How to support employees during a cost of living increase
HR leaders continue to face tough challenges that come with a state of constant change and evolving workforce needs - from navigating the cost of living increases, standing out in a highly competitive recruitment landscape to staying connected to a dispersed workforce.
At Reward Gateway we talk about us now being in the era of 'The Great Adjustment,’ with HR leaders having to continuously adjust to new employee needs and redefine what flexibility means within their organisations.
As businesses continue to deal with the operational and financial impact of the War for Talent, increasing inflation figures are putting pressure on employers to also do more to support employee financial wellbeing.
Australia's inflation rate is expected to peak at 7.75% in the December quarter, which is significantly impacting on employees’ disposable income and living standards.
Unfortunately, there are many costs that will be increasing – your weekly food shop, rent, rail fares – and we’ve all heard about rising energy bills. It’s time for HR leaders to put themselves in the shoes of their employees.
|Between June 2021-2022, headline inflation in Australia has risen by 6.1%. (Mozo)|
|The cost of non-discretionary items spiked by 1.8% in the June 2022 quarter alone. (Mozo)|
|The cost of food and non-alcoholic beverages was the second-largest household expense, only after housing costs. (ABS)|
|In June, the average monthly spend on petrol in Australia was $192.63, an increase of $82.05 (74.19%) from September 2021. (ABS)|
|Benchmark electricity prices are predicted to rise by up to 18% this year, adding up to $250 to Australian electric bills annually. (ABC)|
How will cost of living challenges impact HR?
But employees aren’t the only ones impacted by cost of living increases. Here’s a look at how our current environment impacts HR. The increasing cost of doing business in general means the costs have to go somewhere, and it’s up to HR to figure out new ways to mitigate these rising costs. Not only that, but the rising global price of energy and increasing inflation is putting pressure on companies everywhere to pass on the costs to customers, and in turn, HR teams must look at every possibility to keep costs down to mitigate this.
Impact of cost of living struggles for HR:
|38% of businesses expect their prices will increase over the next three months (ABS)|
|92% of companies say cost of products or services are creating pressure (ABS)|
|78% of business say the rising cost of fuel and/or energy is contributing to the price increases (ABS)|
Attraction and retention challenges are squarely in the spotlight like never before, resulting from the continuing shortage of workers, pay not being able to keep up with inflation and increases in hiring costs compounding everyday obstacles companies face in the ongoing War for Talent.
With many organisations facing budget constraints, how do we support employees financially, mentally and emotionally to limit the financial and wellbeing impact of cost of living increases, while keeping costs down?
A smart employee-first strategy that addresses the immediate impact of inflation, such as an employee benefits program designed to stretch disposable income, has helped our clients improve the employee experience, even in this uncertain environment as they lean into The Great Adjustment.
Netwealth, one of Australia's leading wealth and portfolio management companies, provides a great example of how powerful discounts can be. The team noticed that staff weren't using the previous discounts offering, so they looked for a new provider and decided to partner with Reward Gateway to deliver a new platform to meet employees' needs.
Staff wanted a wider range of discounts to appeal to Netwealth's
broad workforce demographic.
Employees can now browse through vouchers, discounts, Cashback options and tech deals directly through the company's platform, 'WorkPerks.' This has allows staff to find great offers that appeal to their individual interests. WorkPerks has had great success, with 87% of Netwealth's workforce now registered on the platform and an impressive $616k spent, saving employees $35.9k. The organisation has seen a total 180% ROI on their overall program.
Check back on our blog for more insights and advice on how HR leaders can navigate the challenges associated with cost of living increases. You can also visit our new content hub to uncover more resources to support your organisation and your employees through these challenging times.