Recognize employee debt - and support them as a manager!
Employees who have debts are under a lot of mental pressure and often perform less well. In addition, there is the threat of wage garnishment if employees are unable to pay their debts. And that means a lot of work for the employer. How you as a manager can recognize and react to financial difficulties among your team members.
In its annual "Stress in America" report, the American Psychological Association (APA) has repeatedly found that a common stress factor among adults is anxiety about the future, especially financial security.
Signs of financial problems among employees can be, for example The team member no longer participates in meetings with colleagues in their free time (e.g. dinner together, after-work events) and no longer contributes to the cost of birthday presents.
Certain changes in behavior or symptoms may indicate that an employee has financial problems.
Recognize signs of financial problems among employees:
Social interaction
- The person concerned no longer takes part in meetings with colleagues in their free time, e.g. having a beer together after work
- The colleague no longer takes part in company celebrations with excuses (probably because the costs of participation are too high)
- Birthday parties are avoided and / or a day off is taken on their own birthday (to avoid the cost of a gift or the cost of birthday parties)
- Payments into the "coffee fund" are delayed for a long time or no longer take place
Other obvious indications
- Attempts are made to swap shifts in order to receive the night, public holiday and overtime bonuses
- The employee asks for permission to take on a part-time job
- Valuables such as cell phones or games consoles are offered for sale to colleagues in order to gain financial leeway.
- The employee regularly uses the option of having an advance paid out.
- The employee asks for an employee loan
- A wage garnishment is received
Reduced quality of work
- The employee appears stressed, is easily irritable or visibly emotionally burdened without there being a professional reason for this
- There is a sudden loss of performance or concentration problems.
- The employee is overtired and unable to concentrate because his financial worries are keeping him awake.
- In extremely serious cases, employees have been noticed for signs of neglect, such as being unkempt or wearing dirty clothes. The reason for this may be that they have already become homeless.
How to react effectively as a manager
1. approach a team member in a confidential conversation
If you, as the team leader, notice increasing signs that indicate indebtedness, it is often helpful to talk to the employee about this in confidence.
Proceed sensitively. Debt is a very shameful topic. Debtors often hide their problem for fear of losing their job or being bullied by colleagues. Take this fear away from your employee!
2. create an atmosphere of trust
Here are some tips on how you as a manager can create an atmosphere of trust:
Private space: Make sure the conversation takes place in a private and safe environment, without distractions or the feeling of being watched.
Active listening: Listen attentively to your employee without interrupting. Show genuine interest and confirm this with empathetic statements such as "I understand that this is difficult for you."
Respectful communication: Use respectful and non-judgmental language. Avoid criticizing or judging the employee, even if the situation is difficult.
Ensure confidentiality: Assure your employee that the conversation will remain confidential and that no information will be passed on without their consent. This creates security.
Show empathy: Avoid offering solutions immediately, but give the employee the space to express their feelings. This creates room for more understanding.
Do not rush: Give the employee the time they need to open up. Don't push for an immediate solution or to share details if they are not ready.
Provide reassurance: Make it clear that no one is perfect and that everyone needs support from time to time. Make it clear that it is normal to seek help and that no one has to deal with their problems alone.
Promote an open corporate culture: Support a corporate culture in which mistakes and challenges can be discussed openly without fear of negative consequences. This creates a general climate of trust.
Positive reinforcement: Confirm the employee's courage and openness in opening up. Positive feedback strengthens trust and encourages employees to continue being open in the future.
Remain solution-oriented: Offer constructive help and support without giving the employee the feeling that they cannot solve their problems on their own.
How can employers support employees with financial difficulties?
If you as an employer find out about your employee's debts through a wage garnishment, offer your help or at least provide the employee with information on where they can get professional help . The earlier the better!
There are many ways to "get out of debt", from budget plans, creditor negotiations and debt restructuring to personal insolvency.
Info: Debt can affect anyone: The most common causes and risks of over-indebtedness
In Germany, loans are a widespread financing option - whether for real estate, cars, furniture or consumption. As long as the income is sufficient to cover the interest and repayments, there is no risk. But if your income is suddenly no longer sufficient or you lose track of your finances, a mountain of debt can quickly build up.
Causes of over-indebtedness
It is common to attribute over-indebtedness to ill-considered consumer behavior. In reality, however, it turns out that most cases of over-indebtedness among adults are triggered by unexpected events .
One of the main causes of over-indebtedness in 2024 was, for example, illness or mental illness. These are the findings of the iff Overindebtedness Report 2024 published by the Institute of Financial Services (iff).
According to this report, health problems, including addiction and illness, were the main cause of over-indebtedness in 18.4% of cases, surpassing unemployment for the first time, which was cited in 17.5% of cases. A protracted illness leads to increasing expenditure on medication and treatment, while at the same time income is significantly reduced due to the receipt of sick pay. This can upset the budget and lead to a sudden lack of money for rent, electricity bills or a car loan.
Download iff over-indebtedness report 2024
In addition, unemployment, reduced working hours, short-time working, separation or divorce as well as other negative events and strokes of fate can also mean that the agreed installment repayment can no longer be made. There is also a higher risk of over-indebtedness in the low-wage sector, but it can affect any employee.
High earners are also affected
Despite a higher income, even high earners can find themselves in financial difficulties. This can be the case, for example, if private health insurance refunds fail to materialize, an unexpected tax refund becomes due or a serious stroke of fate (e.g. addiction problems such as gambling addiction) causes the financial situation to falter.
Income and budget advice for employees
The trained pme Familienservice team from the income and budget advice department will be happy to advise both you as a manager and the employee. Together with the person concerned, we will look for a joint solution - also in cooperation with the creditors, and if necessary, the employee will even be accompanied through to personal insolvency.
Manuela Sontheimer
Certified debtor and insolvency counselor
Income and budget counseling department of pme Familienservice
E-Mail: manuela.sontheimer@familienservice.de
On behalf of more than 1,400 employers, the pme Familienservice Group supports employees in achieving a successful work-life balance and being able to work with a clear head.
We support working people in crises, e.g. conflicts at work, addiction or partnership problems, financial challenges or when it comes to care and childcare.