| Reduce Turnover by Coaching Whys Money Management
In 1948, Agnes and Norbert built a house in St. Cloud, Minnesota on a small lot they had purchased the previous year. The flat top tar roof of their home was only a few inches off the ground, and featured a stairway entrance leading downstairs into a four-room basement. For two years, Aggie and Nubbs shared the only bedroom of their basement house with their three young children as they worked and saved until they could afford to build the main floor story-and-a-half addition above their existing foundation. Four years and two more kids after that move, the couple converted the ‘half story’ attic to a bedroom for the boys. They raised five kids in this 1100 square foot home; the same house where Aggie, now an 88-year-old widow, still resides.
There was a time not too long ago when young families bought only that which they could afford. Credit was scarce and people lived within their means. That era now stands in stark contrast to the “buy now, pay later” climate that has permeated our culture and continues to escalate. Deficit spending has become pandemic in this country, evident from the highest levels of government to businesses and organizations of every size and type down to the checkbook of the average American family. And it hasn’t stopped there.
Your youngest employees are in debt. Whether they owe $5 to a buddy for the burger they had for lunch last week, $200 to their parents for last month’s rent, or $50,000 in student loans for the freshly-printed diploma that hangs on their wall, they owe. And the reality of owing means that they need more money than you are paying them.
Even if they like their job and love their boss, their antenna is still raised in hopes of finding an opportunity that pays more. And when they find higher income, they’ll buy bigger, faster, newer, cooler stuff than they have now—on credit—keeping them on the prowl for a higher paying job elsewhere. It’s a never-ending cycle.
Hello turnover.
One of the questions I ask young talent to gauge their job satisfaction and loyalty is, “If you were offered 50 cents more per hour to do the same work for the competition, would you leave?” You can easily guess the prevailing response to that question. When I prod for the reason behind their immediate “yes,” most simply say, “I need the money.”
Need? I bet Aggie might have an opinion about that. A 2008 Capitol One survey found 54 percent of parents have not discussed with their children the difference between "wants"
and "needs."
Student Loan issuer Nellie Mae reports the credit card balance of the average college freshman is in excess of $1550. More students now drop out of college because of financial problems than because of academic inefficiencies. Credit problems among youth have become so rampant that the federal government recently passed a law that goes into effect this February making it much harder for under 21-year-olds to obtain credit cards without a co-signer. But lenders are not going to give up targeting young naïve buyers who’ve been conditioned to believe that if their credit app is approved, their purchase is affordable.
What Does this Mean for You, the Employer?
It’s always a good idea to pay above average wages, but if you don’t want to get into an endless bidding war to keep your young talent from walking out the door, take a different route.
Show them how to get more mileage out of the money you already pay them. Coach frugality, common sense buying, and practical money management. Occasionally espouse the virtues of saving for a rainy day, even if it seems to fall on deaf ears.
Obviously, you can’t force financial responsibility upon anyone, much less your young employees. But don’t let that stand in the way of introducing it, encouraging it, reinforcing it, and modeling it.
Introduce - Let your team know that you are open to a discussion about money management, either as a group, or on a one-to-one basis. (If this topic isn’t really your forté, then offer to introduce them to someone who is better suited for the conversation.) Let them know that you care about what happens to them outside the workplace after you hand them a paycheck. Explain that this is not a conversation about their wages and how to make more money, and steer away from discussing the specifics of their personal finances. Instead, focus on good budgeting principles and share best practices for saving and buying using hypothetical situations.
Encourage your employees to begin saving. Invite a financial expert to a team meeting to discuss simple, easy investing strategies for people on a limited income. If your company offers direct deposit, make it really simple for them to take advantage of it, and to take 10% out of every paycheck and set it aside. Get them started on the right foot by putting the first few bucks into their savings account and offer to double the amount if it’s still earning interest in 90 days. (This may give them another reason for remaining on your payroll.)
Reinforce the importance of smart money management. Restaurants post signs to remind employees to wash their hands and retailers post signs reminding cashiers to smile and say thank you, so why not also post signs reminding employees to ‘use credit only when absolutely necessary’ and to ‘make your paycheck last by avoiding impulse buying decisions’. Share success stories of employees who were/are being paid at the same level and have managed to live comfortably and still put some bucks in the bank. Just knowing it can be done may be all the inspiration they need to buckle down.
Model – Nothing will impact the money management skills of your Gen Whys better than seeing those principles in practice. In your business, and in the part of your personal life that is transparent to them, exercise sound financial practices. Never complain about your lack of money or what it is you want and can’t afford. Let them see that money ceases to be a problem when it is handled with care and respect.
The topic of financial responsibility provides you with the common ground on which to build a relationship with your young employees. After all, neither you nor your employees would be working in your respective jobs if money weren’t a part of the equation. What your employees do with their paycheck matters, and its impact on their longevity with your organization should not be ignored.
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In this month's Whys News:
Resources:
You cannot bring about prosperity by discouraging thrift. You cannot keep out of trouble by spending more than your income. You cannot establish sound social security on borrowed money.
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Abraham Lincoln |
By desiring little, a poor man makes himself rich.
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Democritus |
The contented man is never poor; the discontented never rich.
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George Eliot |
Industry, perseverance, and frugality make fortune yield.
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Benjamin Franklin |
Better to go to bed hungry than to wake up in debt.
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Benjamin Franklin |
If a person gets his attitude toward money straight, it will help straighten out almost every other area in his life. |
Rev. Billy Graham |
Credit buying is much like being drunk; the buzz happens immediately, and it gives you a lift. The hangover comes the day after. |
Dr. Joyce Brothers |
I’d like to see a James Bond movie where he gets behind financially and maybe has to take out a consolidation loan, because even when he’s applying for a loan, he still real smart-alecky. |
Another Deep Thought, by Jack Handey
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Whys Website of the Month
Teachers Beware - Students are arriving to class this fall expecting information to be delivered with high speed graphics, peer tutors on video, and lots of interactive games. A talking head is going to bore them to snoozeville. Would you want to teach out of a textbook if your 8-year-old students were used to visiting sites like this? http://www.discovertheforest.org/what.html
Whys
Cracks
This Kind of Kidding Ain’t Funny : Cotton On Kids, a New Zealand clothing store chain, is refusing to pull a line of baby clothing with sayings on them after calls from "child advocates." The slogans include "I'm Living Proof My Mum Is Easy", "The Condom Broke" and "Mummy Likes it on Top". A store spokeswoman said only a few shoppers have been offended, and most are finding the line amusing. (New Zealand Herald)
When did ‘amusing’ supplant common sense as an objective for parents?
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