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

Year 2018, Volume: 10 Issue: 1, 80 - 95, 01.01.2018

Fanus Jansen van Vuren Prof Jaco Fouché Jaco Barnard Dr Leon de Beer

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