When prices of consumer goods increase, it can spell disaster for household expenses and cause inconvenience to employees who rely on gas for travel, as well as groceries and other essentials to survive day to day. At this juncture, employees look to their companies to match, if not exceed, the inflation rate with a possible rise in their wages.
And so, as prices skyrocket, so does the pressure for employers to do more to support their employees’ financial well-being.
Offering higher salaries and giving out bonuses might seem the obvious solution, but doing these might not always be practical or possible. What happens when living expenses are too burdensome for employees? How can you address these challenges and support your team amid inflation?
Read more: How to build a recession-proof career
Facing the realities of inflation
In the United States, the average American family is spending an additional $327 per month compared to pre-pandemic costs because of rising inflation. According to the Bureau of Labour Statistics, the consumer price index rose 7.9% over the past year. As a result, US President Joe Biden has already laid out plans to combat rising living costs and deal with inflation.
In the United Kingdom, inflation is at an all-time high of 5.5%, dramatically impacting employees’ income and living standards. The cost of rent is expected to increase by nearly £1,000. The average food shop is predicted to increase prices by around £100. Additionally, energy prices increased by 54.3% in April. The average employee will lose about £1,000 in incremental costs every year.
How companies fare during inflation
Employees are not the only ones experiencing the impact of inflation. Companies adjust to the crisis when prices go up. According to the BBC News, three out of four businesses increase the prices of their products and services to offset costs. About 62% of companies say that soaring energy bills put pressure on them to pass the costs to consumers.
Inflation is also causing attraction and retention challenges for companies, resulting in the continuous shortage of workers, salaries not keeping up with rising costs and increases in hiring costs intensifying everyday obstacles that companies face.
Ways to support your team amid inflation
As companies face budget constraints, how can you support your employees through these difficult times?
Look for ways to ease the financial burden
Although not every company can afford across-the-board pay increases, there are ways to ease employees’ financial burdens that do not involve raising salaries or giving out bonuses. You can start by getting creative with benefits and perks. A survey by Glassdoor revealed that 80% of employees prefer additional benefits over a pay raise. These additional benefits can include:
Remote work, either part-time or full-time, which will help them save on gas or commuting costs;
Paying a more significant percentage of employee health insurance costs;
Providing tuition reimbursements;
Employee discounts on pet insurance, childcare costs, or home and auto insurance
Phone stipends or home internet reimbursements.
Address employee concerns proactively
Employees usually broach conversations about remuneration, but smart employers can try to get ahead of potential concerns. According to Kiran Contractor, Director of Talent Acquisition at ADP, organisations must try to connect better with people and ask what’s important to them. Although asking how inflation impacts them directly can be tricky, talking about the situation can uncover insights into what matters to your team.
Maximise available compensation data
How your company decides to offer pay raises must be backed up by data. If not, you could wind up giving pay raises that do not affect talent attraction or retention. Contractor explained that companies must do their research to understand what the market is paying. Analysing compensation can help determine whether your remuneration is within range nationwide.
Use salary ranges
Consider creating a pay range instead of setting a fixed salary per role. A flexible pay range can motivate employees to grow within their positions. It can also make the position more appealing to employees.
Despite rising costs and increased pressure to restrain expenses, you can still support your team by playing an active role in easing financial burdens. Make sure to back up your decisions with data to devise smart solutions.