With reports of inflation hitting a 40 year high in April and costs for energy, food and fuel continuing to rise, employees are looking to their employers to help them with the rising cost of living and it is hard to know exactly what the best strategy is.
Pressure has been put on employers to increase salaries as a way of supporting their employees but for most employers, this is not possible.
Employers do have a role to play and following a recent CIPD Reward Management survey, 96% believe organisations should provide a fair and liveable wage, 87% believe organisations should support in-work progression to help people increase their earning potential and 71% believe organisations should offer support with financial wellbeing by offering and signposting benefits and financial education.
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What is the effect on employees?
Organisations may risk an unengaged and distracted workforce as worries of costs of living concerns increase.
Money and people’s mental health are very much connected, money is a fundamental factor in all our lives, so it is no wonder that one affects the other. It is understandable given the current climate for people to feel anxious about their financial circumstances when there is such economic turbulence. When people feel like this it can overwhelm them, which then has a knock-on effect on other areas of their lives such as work, where people may become disengaged, demotivated and exhausted.
A recent survey by a financial wellbeing platform Mintago found that 36% of millennials felt that money worries had impacted their work performance.
What action should employers take?
Supporting your employees to have a decent standard of living contributes to being a responsible business and paying as a minimum the real Living Wage, demonstrates this.
Pay increases, whilst beneficial, are not the only way to help employees with the cost of living crisis, especially when employers are also under a financial strain.
We have often seen companies offer to support their employees’ mental well-being, so why not offer financial well-being support as well? It can be a valuable and relatively low-cost benefit to offer and may already be an option with current providers that you are using.
Employee Assistant Programmes (EAP) are a key investment for many businesses. They are somewhere employees can go to get support in a variety of areas including mortgage advice, financial planning, debt management and often also offer a counselling service. Normalising conversations about money worries can often help people with tackling what is in front of them.
Private healthcare, interest-free loans, saving schemes, salary sacrifice and looking at discounts for lifestyle benefits such as gym memberships may also be a great benefit to employees.
It is often more about educating people as to the best ways to manage their money and how to get the most from it, which can then prove to be a life-changing benefit.
Attracting and retaining staff
When people are looking at their current employers or future employers, they are looking at the whole package that is on offer. Businesses are becoming more creative with the rewards that they offer, whether that be in relation to working hours, the location of where their employees work, or their benefits.
Since the pandemic, a lot of people have become used to working from home and not having the travel costs associated with going into the office. With the increase in travel and fuel costs, some people are now not able to afford the daily commute. So, the attraction of having a hybrid or working from home option is appealing to a lot more people, it also reduces costs for business!
This doesn’t work for every business, however promoting options like car sharing, cycle to work schemes or offering discounts for parking / public transport could help to save employees money and also promote physical health, as well as contribute to the commitment to ESG (Environmental, Social and Governance).
The situation we currently find ourselves in is not predicted to disappear anytime soon, so educating and supporting your employees as to how best to manage their situation may help their well-being and in turn, keep them motivated at work.
If you have schemes available within your organisation, then remember to promote and communicate them. Highlight what you have available for staff and encourage people to use them.
If you wish to discuss any options or need support, please contact a member of the MAD-HR team who will be happy to help.