It’s no secret that the everyday cost of living has been rising significantly, nor that greater increases are yet to come.
There is a wealth of contributory factors, including a global surge in energy prices and the ongoing impact of the Russian invasion of Ukraine, both of which have had knock-on effects on the manufacturing and transportation of goods.
Currently, the UK inflation rate is at a 40-year high, with experts warning that it may rise further within months.
The Chancellor’s recent Spring Statement details a ‘support package’ designed to help ease the financial burden on households. Meanwhile, the police have been advised to use their “discretion” when deciding whether to prosecute people who steal in order to eat.
But how should employers respond?
Paying employees a fair and liveable wage is a given, of course. However, significant pay increases may not be an option for businesses affected by rising costs.
The CIPD’s most recent Labour Market Outlook report acknowledges that “employers may have reached a limit to how much further they can go on pay.” The report also recognises an “ongoing need to keep (workforces) engaged and motivated… particularly if increasing pay has already been explored”.
As the function most likely to be in regular touch with employees’ needs and priorities, HR is particularly well-placed to offer creative solutions that offer the right support, in a way that stays relevant to organisational culture.
Here are some examples.
Involve employees in decision-making
A recent Personnel Today article highlights the value of involving employees in discussions around how best to support them.
Along with group meetings and one-to-ones with management, companies could also encourage practical suggestions in a secure online space, such as the company intranet, or an online communication platform (such as Slack).
After months of open discussions, Smile Time, an oral-care business featured in the article, offered its workforce a choice of a pay increase or reduced travel costs. Although all employees opted for the increase, the company noted that the discussions themselves had “paid off in terms of retention, and there has been no turnover since”.
Review benefits packages
Now is a very good time for companies to look at changes to their current benefits packages, to find ways of helping employees meet their day-to-day living costs.
Some ideas might include targeted assistance with childcare or travel costs, or even providing temporary additional payments to cover rising household bills.
Going further, the CIPD recommends offering employees financial wellbeing support including places on financial management training courses, or offering ‘crisis loans’ to protect them from unexpected financial shocks.
“Our financial wellbeing depends on more than how much we’re paid – it’s about feeling secure and in control, knowing you can pay the bills today, can deal with the unexpected, and are on track towards a healthy financial future.”
Many companies have encouraged employees back to the office following Covid lockdowns. However, allowing them to continue working from home will help them save money on soaring petrol and commuting costs.
In response to these rising transportation costs, Dr. Andrew White, a director at Oxford University’s Saïd Business School, has described the need for leaders to accept “a second coming of working from home for those whose jobs can be done this way”.
Focus on wellbeing
Understandably, business conversations have been monopolised by hard financial topics. Yet supporting employees’ mental health and wellbeing has never been more important.
For managers, listening and observing will play a key role in offering the right support, at the right time.
Listening to employees’ aspirations, then offering training and opportunities where relevant, will help them feel more in control of their career and future.
Research from the Money and Mental Health Policy Institute also shows that over two-thirds of employees who struggle financially report at least one sign of poor mental health that “could affect their ability to function at work”. These include loss of sleep, poor concentration, and affected workplace relationships.
Managers should therefore observe and respond to uncharacteristic employee behaviours, such as irritation or tiredness, with compassion. It could also be helpful to signpost forms of free financial advice (such as National Debtline) where appropriate.
The CIPD offers a suite of resources to help employers develop a programme of financial support for their employees. If you would like some bespoke guidance for your organisation, please contact our experienced team at Viridian HR.