Debt Management
- Employee performance may be undermined because debt management takes up employee time and creates stress. Evidence suggests that unmanageable debt is linked to unmanageable job performance.
- Employees are more likely to seek alternative sources of income to take care of large debt. Employee focus and performance may be undermined by the need to borrow more money from family and friends or even the employer to reduce pressure to repay loans and/or reduce interest charges.
- In some cases, over-stressed employees may display poor judgment and contribute to an uncomfortable work environment. Human Resource administrators are very aware of the disruptive and safety issues stemming from employee stress.
- Employees may need counseling on the timing of participation and contribution rate if they are burdened by debt. It is possible that some employees may need to be counseled on the need to repay their debts and/or save for an emergency fund even if it means temporarily terminating their participation or their rate of participation in a retirement program.
- Assistance on where employees may get or seek guidelines to manage debt may decrease health costs related to stress. Employer health costs will be lower if employees seek employer facilitated assistance.
Click here to go to the next topic and see how a Financial Health Assessment can lower employer costs.
About the Financial Literacy Center
The FLC's mission is to develop and test innovative programs to improve financial literacy and promote informed financial decisionmaking.
With support from the Social Security Administration, the Center was established in October 2009 by the RAND Corporation, Dartmouth College, and the Wharton School of the University of Pennsylvania in order to develop educational tools and programs that help individuals prepare for their long term financial stability.
About the Program
Presented by the Financial Literacy Center, a joint center established by the RAND Corporation, Dartmouth College, and the Wharton School of the University of Pennsylvania in order to develop educational tools and programs that help individuals prepare for their long-term financial stability.
Success Stories
Take a look at how companies like Mandarin Oriental Hotel Group and Nationwide have had success with automatic enrollment and automatic escalation.
The Dartmouth Project
Increasing employee participation in retirement plans has always been a challenge.
However, researchers at Dartmouth College, through a grant provided by the National Endowment for Financial Education, show that specific low-cost strategies succeed in boosting employee participation rates.
