You don’t need a psychologist to tell you financial debt creates stress. Almost a third (31%) of Canadians experience stress due to credit card debt, according to a 2015 Global News/Ipsos Reid poll.
“The key issue is how they’re managing personally,” says Laurie Campbell, chief executive officer of Credit Canada Debt Solutions. “They’re often an emotional wreck . . . because financial problems impact so many other areas of life.”
The impact on the workplace
And these personal issues tend to spill into the workplace. Campbell notes the consequences of having a debt-ridden employee can be huge. The employee may take more sick time, have lapses in concentration and possibly even receive collection calls at work, all of which can prevent them from functioning well.
Or worse, employees could turn to addictive behaviours to cope with their financial problems. “Whether it be gambling, drugs or alcohol, it impacts the well-being of the individual,” says Campbell.
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At the extreme, people could resort to embezzlement. “If the employee is under so much pressure, there’s a risk — if there’s a financial component to their job — of some type of fraud.”
Debt can also damage an employee’s retirement plans. Faisal Siddiqi, a principal and consulting actuary for retirement services at Buck Consultants, sees many people continuing to work past the age when they want to retire. “One of the reasons could be because they’re trying to get rid of their debt,” he says.
Employers, though, should be aware that getting employees to accept debt counselling does come with some problems.
Ways to offer help
“The problem with having a debt counsellor on staff is nobody’s going to go to that person because they’re afraid management will find out,” says Campbell. Even when she sees employees from the City of Toronto — one of Credit Canada’s corporate clients — at her office, they ask if the information will be available to their employer.
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Siddiqi agrees. While he admits having a debt counsellor on staff would be nice, he says employees would want to contact someone privately. “That person is trying to be helpful, but having [him or her] on staff might be going one step too far.”
That doesn’t mean employers should forget about helping those employees. Instead, they can go about it a different way.
Siddiqi suggests having a debt counselling service on retainer. A company could make an agreement with a particular debt counselling firm and let its employees know it’ll help them make a financial plan that includes looking at debt.
As part of that, they can offer employees a nominal amount to cover a certain number of sessions. “After that, employees can use them or not use them as they wish,” he says. “I think a lot of people would probably take that up.”
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A debt counselling service can also offer financial management sessions on-site. And employers should make employees aware that help is out there, says Campbell. They should also ensure managers are able to recognize the possible signs of financial difficulties, such as more mistakes and lack of concentration, in the employees who report to them.
Employers have to remember that stress and personal debt takes a toll on people, says Campbell.“People are quite embarrassed [about their debt], so the more confidential help employers can offer, the better.”
Brooke Smith is a Toronto-based freelance writer and editor.