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 crisis, 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.
To put this into greater perspective, we can see that Inflation is now at 5.5%, a 30-year high in the UK, which has a significant impact on employees’ disposable income and living standards.
Unfortunately, there are many costs that will be increasing, including 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.
|38% of people worry about money on a weekly basis (Breakingnews.ie)|
|Cost of renting is expected to climb by nearly £1,000 (8.5%)(BirminghamLive)|
|Average food shop predicted to increase by around £100 (+3.2%) (BirminghamLive)|
|Regulated rail fares in England will rise by 3.8% in March (The Guardian)|
|Energy prices set to increase by 54.3% in April - adding nearly £700 to our yearly bill (BirminghamLive)|
|Average employee set to lose more than £1,000 in incremental costs each year (HR Magazine)|
What do I mean by this? Well, to maintain the normal cost of living, an employee making £30,000 annually would need a 7.1% increase in their salary.
And we know, that’s not feasible for most organisations, though we’d all love to see it!
How will the cost of living crisis impact HR?
But employees aren’t the only ones impacted by the cost of living crisis - and yes, we can safely call it a crisis. 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 crisis for HR:
|3 in 4 businesses are increasing prices of products and services to offset rising costs (BBC News)|
|62% of companies say soaring energy bills are creating pressure (BBC News)|
|90% of manufacturing firms say higher raw material costs are an issue (BBC News)|
|63% of firms overall - and 70% of manufacturers - report rising wage demands causing pressure (BBC News)|
Salary is now a top priority for 40% of job seekers due to increased cost of living.
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 the cost of living crisis, while keeping costs down?
A smart employee-first strategy that addresses the immediate impact of inflation, such as an employee discounts scheme or a wide range of employee benefits 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.
One of the ways to mitigate the cost of living crisis is by showing your employees the total value of their reward package. This is what St. James's Place Wealth Management did, as the financial organisation modernised its reward strategy to reach nearly 2,000 employees.
The organisation previously had poor communication surrounding rewards and benefits, which made it difficult for employees to find what they needed.
The team was also looking for ways to improve the benefits it offered employees following an employee survey that revealed a 5% decrease in employee satisfaction with benefits.
Working with Reward Gateway, St. James's Place launched its 'My Rewards' portal, a centralised, all-in-one rewards and benefits platform where employees could access everything they needed. My Rewards was designed to reflect the company brand, and St. James's Place ran campaigns leading up to the launch to build excitement for the new platform. When the team launched the platform, they also introduced a new Cycle to Work benefit which adds to their Employee Value Proposition. 97% of employees are registered on the platform, and the discounts, Holiday Trading and Cycle to Work are all being used frequently by employees to save money. Read the full story here.
Check back on our blog for more insights and advice on how HR leaders can navigate the challenges associated with the cost of living crisis. In the meantime, relive our latest Engagement Excellence Live, where we explored this topic in-depth with a half-day of speakers and panels.