What can employers do to help with the cost of living crisis?
The last few years have been challenging for employers and employees alike with the need to adapt to global events and rollercoaster economic conditions. The latest challenge is the exponential rise in the cost of living in the UK. Many employees are finding to harder to keep up with basic home expenses such as energy bills. Even a trip the grocery store can be stressful with food prices impacting what families can afford.
Companies concerned about employees are recognising the potential impact of the cost of living crisis on their wellbeing. There’s an awareness that additional stress can impact on their ability to perform well at work. Employee benefits are changing from being based on status to focus more on employee needs, highlighting many ways employers can help their employees with the cost of living crisis. Here are a few important considerations:
1. Defining the Company Reward Strategy
It’s generally accepted that throwing more money at a problem, rarely solves it, even in tough economic times. This is why reward strategies need to take into consideration both personal and financial well-being. There’s a growing trend that employees want to feel that they have a purpose in what they do, and aligning personal values with company values is a big part of this. Additionally, employees want to be able to progress in their careers. Recognition as well as opportunities for learning and development are often important elements of attracting and retaining employees. When there is a clearly defined reward strategy it helps employees understand what they can work towards and how the company may be able to help them get there.
2. Communication and flexibility
Employees want to be their authentic selves and have a voice within a company. This includes the freedom to express concerns and needs that they might have. It took a pandemic for companies to realise that flexible working was not only possible, but could be beneficial to both employees and employers. Now that hybrid work has become the norm, it’s important for companies to define and clearly communicate how flexible working arrangements are decided. Allowing work-from-home can help employees reduce their household costs because they can save on their commute. Also, there’s no need to dress up to go into the office so they can save on wardrobe costs, and it makes it easier to co-ordinate family and household errands which save time and transport costs.
3. Pay structure and transparency
Employee’s generally get concerned about pay when they aren’t making ends meet. The easiest way for companies to help with the cost of living crisis is to pay employees what they’re worth and what they need. With this in mind, there are some that call for greater transparency in salaries, but it’s not really practical to make public what each individual earns. Most employees wouldn’t be comfortable with this in any event. But it is possible to be more transparent in how pay structures and specifically pay increases are structured and decided. If these are aligned with clear KPI’s then it creates more clarity for all.
4. Closing gender pay gaps
It’s an unfortunate reality that gender pay gaps still exist. When women are working to support themselves or their family without the support of a partner or spouse, earning less than male colleagues while doing the same level of work makes life harder. Companies may baulk at the added costs, but this is a historical wrong that needs to be corrected, and the sooner the better for all.
5. Bonus structures
Some companies may be fortunate to have had a good financial year. This could lead to an expectation from employees that lucrative bonuses will be forthcoming. Variable pay structures are usually performance related and it’s important to clearly define targets and expectations and well as how and when bonuses are paid out. Variable pay needs to benefit the company in terms of improved business as well as the employee – as their reward.
6. Health and well-being
Financial stress can have a huge impact on the health and well-being of employees. It’s not just about having empathy for employees who find themselves in a tough situation financially, it can become an added cost to the company. Sick days, lack of productivity, and the cost of mistakes. In short, it pays to look after employee’s health and well-being. When companies are proactive about providing support to employees it helps significantly, easing the stress of the situation and letting them know that they’re not alone in dealing with it.
These considerations highlight that solutions aren’t just about money, even when the root cause is financial stress. Employees deliver value to companies and are assets worth investing in. When times are tough, be the company supporting employees and helping to make their situation less stressful.
With over 20 years of experience in HR Systems, People Analytics and Reward, Andrea Rae set up her consultancy Inspiring Reward in 2020. Andrea works with medium and large organisations to develop Compensation & Benefits strategy, communications and tools to ensure they can effectively attract and retain talent.
HRHuddle – Cost of living crisis – What can employers do to help and support their employees
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