MODELLING PERSONAL FINANCIAL WELLBEING ON EMPLOYEE COST IN THE SOUTH AFRICAN MANUFACTURING SECTOR

Abstract

With increased competitiveness and rivalry among employers, profitability and productive employees are critical factors to increase the financial performance and results of a company. Previous research found that the levels of personal financial wellbeing have an impact on the profitability of an employer. This study focused on the effect of employees’ levels of personal financial wellbeing on their employers, with specific reference to productivity and absenteeism (two elements of total employee cost) in the South African manufacturing industry. For this purpose, a sample of 872 employees from this industry was used and a quantitative, cross-sectional design was followed. The proposed hypotheses were investigated by means of structural equation modelling techniques with a categorical estimator. Mediation analyses were also conducted to determine whether there were any significant indirect relationships between financial wellbeing, productivity and absenteeism due to financial interference. Results indicate a statistically significant negative relationship between financial wellbeing, financial interference and absenteeism. The relationship between financial wellbeing and productivity was, however, found to be positive. This study adds value in that it creates awareness for entities on the importance of personal financial wellbeing for the employer and what impact this could have on an entity’s overall performance in the South African manufacturing environment. It also recommends that employers assist employees in managing their personal finances better, as this will also benefit the employer.

Keywords

• Personal financial wellbeing, Financial interference, Productivity, Absenteeism, Employee cost, Manufacturing environment