When you think of a mentor, who comes to mind? Perhaps it’s that exceptional high school teacher or a beloved aunt or uncle. Mentors are individuals dedicated to helping us succeed without dwelling on our past mistakes. They invest time in understanding our challenges, leveraging their education and experience to guide us toward our goals.
While finding the right mentor for your career and personal goals is essential, one area with tremendous potential impact is securing a Financial Mentor. Many individuals feel adrift when it comes to managing their finances, and the lack of guidance can be disheartening.
Often, human resources staff shoulder the responsibility of addressing employees’ financial concerns, from navigating 401K enrollment to conducting personal finance webinars. What if your organization could provide employees with dedicated financial mentorship? How might this support influence their stress levels and overall productivity?
Financial Stress is on the Rise
Since the pandemic disrupted normal economic conditions, employees have been left reeling by inflated prices and higher cost of living expenses than ever before. A recent study found that a staggering 86% of employees feel stressed about their finances, revealing a significant gap between employees’ needs and current employer offerings.
More than half (66%) of employees admit feeling unprepared to handle major unexpected expenses like car repairs. Consequently, financial goals are shifting, with 47% prioritizing building an emergency fund. Despite this shift, only 14% report having resources at work to support such endeavors.
The financial stress employees experience can impact businesses in various ways. Let’s explore a few of these consequences.
Loss of Productivity
Not surprisingly, employees bring their financial stress to work, resulting in decreased productivity.
According to a survey, 49% of employees distracted by financial concerns spend three or more working hours weekly on these issues. This distraction costs employers over $5,000 annually per employee, as stressed workers struggle to perform at their best.
Furthermore, stressed workers who still show up can cost employers more than absenteeism. A Harvard Business Review study indicates that presenteeism, the lost productivity due to employees not functioning optimally in the workplace, costs the U.S. economy approximately $150 billion yearly—exceeding the costs of absenteeism.
Delayed Retirements
Financial strain doesn’t merely affect employees’ daily lives; it also influences retirement planning. Many workers, grappling with increased living costs and insufficient savings, find themselves compelled to extend their working years. Their dreams of a timely and well-deserved retirement become less achievable as individuals confront various financial challenges.
This postponement in retirement not only impacts individual employees but also poses challenges for employers. A workforce that delays retirement can disrupt succession planning, limiting opportunities for younger talent and impeding the overall rejuvenation of the organization. Also, an aging workforce presents a difficulty in keeping health insurance costs down, as claims are far more frequent and expensive than average. Recognizing and mitigating financial stress through mentorship becomes not only an employee-focused initiative but a strategic move to ensure a balanced and flourishing workforce.
Employee Turnover
Perhaps the most expensive consequence of financial stress for employers is employee turnover. The true cost of replacing an employee extends beyond recruitment expenses, encompassing hiring costs, temporary workers, overtime pay, training expenses, and the time required for a new employee to reach full productivity. The cost of replacing an employee can range from one-half to two times the employee’s salary.
With the average annual turnover rate at 3.8% in 2023, a 100-person company paying the average hourly rate of $34.55 would face replacement costs ranging from $143,000 to $574,000 if they lost four employees in a year.
Financial Mentorship Creates More Job Satisfaction
A robust benefits package, including paid time off, workplace perks, wellness programs, and tuition reimbursement, demonstrates a company’s commitment to its employees. Financial advisors, stock market mentors, and general financial mentors typically charge fees ranging from $2,000 to $7,500 a year, making them unaffordable for many middle-income earners. Implementing organization-wide financial mentorship can provide education, hope, and tangible benefits to all employees, regardless of their position or salary. At Mentoro, we tailor our approach to each employee’s financial situation, offering guidance on eliminating debt, home buying, estate planning, and more. Our aim is to provide unbiased guidance and actionable advice, ensuring that your employees receive the support they truly need. We would love to discuss and partner with you to create a program that benefits all employees, promoting job satisfaction and well-being.