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Survey finds link between financial pressures and employee underperformance

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25% of employers report an increase in sickness absence

A new survey by WorkNest, an employment law and HR consultancy firm, has revealed the link between financial pressures and employee underperformance. The survey found that nearly half of the employers surveyed believed financial pressures were one of the main external factors impacting employee underperformance, with homeworking, childcare responsibilities, and time management also cited as key factors.

The survey also identified mental health and work-related stress as significant internal drivers of underperformance, with almost one-third of employers identifying it as a cause for concern. Additionally, ineffective leadership, poor conduct, and lack of formal training were also found to be factors affecting employee performance.

Danielle Scott, Employment Law Adviser and Solicitor at WorkNest, said that employers must recognise financial pressures due to the rising cost of living as a major factor in employee underperformance. Scott emphasized the importance of open communication and building relationships with employees to identify and address the real issues that impact their team’s performance.

Employers also expressed concern about their line managers’ ability to handle conversations about underperformance, with 27% reporting that they had provided inadequate training. The impact of mishandled conversations can be significant, with 25% of employers finding that grievances crop up out of the blue or see an increase in sickness absence.

Scott added that employers must take action by providing line managers with training and guidance on how to address these situations. Regular reviews with an employee on performance management can increase employee engagement and motivation while providing clarity on individual and team objectives. Line managers can also identify training gaps and development opportunities for team members requiring extra support.

The survey’s findings highlight the need for employers to recognize and address the external and internal factors impacting employee performance. By prioritizing open communication, providing adequate training, and regularly reviewing employee performance, employers can improve productivity and reduce the risk of grievances and absenteeism.

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