Experts also suggest helping employees understand their own personal economy. What could cause more stress to one employee may be a non-event to another. For example, some employees may be more worried about secure housing than others.
It is the season to worry about a recession. Actually, many employees often worry constantly about recessions and the resulting uncertainty in their finances. Some employees may have tucked away the two recessions they’ve already lived through into their psyches incompletely and may worry disproportionately about a repeat of that kind of economic stress. Other employees may have watched their parents live through severe economic stress during the 2001 or 2009 recession and have a form of childhood stress. As the National Child Traumatic Stress Network describes it: Economic challenges can affect feelings of safety, the ability to remain calm, relationships with others, and the belief that things will improve…. As children hear, see, and read about what is happening in their homes, communities, and the world, they experience economic stress alongside their parents; when their parents are worried, children begin to worry too.” Reducing worry in your employees, for whichever reason generates it, can help them continue to be productive and according to the NCTSN may help their children feel more secure as well.
How can Plan Sponsors help reduce worry about a recession? First, educating employees as to what a recession is and what impact it can actually have on their jobs may help reduce worry. By definition a recession is a set of circumstances (reduced production of goods) for six months. That means a stock market shake up or correction isn’t a recession. Helping employees understand that the news on the market or economy as discussed may be slightly exaggerated can go a long way to helping those employees reduce stress. For example, those same talking heads also regularly discuss the dangers of regular house hold products like shopping markets and socks, in addition to stock markets and stocks.
Plan sponsors can also help employees reduce stress by feeling prepared for the recession. Employees should be prepared for the unexpected, as we’ve written about in the past. The best way to be prepared for the future is to have an emergency fund and to reduce debt. Plan Sponsors can help employees understand that each deposit into an emergency fund can help reduce stress later as well as to keep from using emergency funds for things that might not qualify as an emergency.
Experts who discuss reducing stress around recession fears also suggest helping employees understand their own personal economy. What could cause more stress to one employee may be a non-event to another. For example, some employees may be more worried about secure housing than others. Employees without extended families, with dysfunctional families, or with families located abroad, may need to focus more on emergency funds for housing than those with multiple relatives located close by. Providing a worksheet where employees can rank their concerns and fears can help those employees plan for their own concerns in an individualized way.
Just as emergency funding should be individualized to the employee to have the most stress-reducing impact, so too should debt reduction and management. Employees may fear student loan debt (theirs or their children’s) or other debt that financial advisors might qualify as positive debt. Other employees may have guilt or shame about credit card debt (especially if it was accrued through buying non-necessities like toiletries, clothing or décor). Their stress may be reduced by addressing the emotional aspects of the debt that could be managed.
Other recession proofing strategies focus on ensuring that skills and experience match the direction a job market may be moving. While Plan Sponsors most likely don’t want to encourage employees to leave the company, to the extent a company has an education fund for employees, simply reminding employees about the opportunities to enhance their skills and the company’s interest in benefitting from that could help assuage that sense of worry about employment opportunities.
In addition to ensuring that employees have an emergency fund, a debt management strategy and a clear path to usefulness in the job market, helping employees understand the need for diversification in their retirement accounts many also help them weather the stress of a the doomsday talking heads on television discussing potential recessions. A seminar on balancing risk with the company’s Plan Sponsor most likely is a common educational session. However, tweaking the advertising of the session to explain more of how balanced risk can help with recession proofing an employee’s finances can help reduce recession stress.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.
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