Employee Financial Wellbeing Linked to Profitability

by PNG Business News - March 15, 2021

Did you know that employee ‘money worries’ associated with poor financial wellbeing can negatively impact business profitability?  Financial literacy training is a relatively easy and cost-effective solution to improving employee financial wellbeing and thus mitigating the negative effects of ‘financially stressed’ staff.  Helping your employees access responsible loan products – some of which are now available in PNG via new and ethical personal lending start-ups – also has a role to play in their financial wellbeing.

The effects of financial stress and poor financial wellbeing on employees can be as great as physical sickness. Many employees admit that they spend several hours each week dealing with financial issues while at work. A 2020 survey by PwC revealed ‘money worries’ to be the biggest cause of employee stress and that the stress is a major distraction at work.  It is estimated that over 80 percent of the PNG workforce is experiencing some level of financial stress.

 

How Does Poor Employee Financial Wellbeing Impact Business Profitability?

Financial wellbeing is closely linked to financial stress.  It is estimated that employee financial stress is costing Australian businesses $31.1 billion annually.  Whilst specific data does not exist for PNG businesses, we estimate it to be high.  We also know that financial stress takes a toll on employees’ health—both mentally and physically – as well as on business health. 

Employee financial stress contributes to increased absenteeism, lower quality work output, decreased productivity, increased staff turnover and associated recruitment and training costs, as well as even workplace theft.  Studies show that employee financial stress is costing businesses up to 19% of their payroll costs! A financially stressed workforce is therefore bad for the bottom line. 

 

What exactly is financial wellbeing?

Financial Literacy Australia defines financial wellbeing as when you are:

  • able to meet expenses and have some money left over;
  • in control of your finances; and
  • feeling financially secure, now and in the future.

Financial literacy, that is, a personal’s ability to understand and effectively use various financial skills such as saving, budgeting, investing and responsible borrowing, underpins financial wellbeing.

 

The business solution

Financial literacy is key to reducing financial stress and improving financial wellbeing.  Providing employees with financial literacy education is also part of being a socially responsible employer as well as an employer of choice. 

Significantly – and especially in PNG’s current economic climate – equipping staff with the right skills to understand and competently manage their personal finances will also impact positively on your bottom line.   

 

Solomon islands business – financial literacy success story

In neighbouring Solomon Islands, food manufacturing company SolTuna (one of the country’s largest employers) significantly cut staff absenteeism and consequently improved productivity, increased revenue, and cut costs largely via a financial literacy program. 

Prior to receiving financial literacy education many staff were taking days off work because they couldn’t adequately manage their pay to last them from one pay cycle to the next.  Absentee staff were raising additional money in other ways such as selling produce at local markets in order to make ends meet. On fortnightly paydays, many workers would head to the bank or the market instead of the workplace when their pay checks are deposited to do some much-needed shopping or pay off creditors. 

Overall, the program was considered a great success by not just SolTuna but also by its employees.

 

Additional ways to improve employee financial wellbeing

There are other ways in which employers can facilitate the financial wellbeing of their employees in addition to providing them with financial literacy education.

  • A good benefits package is a must. Performance incentives in the shape of bonuses, and clarity about pay bands are a great starting point.
  • Offer competitive salaries. This one might sound obvious—and expensive—but, it is worth the effort.
  • Give employees time off (or flexible work schedules) to allow them to put their finances in order – be it visiting the bank to set up internet banking or to pay out a high interest loan.
  • Incorporate financial advisers in to your broader wellness or employee assistance program.
  • Assist employees with their tax returns.
  • Even understanding payslips can be complex for some employees—helping employees to understand their payslips can reduce the burden of stress.
  • Encourage (and better still, facilitate) responsible borrowing – especially personal lending which in PNG, can attract interest rates of up to 50 percent per fortnight! 

 

Facilitating responsible borrowing

Access to affordable credit is a right not available to the majority of PNG employees.  As such, and in combination with poor financial literacy, staff often turn to unethical ‘pay-day street lenders’.  Street lenders typically charge extremely high interest rates (up to 1000 percent per annum) and often ‘over lend’ exacerbating and perpetuating unsustainable debt burdens.

Many PNG businesses offer in-house employee loans to mitigate the risks posed by unethical pay day lenders.  However, the administrative burden of managing loan books can be high.  An alternative is now available via personal lending start up – Savi Moni.

 

Responsible lender offers financial literacy education

Newcomer to the PNG Lending market, Savi Moni’s personal loan solution was developed to help corporate sector employees take control of their finances and enjoy financial wellbeing whilst simultaneously reducing the negative business impact of financially stressed employees.

“We want to give employers and employees a beneficial staff lending solution that incorporates financial literacy to help avoid future financial stress” says Founder, Nick Keane.  Born and bred in PNG and with several in-country business experiences, Nick understands the problems that staff loans cause for businesses as well as the financial stress generated for many PNG households.  He is passionate about creating an improved sustainable solution.

Financial literacy education is a central component of the Savi Moni loan product, with a PNG specific formal ‘family money management’ workplace training, delivered by Australian Business Volunteers (ABV) available to interested employers. The training has been developed specifically to suit the PNG context and to help families strengthen skills in planning and saving for the future, as well as seeking advice about money and finance. 

Savi Moni’s financial literacy education offers a gender inclusive approach, encouraging men and women from family groups to participate collaboratively.   In addition, Savi Moni offers ‘Moni Savi’ - a range of free resources and tools on their website, targeting for both employers and employees to help improve financial literacy and reduce financial stress.

 

Summary

Improved financial literacy in combination with responsible borrowing contributes significantly to employee financial wellbeing and helps mitigate the negative business impacts of a financially stressed workforce.  There is a clear business and social case for supporting employees’ financial wellbeing and for partnering with responsible personal lending services such as Savi Moni – which has financial literacy education firmly embedded in its loan products.  To learn more:  www.savimonipng.com.



Related Articles

Company

PNG Business News - January 17, 2022

Access to Quality Credit - Employers Benefit When Staff Benefit

Photo credit: Savi Moni Access to affordable credit is highly valued but not readily available in Papua New Guinea.  In an extremely competitive employment marketplace, businesses are increasingly assisting employees to access credit as a means to both attract and retain their top talent.  Even in the current economic downturn, there is still a ‘war on talent’ when it comes to PNG’s ‘best and brightest’.  This is only set to intensify in 2022 with the Government having effectively given the ‘green light’ to both the PNG LNG expansion (i.e., P’nyang) and the reopening of the Porgera gold mine.  Furthermore, despite the slow progression of the much anticipated Wafi-Golpu gold mining project, it will only be a matter of time before it too will require the skillsets of thousands of new employees.  A recent Salary Finance survey of US workers found that access to affordable credit is one of the most desired benefits not currently being offered by employers.  Human Resource professionals agree, that in combination with competitive salaries, providing staff with access to affordable credit is another way to reduce the likelihood of valued employees ‘jumping ship’.  It also helps position a business as an ‘employer of choice’ when it comes to recruitment. Significantly, a key finding from PwC's 2021 Employee Financial Wellness Survey, found that, 72 percent of workers who reported facing increased financial setbacks during the pandemic said they would be more attracted to another company that cared more about financial well-being than their current employer. Savi Moni, an online personal loan service designed specifically for PNG’s corporate sector was launched in 2020.  Founder and Director Nick Keane has heard firsthand from several business leaders the concerns they have of losing key staff, as well as the administrative and cost burdens of managing employee credit programs in-house. Having lived and worked in PNG for over 25 years, Keane understands the stress and hardship that a lack of access to affordable credit results in – especially when people resort to lending from unethical pay day street lenders (i.e., ‘loan sharks’). “I’ve seen far too many people – even highly-educated people in good jobs – end up in a cycle of debt that they can’t escape.  Typically, these people find themselves with a mix of formal and informal (street lender) loans on high interest rates that they cannot afford. It is a really sad and really desperate situation for a lot of hard working and honest people.” Keane started Savi Moni so that he could help the corporate sector help its employees.  “As someone with other business interests in PNG and someone who has managed large PNG workforces, I knew that internally managed employee credit programs are really time consuming, prone to creating workplace issues and not a good use of company capital.  As such, we designed our lending product to be simple and streamlined so that there would be an absolutely minimal administrative burden for businesses.  We also wanted to introduce the concept of ‘responsible lending’ to the market – that is, by carrying out in-depth assessments to ensure we don’t over lend to our customers.  We want them to be able to comfortably manage their repayments, whilst having enough money for life’s essentials left in each pay packet.”  Central to the Savi Moni product is the recognition that employee financial wellness is not a ‘warm and fuzzy’ or ‘feel good’ employee program.  Financial wellness programs are now a ‘need-to-have’ employee benefit.  As such, Savi Moni provides not only a range of free financial literacy tools, tips, resources and courses on its website, but it has partnered with Australian Business Volunteers (ABV) to deliver a PNG bespoke ‘Family Money Management’ two-day course for its loan partner companies.  The training is delivered at cost. Solar Solutions, an early adopter of Savi Moni’s loan offering delivered ABV’s Family Money Management course to its Port Moresby staff.  Savi Moni’s Pukari Peni, who attended the training session with them reported that “The feedback was great.  All of the staff that participated said they greatly benefited from the training.”  Port Moresby based Avenell Engineering Systems (AES), has been impressed with the flexibility of setting their own loan parameters.  Knowing full well, the negative affects to their business of staff suffering from high levels of financial stress, AES wanted to implement their own lending rules.  “Savi Moni really do have a ‘responsible lender approach’, with tight lending guidelines, yet we wanted to ensure even tighter rules for our staff.  We set our own Debt to Income (DTI) Ratio and Savi Moni were able to implement this without a hassle.” AESHR Manager, Maria Jesusa Garcia. Savi Moni is a 100 percent online personal lending service with agents on the ground to assist if needed.  It is delivered through a convenient and transparent digital platform that a business’ approved HR and Payroll staff log in to.  In order for employees to benefit from a Savi Moni personal loan the employing business must first sign up as a Loan Partner, there is no risk for Loan Partners just benefits.  Minimal time and effort are required from Loan Partner businesses and their employees to ensure a fast and simple employee credit program.   Article courtesy of Savi Moni

Place your Ad Here!


Recent Articles

Business

PNG Business News - August 12, 2022

Going Green: FAO-led EU-STREIT PNG Programme provides green-powered facility to local agricultural authorities to effectively service rural farmers

EU Funded UN Joint STREIT Programme in Papua New Guinea establishes a renewable energy-powered facility to support local government authorities in East Sepik Province, in delivering effective services to rural farmers and entrepreneurs.  With generous support of the European Union, the FAO-led EU STREIT Programme officially opened a new 3 cluster office building on 10 August 2022, to host the Programme along with the East Sepik provincial divisions of Agriculture and Livestock, Cocoa Board and the National Agriculture Quarantine & Inspection Authority. The new-look office building is powered by 189 solar panels, which significantly reduce greenhouse gas emissions and reduces the collective dependence on fossil fuel. The solar panels supply the building with 90 KW of energy, relieving the resident agencies and authorities from relying on fossil-generated electricity for their needs, including lighting, ICT, water pumping, and temperature control. This zero-carbon-emission facility has the capacity to accommodate around 90 experts, technicians and extension service officers. Equipped with 120 batteries, the building can support staff’s operation for 36 hours in case of experiencing high cloud cover. The building, currently co-resided by the Programme and provincial agricultural bodies, will be transferred over to the East Sepik Provincial Administration at the end of the Programme and will continue to provide a sustainable base for sustainable support to agriculture-related services in the Province. Officiating the opening ceremony, His Excellency Ambassador Jernej Videtič, Head of the European Union Delegation to PNG, in his address, said: “I am happy to be here and to see that things are moving in the right direction to bring sustainable benefits to the people of East Sepik” Ambassador Videtič further highlighted that “with resources from the citizens of Europe to fund the EU-STREIT Programme in providing training, tools and support, the quantity and quality of cocoa, vanilla and fisheries products will increase. The objective is also to protect these quality products in international markets under the EU-STREIT introduced initiative of Geographical Indication.” The East Sepik Acting Deputy Provincial Administrator, Mr James Baloiloi, in his speech expressed his appreciation to the EU for funding the EU-STREIT Programme and the interventions that the Programme is doing in East Sepik and Sandaun provinces. “The STREIT Programme has gone ahead to introduce a culture of agribusiness that now enables the people of this Province and the people of Sandaun Province to have cash income that can sustain their livelihoods.” Mr Baloiloi added, “this infrastructure and building supports us and facilitates the service delivery to our people in this Province as well as Sandaun Province.”  Thanking the EU for its generous funding support, Dr Xuebing Sun, the EU-STREIT Programme Coordinator, said: “the Programme has generated substantial impacts at beneficiary, local institutions and enabling business environment levels. This would not be possible with good partnership, increased ownerships and leaderships of the governments and implementing partners.” “This co-residing and close co-operation among UN agencies and their national partners in this integrated space reflect the partnership approach taken by the Programme to sustainably develop agri-enterprise activities in the region,” added Dr Xuebing Sun, adding “the new climate-friendly facility, which is fully powered by solar energy, also provides a space to welcome, advise and serve the farmers, including interested women and youth, who play very important roles along agri-food value chains”. “This kind of ‘green investment’ enables a shift to a more green economy for local institutions and infrastructure to meet cocoa, vanilla and fishery value chains stakeholders” advised Anthony Bennett, the FAO Lead Technical Officer of the EU-STREIT PNG Programme. United Nations’ implementing partners supporting the FAO-led EU-STREIT PNG present in the office include the International Labour Organization (ILO), International Telecommunication Union (ITU), United Nations Capital Development Fund (UNCDF) and United Nations Development Programme (UNDP). The EU-STREIT PNG is being implemented as a UN Joint Programme (FAO as leading agency, and ILO, ITU, UNCDF and UNDP as implementing partners), is the largest grant-funded Programme of the European Union in the Country and the Pacific region. It focuses on increasing sustainable and inclusive economic development of rural areas through increasing the economic returns and opportunities from cocoa, vanilla and fishery value chains and strengthening and improving the efficiency of value chain enablers, including the business environment and supporting sustainable, climate-proof transport and energy infrastructure development.

Business

Paul Oeka - August 12, 2022

CPAPNG annual meet to discuss global changes

Certified Practicing Accountants of Papua New Guinea will be hosting their 23rd annual conference with about 400 participants nationwide expected to attend the two day conference organized by CPA PNG in Lae Morobe Province from August 18 to19, 2022 CPAPNG was established in 1974 and has come a long way with a lot of achievements along the way. Over the years its membership grew from mere numbers to just below 2000 which includes 40% locals and 60% non-citizens. . The CPA PNG conference is one of CPAs three significant annual events on their calendar with this year's conference theme; Is PNG prepared for the recession?" The conference will see certain key leaders in executive management roles from both the public and private sector delivering presentations in line with the conference theme. CPA PNG's Executive Director Mr. Yuwak Tau said the theme of the conference was selected because there was a decline in the global economy and the general so when that eventuates small economies tend to be affected. He added that they have basically selected the theme that was current and appropriate so that members would find relevance during the course of the conference. “The meeting is to create intellectual and interactive discussions with seasoned business leaders to present and share their ideas and experiences to find probable outcomes within their business environment and industries in times of economic uncertainty”. Some of the topics to be presented by consultants are current significant issues such as crypto currency, transport pricing, bit coin block chain technology and stress management. This were some topics that people have heard about but have not really ventured into. Mr. Tau added that it would be quite hard to measure the benefits immediately but the participants will be able to look at insights shared during the conference that would be appropriate in the areas of employment, accounting, finance, auditing and others. The conference will create an environment where participants can also share information so That they can take points to apply in their work place and industries. In relation the Kumul petroleum Holdings had also presented a cheque of K50, 000 to support the coming event at their head office. The cheque was presented by KPHL's executive General Manager Corporate Affairs, Luke Liria and was received by CPA PNG Chairman Richard Kuna. Mr. Liria said KPHL has appreciated the effort put in by CPA PNG to ensure that its members in State owned enterprises and the private sector were given appropriate level of training and as part of KPHL's corporate social responsibility and commitment they hope that their support will continue to help the organization facilitate and make sure the accounting practices is of international standards. CPA PNG's Chairman, Richard Kuna acknowledged KPHL for their support and stated that he was looking forward to seeing KPHL being a big part of the upcoming conference.

Business

Paul Oeka - August 12, 2022

BSP: Small to Medium Enterprises Loans reaches 60% rate.

Bank South Pacific's Financial Group Ltd Chief executive officer Mr. Robin Fleming has recently announced that the bank has granted more than K200 million as loans to small to medium enterprises under its credit scheme facility that the then Marape government had released to the bank to support Small to Medium Enterprise (SME) and local businesses during the peak of the COVID-19 pandemic. Mr. Fleming said about 1523 customer loans have been approved, that is about 60% of loan approval rates since 2019. Prior to this announcement BSP and the Department of Commerce and Industry (DCI) had agreed to increase the maximum loan under the small-to-medium enterprise (SME) credit enhancement facility to K5 million. The previous limit was K3 million when the Government first released K100 million as security to the bank under its K200 million SME allocation for BSP to rollout the loan facility last year. Fleming stated that even though they have exhausted and rolled out the bulk of the governments relief funds for SME's they will still be running the SME loan program under its credit facility scheme “At this stage, BSP has not received the funding planned for this year but that is not preventing BSP from giving loans under the facility”. “There remains significant capacity for BSP to continue to assess, approve and funds loans under the facility”. “The agreement with the Government did provide for momentum in the SME facility to be maintained while allowing for the Government budget and funding process to be adhered to”. As part of the government SME relief funding, Commercial Banks were allocated K200 million with BSP Financial Group receiving K100 million, NDB K80 million and another K20 million was allocated to the department of Commerce and Industry BSP could not comment on how the National Development Bank (NDB) is dealing with the K80 million it received, but the intent, when discussions were initiated, was that BSP would be lending to more mature SMEs and NDB to startup ventures. In addition to enabling SMEs to access lower cost of funds through the facility with BSP, the bank has also made it a responsibility to ensure that Government funding is preserved by not approving loans that have a higher risk of default.

Join Papua New Guinea's

Business Community

Be the "First" to get our exclusive Digital Magazine & Weekly Newsletter.