We’re being asked by lots of clients what to do, or what other businesses are doing, to support their employees through the cost of living crisis.
The cost of inflation and living have already rocketed this year. In fact, after decades of low UK inflation and wage increases, the rise of 5.4% in December was a shock – it’s the highest rise in 30 years. A recent report by Post Office and The Trussell Trust showed that 38% of people in Britain had to choose between heating or eating from November to January. In June 2022, inflation this was 9.4% and yesterday the Bank of England raised interest rates to 1.75% as inflation is set to hit 13%.
And although earlier in the year the National Minimum Wage and National Living Wage increased, this rise isn’t enough to absorb the cost of living – especially considering the National Insurance increase of 1.25%. And what do you do if your employees already earn more than National Minimum Wage?
There’s a chance that if you don’t acknowledge the increased cost of living, you risk losing your employees. Since it’s a candidates’ job market at the moment, the usual fears that come with leaving a job are increased.
A number of our clients are asking us what they can do, or what other businesses are doing, to support employees through the cost of living, with concerns about people’s wellbeing as we move into the winter months. We’ve put together our top 5 tips to supporting employees during this time.
Also, as Leaders of the organisations, think about your actions and how this could be perceived in the workplace. For example, if you are not increasing salaries, is it appropriate for you to have delivery of a brand new company car, do you need to have that corporate box, and when you do travel, is first class necessary? We appreciate you are entitled to do these things as you’ve worked hard for it, but think about how this could be perceived by your teams when they have money worries.
I’ll never forget the time in an HR role where we were serving notice for people to made redundant, only for the same day a bunch of senior managers to take delivery of their new company cars (which had been ordered months in advance), an internal PR disaster and upsetting for a number of employees.
Pay Reviews/Bonus
If you don’t already, could you hold regular pay reviews with all employees?
You don’t need to tie these into your regular 1-1s/appraisals, as we appreciate with rising business costs, it might not be possible to increase salaries based on the levels your employees might expect for meeting their objectives. But be honest and transparent with people and explain why.
It doesn’t mean you need to increase everyone’s salaries right away, but instead it opens lines of communication with your team about the possibility of a pay rise.
Set each member of the team a series of goals or targets they have to meet in a specific time frame. If they meet these targets, then they could be on track for a pay increase, or bonus. Not only is this a good way to improve performance within the business, but it also gives you an insight into how your people wish to progress at work.
Remember, people should not get a bonus for doing their job – it should be based on KPIs and where targets are exceeded. Otherwise, you could drive the wrong behaviours.
You may also be able to set training goals and link this to a pay increase too.
When the subject of a pay rise is approached in the right way, it really can work out well for everyone.
We understand that employers are currently trying to navigate their way through a slowing economy and the possibility of recession. Offering a pay rise now or in the near future may not be possible. In fact, a report by the Chartered Management Institute found that 48% of businesses were not planning to give staff a pay rise this year. The percentage of people who said they are planning to give their staff a pay rise are only able to offer on average, 2.8%. This doesn’t match the rise in cost of living.
We are also working with a number of businesses to carry out salary and benefits benchmarking, allowing employers to sense check if their offer is competitive.
Thankfully, pay reviews and increases are not the only solution to support employees through the cost of living crisis.
Debt Support
One of the best ways to help staff through this difficult time is to offer debt support and advice. You can do this by creating an Employee Assistance Plan. If you don’t have this in place, there are a wide range of reputable and cost-free dept management support services that can offer good advice. You can point your team in the direction of organisations such as National Debtline, StepChange, and CAP to get the right support.
There are many Employee Assistance Programmes out there, we have one at The HR Booth and we’ve also helped many clients with these programmes too.
Employee Benefits
Look at the current benefits you have that can help staff save money and remind them of this. Your benefits may be fantastic, however, they’re not effective if staff aren’t aware of them. Promote employee benefits throughout the workplace, mention what’s on offer during team meetings, and even promote a money saving event.
Other ways you can help is by offering hybrid working. This will allow your employees to work from home half of the week which will help them save on travel costs. Read more about hybrid working in this latest article. Other benefits can include private health care, discount codes, voucher rewards, insurance, and gym membership schemes.
We recommend looking at your current benefits and measuring their effectiveness and popularity. If you feel they are no longer relevant, you can swap them out for other money-saving benefits. Make sure these benefits are easy for employees to use and access.
Some businesses have explored other innovative methods such as prepaid cash back cards that offers a percentage of cash back that can be used in a range of shops. These cards also comes with an app that helps people track their spending.
Emergency saving schemes can be a great way to help employees save for unexpected bills. The idea of this benefit is that members add additional contributions direct from payroll that goes straight into a savings account. Staff can then access in an emergency.
Some benefits also include discounts at some of the main retail providers. Your employees will be shopping anyway, but these schemes allow them to save money, whilst working for you, helping you to retain talent in your business. We are working with a few clients on such schemes at the moment.
And if you don’t have one, consider an Employee Assistance Programme (EAP). These not only offer 24-hour counselling on things like financial/debt advice, but also offer many other benefits including GP, counselling on a range of subjects, all geared to supporting your people. We’ve helped a number of businesses with an EAP and we also have one in place for our own team. It does make your teams feel valued.
Expenses
Is it time to look at your expenses policies and make sure they reflect the rise in prices? Check your car mileage allowance and make sure it considers current fuel costs. Have you let your team know about the tax benefit if they work from home? Do you provide a heating allowance to help staff heat their home office? If not, you encourage you to start doing this now.
Employees Under 25
We encourage you to look at what you pay your employees and make sure it’s fair. The living wage for employees aged 23 years and over is at least 32p more an hour compared to younger age groups. If your employees are doing the exact same work but are being payed differently, you need to consider how unfair this is. Younger employees can have the same overheads and financial constraints as anyone else and shouldn’t be penalised for their age.
If you can offer everyone in your team the current top living wage, no matter their age, we encourage you to do so.
If you’d like more help or guidance in dealing with the cost of living crisis, we’d love to assist you. Just give our outsourced HR team a call.
