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Posts Tagged ‘business insurance’

Reducing Employee Fraud

Reducing Employee Fraud

Most business managers and owners are well aware of the threat of loss from outsiders, and use a variety of methods to reduce this risk.  From locks on the doors, to security guards and dogs, to complex electronic burglar alarm systems, many preventative steps are taken.

However, it is often the case that less attention is dedicated to reducing the risk of theft by an insider. No one wants to believe that an employee will purposely defraud the company of money. Most people want to trust their employees, and rightly so.  But it only takes one bad apple to do significant damage.  Depending on the person’s position within the company, and the length of time the theft continues, substantial losses can result.  Business owners often have a tendency to believe “it can’t happen here.” Unfortunately, employee fraud is quite common.  Furthermore, no risk reduction measures can be guaranteed to keep it from ever happening or detect every instance.

Having said that, loss control experts recommend two general approaches to reducing vulnerability to theft by insiders:  measures to decrease the probability that employees will commit the crime, and measures to increase the perceived probability of discovery and punishment.

Below are seven tips to help with both approaches:

  • Institute an anti-fraud policy.  Many employers wrongly assume they don’t need to discuss insider theft, since their employees know it is wrong.  But experts say a strong, written anti-fraud policy, published in the employee handbook and/or posted on employee bulletin boards, helps prevent insider theft.  The written policy reinforces the employer’s intent to maintain an honest, ethical environment, as opposed to one where it is regarded as common practice to steal from the employer.
  • Ask employees to report suspected fraud, and provide guidelines for reporting fraud.  Employees need to understand how to report any suspicion of fraud or theft.  Honest employees will usually report fraud when there is a good policy for doing so.  They are more likely to say nothing, if they are not sure how to report the suspicious behavior of a co-worker.
  • Maintain a business climate of loyalty and trust.  Expectations influence behavior.  When you expect employees to steal, some are more likely to do so, reasoning that there is no point in behaving honestly if you are already suspected of being dishonest.  Maintaining an atmosphere in which employees feel trusted and valued and are rewarded for loyalty helps prevent insider theft.
  • Encourage ethical business practices.  The typical employee thief is often a first-time offender who rationalizes his or her behavior to avoid having to face up to their criminality.  Employees who have a weak moral character are more likely to act on it in an environment where they see the business engaging in unethical practices.  When the company promotes and rewards ethical business practices, the risk of insider theft goes down.
  • Compartmentalize job functions.  When the same person both approves and pays invoices, it is especially easy for a dishonest employee to submit bogus invoices and then pay them.  Compartmentalizing duties helps to prevent this type of scheme.
  • Ask your accountants to look for red flags that could indicate fraud.  Among the methods accountants often recommend are accounting controls, built-in detection mechanisms, and reconciliation of records.  Businesses increase the probability of discovery with frequent audits that include steps to uncover fraud. Make sure that accountants understand that you view the discovery of insider theft as an aspect of their duties and services.  Utilize your accountants to survey either all employees or randomly chosen employees from time to time, asking whether they are aware of any misappropriation of company money, property, or resources.
  • Look into any tips about employee fraud.  Many dishonest employees are first brought to their employer’s attention as a result of a tip from an unhappy spouse or significant other.  These tips should be investigated objectively.  Sometimes employers ignore such tips, because they trust the employee in question, only to find out later that the tip was accurate.  In such cases, the amount of the theft could have been lessened by taking the initial tip seriously.

In summary, to reduce the risk of insider theft, the employer’s position should be one of trusting employees in general not to steal, while at the same time being proactive about measures to help keep workers honest.  Most employees will never engage in schemes to defraud, but unfortunately, there are always some who will.  The dishonest employees are often the very people the employer would be least likely to suspect.

Beware of Small Business Scams

Beware of Small Business Scams

Whether you’re a small business, medium-sized organization or non-profit group, one thing is for certain: there are numerous fraudsters—both online and off—who would be happy to relieve you of your money. Fraud directed towards small businesses is so common, in fact, that the Federal Trade Commission (FTC) has produced a free booklet (available for order here) outlining the most common tactics. The following scams are included.

Directory Listing Scams

If you receive a phone call from a business to “verify” or “confirm” your company’s information for listing in a business directory, you may be experiencing one of the most common scams. Fall for it—and provide the information the caller requests—and you’re then likely to receive invoices for listings in directories that don’t even exist. If the employee who pays your bills doesn’t realize the invoices are fraudulent, he/she may simply cut a check. You’re then out hundreds of dollars.

In some cases, when small businesses refused to pay these phony bills, the fraudsters proceeded to send fake collection notices and make threatening calls about late fees and penalties. They may eventually offer to “cancel” the listing—sometimes for a fee—but will then send more bogus invoices from a different company name. They may even sell your company information to other scam artists who will do the same.

Unsolicited Supplies Scams

If you’re running a business, you need office supplies. However, unless you have a formal ordering process in place, your employees may not always be able to confirm what they should be receiving. Some scammers take advantage of this by sending boxes of unordered merchandise to small businesses. They may even send empty boxes and then call to “verify” the delivery. If one of your unsuspecting workers acknowledges the receipt, you’ll then receive invoices and demands for payment.

URL Scams

These days, many consumers make purchases—or at least research their options—online. As such, your website is a vital marketing tool, and you don’t want to lose it. Scammers know this, and some will call your office (or send emails) claiming that your web address registration is set to expire if you don’t make an immediate renewal payment. If the employee who pays your bills doesn’t realize this is a fraud, you could be out hundreds of dollars once again.

Charity Scams

Consumers like businesses that care about their communities. Again, scammers are all too ready to take advantage of this. They make fraudulent calls claiming to be with local fire fighters, veteran’s organizations, police departments or schools and ask whoever answers the phone to make a donation or buy space in a charity publication. They then take the money and disappear.

Fortunately, there are steps you can take to help your business avoid these and other common scams. These include training your staff to verify everything before writing checks or giving out credit card account numbers, implementing a formal purchase ordering system, inspecting all invoices received, and reporting fraud attempts to the FTC. You can do the latter at


Before You Hire a Temporary Employee

Before You Hire a Temporary Employee

Seasonal and temporary workers have always been common in industries such as manufacturing, construction, landscaping and retail. However, since the recession, more employers—including those who traditionally employed permanent professionals—have turned to temps and contract workers to satisfy their staffing needs. In fact, by 2020, more than 40% of the US workforce will be free-lancing, according to a recent study conducted by software company Intuit. That’s more than 60 million people.

Temporary and seasonal workers are certainly cost effective. Hiring temps is often cheaper than hiring permanent employees with benefits—especially if you expect to use their services for six months or less. If you choose to work with a temp agency, you are relieved of much of the burden associated with maintaining an employee, from recruiting and hiring to payroll expenses and benefit paperwork. However, you must still abide by the laws and regulations that govern the use of seasonal and temporary workers.

Discrimination and Disability – Equal employment opportunity laws, such as Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act, apply to temporary and seasonal employees, whether you’ve hired them yourself or through an agency. These professionals receive the same protection against discrimination, harassment and retaliation as do permanent employees.

Unionization, Wages and Safety – Additionally, the provisions of the National Labor Relations Act, the Fair Labor Standards Act and the Occupational Safety and Health Act also apply to temporary and seasonal employees. You may not prohibit your temps from joining a union. You must pay them at least the minimum wage required by law. And you must provide them with a safe workplace.

Unemployment – Laws vary by state, so consult your state department of labor or your legal advisor to determine your responsibilities. Certain “seasonal employers” may be exempt from unemployment benefit obligations.

Social Security and Medicare – Unless you are using a temporary or seasonal worker acquired through an agency (and they are handling the payroll for that worker), you must withhold Social Security and Medicare taxes from the worker’s wages and pay the required matching amount yourself.

State and Federal Taxes – Again, unless a staffing agency is handling payroll for your seasonal and temporary workers, you must withhold appropriate state and federal income taxes from their pay.

Workers’ Compensation – The law requires all businesses with employees—temporary or otherwise—to carry worker’s compensation insurance. This insurance covers the medical and rehabilitation costs—plus some lost wages—of your workers should they become injured on the job. If you’ve hired your temporary or seasonal workers through a staffing firm, the contract should specify who pays for workers’ compensation insurance. If you are responsible for this and fail to do so, an injured temporary worker could sue your company for negligence.

Whether you regularly rely on temporary and seasonal workers or are thinking about adding to your staff with this type of employee in the future, consult your insurance representative about your state’s workers’ compensation insurance requirements and other legal considerations.

What’s the Best Social Media Platform for Your Business?

What’s the Best Social Media Platform for Your Business?

Facebook, Instagram, Pinterest, Twitter—you may already use these social media websites in your personal life to connect with friends, share photos with family, and follow the exploits of celebrities and politicians. But are you using them in your business? If not, you may be missing out.

According to a Nielsen survey, 46 percent of online consumers use social media when making purchase decisions. And a DigitalSherpa survey found that 63 percent of consumers prefer businesses with information that can be easily accessed on social media.

While you should create a business profile on every social media network, actively engaging with consumers through multiple sites is naturally time consuming. Instead, use the information below to determine where to focus your efforts.


This popular social network has 1.35 billion active users every month worldwide. While the Facebook user base is dominated by those over the age of 25, it still has over 50 million who are younger. The gender breakdown of Facebook’s users is roughly 53 percent female and 47 percent male. It’s an excellent platform for businesses interested in building a community of customers and potential customers online.


This social network is not as big as Facebook, but Twitter still has 284 million monthly active users. Its demographics skew young, affluent and predominantly male. Twitter can work well whether you want to connect with other businesses (B2B) or consumers (B2C), and it attracts plenty of mobile users. If you want to engage people directly—while communicating breaking news, product updates or soliciting questions and opinions—Twitter may be for you.


LinkedIn is the premier social media career networking site. It’s also the most popular social media platform among 50- to 64-year-olds, though most of its users fall into the 30- to 49-year old age group. Overall, 22 percent of Internet users over the age of 18 have used LinkedIn. If you want to use social media in your recruiting and hiring efforts, LinkedIn may be your best option.


Pinterest is a content-sharing service that allows members to pin or post photos, videos, and other images to their pinboards. It’s a fantastic social media platform for businesses that provide a product or service that lends itself to visual communication (think restaurants, hotels, hair salons, doggie daycare centers, clothing retailers, wedding planners, photographers, etc.). The site has 70 million users, and 80 percent of them are women. According to one Pinterest survey, 52 percent of the social media platform’s users look to Pinterest before they make a purchasing decision.


Like Pinterest, Instagram is also best suited to businesses that can communicate visually. Twenty-six percent of online adults use Instagram, with 53 percent of 18- to 29-year olds online now using the service. In fact, 90 percent of the 150 million Instagram users are under the age of 35. Sixty-eight percent of its users are female. According to Business Insider, Ben & Jerry’s Ice Cream was able to reach 9.8 million people in the U.S. in eight days using Instagram.

Small Business Insurance Misconceptions

Do you believe everything you hear about insurance when talking to fellow business owners? If so, you’ve probably been privy to—and maybe even regard as true—a few small business insurance misconceptions. Consider the following common mistaken beliefs to avoid.

Insurance companies never pay on claims.

While a common belief—everyone’s friend of a friend allegedly knows someone whose insurance company failed to pay up—it’s patently untrue. Your small business insurance policy is a contract. If that contract specifies certain types of damages caused by certain types of situations are covered, the insurer has to honor its obligations. Don’t let this misconception prevent you from investing in the insurance your small business needs.

Only big businesses need insurance.

If big companies were the only ones facing lawsuits, dealing with data breaches, or incurring damages in floods and fires, the belief might be true. But it’s not. According to Forbes, 71 percent of cyber-attacks are on small businesses. And according to the Federal Emergency Management Agency (FEMA), nearly 40 percent of small businesses affected by natural disasters never reopen. You can bet a tornado or hurricane doesn’t care how many people you employ.

If I’m incorporated, I don’t need business insurance.

While a LLC (or limited liability company structure) can limit your personal liability by legally distinguishing you from your business, it doesn’t eliminate all potential danger. An angry customer or client could still try to bankrupt your company with a lawsuit. Should he or she succeed, you’d be left to start over at square one—unless you have appropriate small business insurance.

Small business insurance is too expensive for my budget.

Sure, every small business insurance policy requires you to pay a premium for coverage. But that expense is minuscule when compared to what you may have to pay out of pocket if a lawsuit or natural disaster strikes. You could lose your livelihood, your company’s savings, even your own personal assets all because you didn’t buy appropriate coverage. Keep in mind, you can bundle policies to reduce your premium costs. Risk management plans can also help you keep premiums low.

My single business insurance policy covers everything.

Chances are good that it does not. No single policy will cover every situation or loss. The only way to ensure full coverage is to purchase multiply policies designed to cover different types of liability (such as property insurance, equipment insurance and business-interruption insurance). Give us a call today to talk about your small business risks and ways to build adequate coverage.

Your Business Insurance Policy Isn’t Flood Insurance

Your Business Insurance Policy Isn't Flood Insurance

Many small business owners are under the mistaken impression that their business insurance policies will cover them for damages arising from floods. This is not correct. Just like residential flood insurance, commercial flood coverage must be purchased separately, in a dedicated policy.

The consequences of getting hit by a flood without owning commercial flood insurance are frequently devastating: 40 percent of small businesses hit by a flood never reopen their doors. The results are financially catastrophic to owners and sometimes to employees as well, who find themselves unemployed just as their community is affected by a severe flood.

What does commercial flood insurance cover?

Most flood insurance is sold under the auspices of the National Flood Insurance Program (NFIP), which has a standard set of benefits and exclusions. Commercial customers in low or moderate risk areas can choose building and contents coverage or a contents only policy. Those in higher risk areas naturally pay more, and may not have the option to cover contents-only. NFIP generally provides coverage for the following items:

Building Property Coverage

  • Damage to the building and foundation.
  • Plumbing and electrical system damage.
  • HVAC, water heater and furnace damage.
  • Built-in appliances such as dishwashers and refrigerators.
  • Permanently-installed carpeting (over unfinished floors)
  • Permanently-installed book-cases, cabinets and paneling.
  • Window blinds
  • Detached garages (for up to 10 percent of total building damage).

Personal Property Coverage

  • Inventory/Merchandise
  • Computers
  • Machinery
  • Carpets not included in building coverage
  • Other business property
  • Business interruption. If you are out of business for weeks or even months after a natural disaster, business interruption coverage may be able to provide you and your family an income to live on. You may also want enough business interruption coverage to pay salaries of key employees and keep payments on leased equipment current.
  • Avoidable mildew and moisture coverage.
  • Cash, currency and stock certificates
  • Most automobiles.

What’s not covered? Mandatory insurance requirements

If you own a property that is securing a federally-backed mortgage and you live in an at-risk area, you are probably required to carry flood insurance as part of the terms of the loan. Check your mortgage document for specific language.

Is There Variance Between Carriers?

There is no significant difference between insurance carriers when it comes to National Flood Insurance Program policies. All companies simply resell the standard policies, which are the same for all carriers across the board. There is the potential for differences in underwriting, though the underwriting and pricing scheme is designed to be as standardized as possible, too. There are judgment calls that may crop up – for example, how to value that antique piano in the basement. That can make a difference on the margins, but for the most part there’s no benefit to shopping around for basic coverage. You can get the same policy from the agent you’ve been working with for years.

Are you a renter?

If you rent your business space, rather than own it, your landlord may carry a good deal of insurance on the property itself. But he will not typically carry any protection for your property, nor any improvements or alterations you made to the property. You will need to arrange your own separate coverage for that. That’s what the contents-only option is for.

What does it cost?

Premiums for businesses in lower-risk areas start as low as $567 per year for both building and contents, while contents-only coverage starts at $162 per year. Commercial coverage gives you up to $500,000 of insurance to protect your building and up to $500,000 to protect its contents.

Businesses in higher-risk areas will have to pay somewhat more for a standard policy. Premiums will be calculated based on the following factors:

  • Age of building
  • Building occupancy
  • Number of floors
  • The location of contents
  • Location in or out of a flood plain or other high-risk area
  • The location of the lowest floor in relation to the elevation requirement on the flood map (in newer buildings only). Recent data from Hurricanes Katrina, Irene and now Sandy indicate that older lower-elevation guidelines were inadequate to provide protection from hurricane storm surge.
  • The deductible you choose and the amount of building and contents coverage

You can estimate your premiums using this online tool from the National Flood Insurance Program.

How to Buy Flood Insurance

You can usually buy flood insurance through your property and casualty or business insurance agent or carrier. Almost all commercial flood insurance happens under the auspices of the National Flood Insurance Program, which is subsidized to an extent by the federal government.

Actuarially speaking, it is a particularly good deal for those in flood plains and other high-risk areas, because the federal guidelines ensure that premiums for these property owners are lower than what insurers would charge without the federal program.

Depending on your circumstances, the insurance carrier may require you to get a certificate of elevation from a surveyor.

While flood insurance is fairly standardized under just a few forms, there are important underwriting considerations that you will need to go over with your agent. For example, items stored in basements need special underwriting and pricing consideration, as does property in excess of the $500,000 cap.

Changing your deductibles can also have a significant effect on your premium.

Act Now

There is generally a 30 day waiting period before your flood coverage becomes effective. That means you cannot wait until the storm clouds are gathering before purchasing flood coverage. It’s important to act prudently to have coverage in place when the flood event happens.

Maximize Your Employee Retention — Know Your Top Performers

Maximize Your Employee Retention

As the economy improves and labor markets begin to pick up the pace of hiring, workers around the world are beginning to seek out new job opportunities. According to research conducted by HayGroup, a global management-consulting firm, worldwide employee turnover will reach 23.4 percent by 2018. The firm predicts more than 161 million employees are already preparing to leave their employers.

As any business owner knows, replacing employees comes with significant costs. In fact, a meta-analysis of studies conducted by the Center for American Progress found the median cost of turnover is equal to 21 percent of an employee’s annual salary. In the case of jobs that are very complex and require specialized training, turnover costs can be even higher.

While minimizing turnover throughout your workforce can reduce associated costs, there is another approach you may want to take. Experts suggest that the top 20 percent of employees in any company do 80 percent of the work. The middle 60 percent of the workforce tackles another 20 percent. The bottom 20 percent of your staff accomplish little to nothing.

You can maximize your employee retention efforts—and boost your company’s bottom-line—if you identify your top performers and focus on them. Once you know what a top performer looks like, you also know what to look for when replacing the average and below average professionals who choose to move on. Many of these ideal employees will share the following characteristics:

  • They have stellar references. When you called their past employers, their supervisors were eager to give them glowing reviews. Their LinkedIn profile included numerous endorsements and recommendations from bosses and associates at previous jobs. They may have even proactively included letters of recommendation with their resume.
  • They have defined goals. If you ask a top performer what he or she wants to be doing in five or 10 years, you’ll receive a well-articulated answer. These professionals are always thinking ahead and proactively pursuing the skill sets needed to achieve their goals.
  • They are ambitious. Top performers are interested in more than a paycheck. They thrive on the satisfaction and recognition they receive for a job well done and are always looking for ways to advance up the organizational ladder. Their employment history will show upward movement within organizations and across jobs.
  • They know how to prioritize. Your top performers juggle multiple projects with ease and avoid wasting time on distractions. They always meet their deadlines on high-value tasks.
  • “No” is not in their vocabulary. You can count on your top performers to tackle any task you send their way. They exude a can-do attitude while creatively and efficiently solving problems.

If you want to make the most of any opportunity, you must  identify your top performers, focus your employee retention efforts upon them, and look for professionals with similar high-quality characteristics to replace less valuable workers as they leave.

Data Breach Insurance — What You Need to Know

Data Breach Insurance

At one time or another you have likely received an email informing you that you will need to change your password for one of the websites you visit. The trigger for these advisories is often a data breach, a nightmare scenario in which a hacker gains access to consumer data, which could include personal information such as credit card numbers, social security numbers and addresses.

Consumers are understandably upset when this occurs, and are often victimized once the hackers sell the information they have gathered to individuals who can run up their credit cards or otherwise wreak financial havoc. The consequences for a company whose data has been breached are often dire. Since hackers often steal data that belongs to thousands of customers, the expenses can run into the millions of dollars. Medical databases are not the only targets, however. Anyone suspected of storing customer financial information can become a victim.

Data breach insurance protects against a company’s losses in the event a breach of data security occurs.

If you decide to purchase it, make sure that your policy covers fines levied by the state, as otherwise you could be left without the amount of financial protection you need. Note that some data breach policies include access to professional assistance to help you comply with regulations and implement practices that can further protect your company.

Many policies provide protection against lawsuits arising from stolen data.

Since the victims cannot sue the hackers who sold the data, they will often look at the next best option – your company. Since a data breach could result in multiple lawsuits, the peace of mind is likely worth the premiums you will pay. Your policy may also offer assurance that forensic services will be paid for in the event you need to gather data to protect yourself in a lawsuit.

Some policies also provide reimbursement for money your company has lost due to the inevitable interruption in business that data breach events cause.

If customer data is stolen during the holiday season, for example, and your business sells smoked turkeys, the financial loss you will experience during that time could be an amount equivalent to your entire profits for the year. While you struggle to reestablish your company’s reputation and deal with notifications, your financial needs will be taken care of if you choose a policy that has this provision.

Insuring your company against data theft is not the only step you can take to protect yourself, however.

Evaluate your data security practices (have you updated your passwords recently?), ensuring that current anti-virus and malware software is installed on all computers, that a network firewall is in place, and data is encrypted. These steps can go a long way toward protecting your organization against financial loss and can help to reduce your liability in the event that a customer initiates legal action.

IBM Survey Busts Millennial Workplace Myths

IBM Survey Busts Millennial Workplace Myths

As a small business owner, you’ve probably spent hours reading about the changing face of America’s workforce as Baby Boomers retire and Generation Y—or the Millennials, born between 1980 and 1993—take their place. Most reports would lead you to believe that managing a multigenerational workplace is difficult, and that Millennials—with their penchant for technology and drive to advance their careers—are likely to start a perhaps unwanted revolution. But a recent survey conducted by IBM has something else to say.

The multigenerational study surveyed 1,784 employees in 12 countries and six industries, comparing the preferences and behavior patterns of Millennials with those of previous generations, namely, Gen X (born 1965-1979) and Baby Boomers (born 1954-1964). The findings revealed that Millennial workers actually want many of the same things their older colleagues do. Their attitudes are not, in fact, that different from other employees. For example, consider the following common myths most employers believe about Millennials and the study’s contradictory revelations.

Myth 1 – Millennials have different career goals and expectations than older workers do.

When given a range of career goals to rate, including “do work I’m passionate about” and “start my own business,” all three generations were quite close in their responses. Millennials and Baby Boomers were actually closer in response rankings to each other than either was to Gen X. And they all want financial security, seniority and the opportunity to work with a diverse group of people.

Myth 2 – Millennials expect recognition and constant acclaim.

Millennials grew up during a time when children’s sports organizations began awarding trophies to everyone on the team, doing away with “losers” and making everyone a “winner.” Their parents told them they could become whatever they wanted, and some have said this generation has unrealistic expectations as a result. However, the IBM study found that they don’t really expect more recognition at work than Gen X or Baby Boomers do. They focused their definition of a “perfect boss” more on a manager who is ethical and fair than one who always recognizes their accomplishments.

Myth 3 – Millennials are addicted to social media and want to do everything digitally.

Millennials are adept at surfing the Internet, communicating via social media and text message, and interacting digitally with the world at large. However, they actually prefer face-to-face contact for a number of things including learning new skills at work. They also easily distinguish between their personal and professional lives, using social media accordingly. While 27 percent of Millennials reported never using their personal social media accounts for business purposes, only 7 percent of Baby Boomers kept their online personal and professional interactions separate.

Myth 4 – Millennials are job hoppers who are likely to leave your company for lack of passion.

In actuality, according to the IBM study, Millennials change jobs for the same reasons Gen X and Baby Boomers do. These included “enter the fast lane” (make more money or work in a more innovative environment), “shoot for the top” (take on more responsibility), “follow my heart” (do work they are passionate about), and “save the world” (have a positive impact on society)—in that order. Additionally, 75 percent of the Millennial survey respondents indicated they had held their current position for three years or more, indicating they are no more likely than other generations to jump from one job to the next.

Is Your Employees’ Financial Stress Affecting Your Business?

Is Your Employees' Financial Stress Affecting Your Business?

More and more employees are worrying about their financial situation. This, according to the American Psychological Association, comes at levels that are higher than what is deemed acceptable. Younger people, parents, and those living on an income of less than $50,000 experience the most financial stress. If the describes your employees — then it’s something you should be concerned about as it affects your bottom line.

Negative Impact on Health

Not surprisingly, financial stress has a negative impact on health. On top of the list of many employee concerns is that to in order to make ends meet, many people no longer prioritize their healthcare needs.  Add this worry on top of medical conditions brought on by stress and it’s a self-feeding loop.

In a recent study, some have considered not seeing the doctor (9% of the respondents) when the need arises. The fact that a slightly higher number of people (12% of the respondents) have skipped going to the doctor altogether is even more alarming.

Stress also has repercussions on the social lives of people. In fact, 31% of adults with partners say that money is often a source of conflict in the relationship.

These numbers paint a telling picture. Despite recovery from economic recessions, many people still cite financial stress among their top concerns.

Income Gap Factor

Higher and lower-income households also experience a gap in the stress levels they experience. This is in stark contrast to stress levels a few years ago when there was nothing to suggest a significant gap was present.

But now, a clear gap has emerged with lower-income households citing higher stress levels compared to higher-income households.

Despite an overall reduction in stress levels, the average person still deals with higher levels of stress that is deemed healthy. This means otherwise productive members of the workforce may become a problem for businesses.

Negative Impact on Business

Beyond affecting their personal lives, financial stress on employees also have adverse effects on businesses. Among the negative implications are:

  • Absenteeism – Employees worrying about their finances tend to use  more of their sick leave and don’t go to work as often.
  • Lack of focus – Despite being present at work, they spend more time on unrelated activities such as talking to creditors and exploring their options. Moreover, many lose their focus and think about their finances up to three hours per day.
  • Low productivity – Several studies point out that companies stand to lose as much as 20 hours of productivity a month for every affected employee. This translates to around $5,000 of added cost per employee per year.
  • Health issues – As mentioned earlier, financially-stressed employees forego their healthcare needs. In turn, this leads to health issues that affect productivity and quality of work. This also contributes to fatigue, sleeplessness and anger.
  • Higher insurance rates – Stress in general can cause serious medical issues such as heart disease, eating disorders and substance abuse among others. For this reason, it is quite common for insurance rates to go up for companies with employees experiencing stress-related illnesses.
  • Workplace conflicts – Employees who are stressed out are less able to contain their personal issues at work. This results in incomplete tasks, tardiness and even accidents.
  • Dependence on employee benefits – Because of financial trouble, a significant number of employees may turn to the company’s benefits programs to help with their needs. Increased borrowing and frequent requests for pay advances are some of the telling signs of this. In turn, this could drive up costs for the company.
  • High turn-over rates – Financially-stressed employees may seek employment with better pay. This forces companies to get new hires that may not have the same experience and expertise. High turn-over rates forces the company to adjust constantly preventing them from relating with their staff.
  • Lack of commitment – Regardless of how much they make, employees experiencing financial stress are less contented with their pay. This could lead to a lack of commitment to their work and dissatisfaction towards their employer.

Financial stress isn’t just a stress for your employee — it’s  a stress on your bottom line as well. This issue should be dealt with sooner than later to improve their sense of well-being. An employee who feels secure tends to perform better and becomes a valuable asset to your company.