Suck It Up Buttercup – The History of How We Got Here

Three out of four American workers don’t have $1,000 available for a financial emergency. And until the past decade, most employers didn’t see the lost productivity – and lost profits – that resulted. Employers seemed to be saying “Employees have to make their own decisions on what they do with their money; it’s their problem, not mine.”

That mindset is swiftly changing says David Kilby in his innovative book, The New Productivity Engine. “it’s the employees’ problem,” he agrees, “That is, until they start using company time and resources trying to fix their personal financial problems. Then it pretty quickly becomes the employer’s problem.”

Here’s a staggering statistic from the book: 46 percent of employees spend an average of 2-3 work day hours a week dealing with their personal finances, rather than actually working.

So how did we end up here? A short history.

For centuries there were two levels of people: Serfs who lived short, brutal lives and owned nothing; and nobles who owned everything, including the serfs. Then the tradesmen came along and became the middle class. They owned things, but were sneered at by the nobility, and the serfs were jealous.

Until the late 1700s, manufacturing was truly a cottage industry. Think – thousands of hand looms weaving cloth, and thousands of miners digging tunnels with a pick and shovel. Water power was the sole source of power, so the local grist mill had to be on a river.

Then came steam power and factories could be built anywhere. Some of these locations were in the middle of nowhere, so manufacturers built company homes and schools, and workers often owed their souls to the company store. Employers had a high level of involvement (good or bad) in their workers’ financial lives.

Then, following World War II, when the big manufacturing cities began to die, employees became more like free agents – able to move from job to job. Employers began to distance themselves from their employees’ personal finances. Which explains how we ended up here.

A win-win for everyone

Here’s the problem. Many workers (75% of them) were unable to manage their money in a manner that gave them rainy day cushions, coverage for medical expenses, and savings and retirement funds. Employers moved back into the workers lives with benefits like medical, disability insurance and retirement plans.

“That’s really great”, David Kilby agrees. But there’s a big part missing – personal financial education and the motivation to use it. He calls it ‘financial wellness,’ and the concept is becoming the latest employee benefit.

The reason is simple, Kilby says. “A financial wellness program offers employees financial education that helps them live more stress-free lives, save for emergencies, and help fund their retirement. Employers end up with highly productive workers who are engaged, loyal and stay with the company longer. It’s a win-win for everyone.”

For employers, the return comes from a number of places.

So, why would an employer take the time and effort, get involved in a worker’s personal financial life, and offer a financial wellness benefit?

First, is a documented financial return, according to Kilby. In The New Productivity Engine he cites results from several studies and organizations that found a return on investment as high as 3:1. The return comes from a number of places.

Second is the gain-back of previously lost hours. If 46% of your employees are spending two work hours a week on personal finances and you have 1,000 employees, you’re losing around 1,000 hours a week times 52 weeks a year. Do the math. How much money are you losing? What would you do with the money if you could get it back?

And third is the result of happier, engaged, loyal employees. It costs up to $24,000 to recruit, hire and get a mid-level worker up to speed. Think about it this way. For every employee who stays on the job for another year, you could put an additional $24,000 on the bottom line.

The culturally conscious employer

Somewhere between lifelong indenture to the company store and the employer who says, “Suck it up Buttercup, it’s not my problem,” is what David Kilby calls the “culturally conscious employer.”

“Culturally conscious employers believe that the corporate culture can positively impact performance,” he says in his book.  “They believe that when employees are happy, satisfied, engaged and present, the positive performance follows.”