that apply to them.

The second question is: what should financial advisers do? Advisers can:

• Forge partnerships for workplace financial education;
• Regularly test client understanding of language used in benefit documentation;
• Co-design a financial plan with clients taking into account their goals, needs and constraints through time;
• Run ‘fire drills’ with clients to test financial plans in possible real life scenarios. Use the outputs to have meaningful conversations; and
• Work with employers for opportunities to engage regularly with employees on their changing needs and circumstances and to make sure information is up to date.