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Impact of Financial Habits on Staff Productivity

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Has it ever crossed your mind that there could be any scientific link between an employee’s financial habits and his productivity at work? Most people think there is no link, many others feel there may be some vague relationship that won’t stand any rigorous scientific evaluations. But what does the real data say?

Insights from a validated psychometric survey on Financial Success Habits from over 250 employees in Africa show some fascinating patterns that can be considered for strategic decisions by HR Directors, CEOs, Business Owners, and Managers.

Participants whose qualifications range from  O-Level to Ph.D., with ages ranging from 18 to 55 years, were registered on an online validated psychometric financial habits inventory called Findex.

Five financial habits were evaluated: Financial Philosophy, Money Retention Skills, Dependent Money Generation Skills, Independent Money Generation Skills, and Money Multiplication Skills. The five variables are summarised into the Financial Success Index  (Findex) Score.

Key Insights

Statistical Data analysis using Python libraries and Jupiter Notebook shows that 3 financial habits: Money Retention Skills, Financial Philosophy, and independent Money Generation skills have correlation coefficients of 0.79, 0.74, and 0.72 respectively at 99% confidence levels of accuracy.  This means that there is a solid statistically significant relationship between an employee’s money retention skills, financial philosophy, and intrapreneurial ability or positive work attitude

The implications of this insight can have a huge impact on how we predict and motivate productivity among middle management to lower-level employees. For example, it means that simply having accurate evaluation or access to the thinking pattern of employees about money, their understanding and committed practice of personal financial budgeting and personal financial records management can help attract, develop, and or retain highly productive staff. This can significantly improve overall corporate productivity, business profitability, and customer satisfaction.

The management can save a lot of money that is invested in pressured salary increases, training programmes, and productivity motivational strategies that do not yield commensurate improvements in staff productivity. Investments and strategies can then be channeled to scientifically validate financial habits improvement policies and training programmes that will quickly benefit the staff and the company. This is particularly true for employees in the range of middle management to lower-level staff as captured by research data.

Think about it this way. Every man’s interests and goals are of higher priority to them than those of others around them. So, the question is: How much interest or motivation will a staff member with poor savings, and budgeting habits have in his company’s desire for profitability through effective budgeting, cost management, and profit reinvestment?

If he does not feel that disciplined financial structures such as personal financial records, disciplined compulsory regular savings, and monthly budgeting are important in his own life. Why will he consider the genuine pursuit of endless growth and profitability by his company as a valuable, ethical, non-negotiable goal that demands his total commitment? These are unspoken dialogues and mental scripts that run the minds of many employees, draining their ability to produce at their optimal capacity.

Based on the linear regression predictive model developed using the dataset for this research, we discovered that the management could increase the productivity of individual staff by as much as 88% by investing in training and policies that will improve the financial philosophy and money retention skills of their staff by only 50%.

Well, some managers can imagine that the financial habits of the staff are their private business and they should be left alone to take care of it by themselves if they so desire. That is very correct.

But, as a manager or business owner, it is important to know that employees and the services they provide are critical inputs that will impact corporate productivity, profitability, customer satisfaction, brand equity, and competitive positioning of the organization. We can then view the issue from the perspective of the ultimate beneficiary of the outcome of a strategic investment of improving the overall financial habits of middle-management to the lower-level staff of the organization.

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