The annual inflation rate in the UK increased to 9% in April 2022, a huge 2% increase from March 22’ and so far is the highest increase since 1982, as shown in trading economics (United Kingdom Inflation Rate – May 2022 Data – 1989-2021 Historical – June Forecast (tradingeconomics.com). This sharp increase has been prompted by continued rising prices for electricity, food, fuel, and gas with the biggest upward pressure coming from the cost of housing and utilities. With forecasts of 9.1%-10% incoming, the cost of living is really starting to take its toll.
Many employees are looking to their employers to help them with the rising cost of living and for many companies it can be hard to know what the best strategy is when faced with this difficult issue.
There has been a lot of pressure put on employers to increase salaries in way of support, but for many employers and businesses this is either not possible or feasible in the long run.
With the cost-of-living crisis getting worse and causing more strain, employers and businesses are at risk of having a drop in job performance as employees may become unengaged and distracted. A poll carried out by Mintago found that 33% of 18-34 year old’s believe their job performance is harmed by financial concerns and 9% of those ages 55+ share this belief (Over a third of millennials say financial worry is affecting job performance – research – Corporate Adviser (corporate-adviser.com).
Money problems and mental health are often intricately linked and financial difficulties are a common cause of stress, almost 39% of people with mental health problems have said their financial situation had worsened their mental health as published in an article (Money and mental health facts and statistics – A Money and Mental Health Policy Institute factsheet).
In many businesses it is up to their HR teams to aid business leaders to address the cost-of-living crisis and help provide solutions to help employees whilst remaining aware of the organisation’s own financial pressures.
Since not all businesses have the capacity to match pay rises with the rising level of inflation, it is important that HR teams and businesses recognise that individual employees will be impacted in different ways, ultimately influencing what they will need from their employer. It is important for HR to encourage businesses to remain flexible with regards to their remote and hybrid working models, or aid implementing them if the business has none in place.
This is because some employees may feel as though working from home, benefits their financial wellness as it eliminates the costs of commuting to work, a big concern with the increasing fuel and transportation costs. Whilst other employees may have concerns about rising utility costs and would prefer to work within the office more often than not. Summed up a one size fits all approach will not be an effective model to manage employees.
Another way HR can help is through the implementation and encouragement of an open-door policy between employees, higher management, and the HR team themselves. This can aid in keeping and maintaining balance throughout the organisation during this uncertain time.
If HR teams are aware that employees may be experiencing financial troubles, it is important that it is made known that employees can always touch base with HR/Managers or other members of the team. Both financial and personal concerns can be hard for individuals to communicate and as the saying goes a problem shared is a problem halved, by a way of useful advice and resources for those who are having a rough time.
The biggest concern for organisation’s right now is how to deal with the rising costs for the business whilst still providing support to employees. HR can help the business leaders gain more insight by revisiting employee costs to see if there is any flexibility to be able to line up the costs of the business objectives, but also take into consideration employee and financial wellbeing measures.
Many employers now offer benefits as a perk for working for the company, these benefits can include gym memberships, discount platforms, and wellbeing perks, however it can be difficult to determine what benefits are suitable and/or valuable to offer, as each individual employees needs vary.
To offer the most (favourable/valuable) company benefit, HR could ask the employees outright what benefits they would like to see and work out whether or not it works within the businesses budget.
It could be helpful if business leaders got together with HR to work out whether there is any flexibility in which un-utilised and/or outdated benefits, for example cycle to work schemes or access to mindfulness apps, can be swapped out for those that are more fitting to what the employee needs in the current crisis, for example, financial counselling or discounts on consumer goods.
A final way in which HR can help is when employers don’t have the budget to increase salaries to match the increase in living costs or increase or swap out company benefits is to offer employees support. For example, Employee Assistance Programmes, financial wellbeing support, in the way of free financial advice and provide benefits that allow for savings where possible. These solutions may not be ideal for some individuals; however, they are valuable and easy to offer at relatively low costs to the business.
The cost-of-living crisis is unfortunately inevitable as prices continue to increase around the world, this however doesn’t mean businesses are doomed, it just means that they may need to reassess their business models and where possible utilise their HR teams to further support and empower their employees.
If you would like further support please get in touch with a member of the team who will be able to support your further firstname.lastname@example.org or 01223 641 017.