Financial stress, pay satisfaction and workplace performance

1. Context
2. The study
3. Key findings
4. Points to consider

Context

Most people will experience financial difficulties at some point – for some, it’s a routine challenge. The stress caused by debt and difficulties meeting payment deadlines can influence people’s work. Research has found that around a fifth of workers are experiencing financial stress that impacts their job performance and productivity. Financial stress may also influence workplace outcomes that have a satisfaction component, such as staff morale, tardiness, and absenteeism.

The study

Data was collected through surveys of employees at different branches of the same insurance company in the United States: 262 useable surveys were returned (response rate 55%). All data was collected in 1999.

The surveys asked employees about their levels of financial stress and work outcomes in terms of pay satisfaction, work time use, and absenteeism. Self-reported financial stress and workplace outcomes were compared using correlation, ANOVA and regression analyses, holding other factors (such as employee health and household income) constant.

Participants were grouped into low, moderate, and high financial stress groups according to their responses.

Key findings

Holding other things constant, financial stress was found to negatively influence pay satisfaction, work time use and absenteeism.

• Pay satisfaction: Respondents that experienced high financial stress had significantly lower levels of pay satisfaction than those with low or moderate financial stress. This is in line with findings from previous studies that have found that pay satisfaction is influenced by worker characteristics as well as salary.
• Work time use: 54% of respondents spent some work time dealing with matters resulting from financial stress. Participants in in the high financial stress group were more likely to be spending their work time on financial matters than those with moderate financial stress, who were in turn more likely to be doing so than those with low financial stress.
• Absenteeism: 34% of the respondents reported no absences and only 1% reported having been absent for 13 or more days. Rates of absenteeism were significantly higher among the participants that were in the high financial stress group compared to the participants in the low or moderate financial stress groups. There was little difference between absenteeism among workers with low or moderate financial stress. Compared to them, respondents with high financial stress were absent about twice as often.

Points to consider

• Relevance: A recent review notes a lack of motivating reasons for employers to provide workplace financial capability interventions for their employees. The findings from this study suggest one: If workplace financial capability interventions can effectively reduce employees’ financial stress, they might help make employees happier and more productive.
• Generalisability/transferability: This research was conducted in a limited range of US-only settings with a small and unrepresentative sample (all at the same company, earning a similar salary, mostly women). Its findings should not be taken to be representative and may not generalise to employees across the US, or transfer to the UK. It’s also worth noting that this study was conducted nearly 20 years ago. More up to date UK research along similar lines would be helpful.
• Applicability: These findings suggest that employers should be mindful of the influence that financial stress may have on their employees. It suggests a useful direction for UK research to see whether similar relationships can be observed here.
• Methodological strengths or limitations: All outcomes were self-reported. While appropriate for financial stress, self-reports are not always accurate, and participants may have misreported their workplace outcomes. While the study explains workplace outcomes with reference to financial stress, it may be that the relationship is actually the opposite – poor workplace outcomes may lead to financial stress – or that the relationships observed are best explained by a third factor that was not considered. As the data was only collected at one point in time and involved a small sample, these possibilities cannot be ruled out.

Full report

Financial stress, pay satisfaction and workplace performance - full report