The strength of business solely lies at the hand of the employees. Well-motivated workers can deliver, subsequently snowballing the company’s profit. However, this might fail to happen, when the internal environment is not favorable to support productivity. The major cause of stress among employees is inadequate finances to meet their daily needs so they can be effective at work.
Small businesses find it hard to pay huge salaries compared to established corporations. The workforce in such companies work under minimal salaries and meeting their needs become challenging. According to the PwC 2017 Special Report: Financial Stress and the Bottom Line, about 30% of employees feel distracted if they are in a financial quagmire. Similarly, the Federal Reserve Board affirm that 40% of Americans don’t have enough cash to cover a $400 emergency expense. This is an indication that a huge part of the population, feels underpaid, a strain that can lower the growth of small businesses.
Financial stress causes ripple effects, as discussed in the following paragraphs.
Extremely decrease in revenue and productivity
Your business relies on the efforts of the employees to generate revenue. A person who is focused on personal issues gives the job less time and lowers productivity significantly. This happens in the sense that when the mind is engaged in something else, the energy to align with the mission and vision of the company lowers. The overall results are observed in the final result, which is measured by a decrease in profits. In some instances, employees would work more than one job, to help their finances.
A business that consists of employees who are less paid, decreases their working motivation.They fail to think of the business as their own, and the effects spill over to customers, who are offered substandard products or services.
To keep your small business growing, it’s essential to have the correct number of employees who are well-paid, rather than incorporating a large workforce that is poorly paid. If a proper plan for employees is not followed, then a business can get into trouble and forced to get a loan to survive, and it can also affect business credit score further. Bad business credit is never good for the long term, and it always affects the ability to borrow fund for business and force to get a bad credit loan, know more here, if a business is willing to maintain its cash flow.
Fosters strained working relationship
One of the important aspects that keeps large corporations such as Facebook, Amazon vibrant, is the need for teamwork. Working together creates an environment for innovation and creativity. Lack of these two, therefore, slows the business’ growth and makes it hard to survive in an extremely competitive environment. Supervisors, managers, and customers can identify strained employees by the way they execute their tasks. For example, failure to meet milestones and set targets are signals of employees who are disinterested in their works.
Compromised quality of services or goods may limit the ability of the business to thrive, and small businesses may lose skilled workers if they cannot meet all their employees’ needs.
In nearly all industries, stressed employees could cause a hazardous situation. The employees who are paid less can opt to act contrary to the guideline of the company. For example, a poorly paid employee might hack the company’s IT system or customer base
Blurs the business plan
MassMutual’s 2017 Small Business Employee Financial Wellness study asserts that about 40% of the employees will not be able to retire at the expected time. They will be forced to extend their retirement date, which can be costly to a small business. Also, an elderly group of employees is less innovative and creative and may block younger, more vital employees, who generally work for less and who could steer the growth of the company.
Significant increase in the rate of turnover
The cost of replacement of employees is high, and small businesses could find it hard to fit the position of a highly skilled person who leaves due to lack of salary increases. The longevity of employees in a startup that is struggling with financial issues is low, and to some extent,it can even make the company fail.
As the workers look for ways to ease their financial stress, they consider greener opportunities. The consequence is the loss of skilled individuals to rival companies. The business should consider the financial challenges affecting workers and solve them accordingly.
Productivity in business is determined by financial strength. Lack of proper financial management can lead to physical and mental damage, lowering the energy that the workers should be directed to the growth of the business. Lending a helping hand by educating the employees on financial matters, as well as paying better wages will be protecting the company’s most important asset.