Would you hire a financial mess?
The following scenario might hit close to home for most human resource professionals: two candidates vying for the same position possess comparable experience and professional accomplishments. Both interview well and are amiable. Both seem able to contribute in meaningful ways to your organization.
Let’s pretend for a moment that you have intimate knowledge about the financial wellness of the two candidates described above (achieved through omnipotence, spying or superhuman powers, obviously).
Candidate A is financially well, with at least three months worth of expenses in savings, a monthly budget to which she adheres, and reasonable financial goals she’s outlined. She’s matching her current employer’s retirement contributions, and she’s a regular contributor to charitable causes close to her heart.
Candidate B is a financial mess, complete with credit card debt, a mortgage and car payment he can’t afford, and not the slightest idea about how to create—let alone follow—a budget. Earnings that might be used to match his current employer’s retirement contribution or support important causes are spent paying down increasing debt.
Who do you choose?
You choose Candidate A. Not out of prejudice against the financially unwell—because many of your potential (and current) employees will fall into this category—but because the financially unwell bring a host of challenges into the workplace that stem from their financial struggles, including:
Stress-related health issues
When an employee’s financial life is a mess, they will inevitably be stressed. If they’re experiencing financial stress, they’re more likely to lose sleep, get sick, gain weight, trash a cubicle in a fit of rage. Those health issues, while damaging to the employee, are also damaging to your business because they can cause increased…
The financially unwell employee will attend work even when he’s sick because he simply cannot afford to take the time off. As a result, he jeopardizes not only his own health, but also the health of coworkers. When that happens, you’ll inevitably experience a decrease in…
Employees have enough things to distract them from being productive: Facebook. Twitter. Fantasy football. Cat memes. A financially unwell employee adds to that list the anxiety and stress-related health issues associated with being financially underwater.
Pushing raise schedule
Rather than changing his spending and saving habits, the financially unwell will often seek to earn more money. As a result, he might attempt to negotiate a pay increase ahead of his raise schedule, which might cause unnecessary tension between him and his manager.
If your employee is unable to remedy his financial situation, he may resort to tapping into his 401(K). If he’s unable to repay his loan and loses his job, most plans require that the balance of the loan be paid immediately. This creates more work for you as you deal with collecting on the loan.
If your employee has significant debt, he might become subject to wage garnishment. Because wage garnishments are figured during the payroll process, it’s your responsibility as an employer to calculate the amount of money that will be taken from your employee’s paycheck until the garnishment expires.
Despite the increasingly dire consequences listed above, all is not lost if your superpowers fail you and you end up hiring someone who is financially unwell. In fact, it happens all the time. By offering financial wellness training, you can educate your employees about the importance of budgeting and help them get out of debt. And then you’re the hero again.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.