In the UK and elsewhere families face a perfect storm of unmanageable fuel bills, sharply rising inflation, Brexit issues, and wage erosion.
All while many companies post record profits and exec level pay and bonuses.
So, should employers react, and if so how? Can they do it in a way that demonstrates empathy with employees, reflecting an all-for-one culture that can continue to appeal to future talent who may well be judging how companies acted during the crisis before deciding who to join?
With UK inflation over 10 per cent for the first time in more than 40 years, some employers have already made help available to employees.
Supermarkets such as Sainsbury’s and Iceland have offered more employee discounts to ensure staff members are able to afford groceries (er….bought from them), while businesses like the NHS Foundation Trust in Norfolk and Suffolk have set up a staff food bank. All perfectly normal.
But is that enough? The fact that companies across the UK have witnessed increasing pressure from trade unions calling for pay rises that match the level of inflation, says no.
Network Rail workers, for instance, created massive disruption to public transport this summer by striking in demand of increased wages. The RMT union received a below inflation offer of a 5% pay rise in a two-year deal, with the biggest rises going to the lowest-paid staff. However, the union was looking for a minimum 7% increase. Still below inflation.
Other companies such as Lloyds Bank (£1000), Taylor Wimpey (£1000), Nationwide (£1200), HSBC (£1500), and MoneySupermarket (£2000) are making one off payments to staff.
Help with Cost of Living
But Office for National Statistics data shows that firms offering handouts are in the minority because only five per cent of businesses with 250 employees or more are offering a hardship bonus.
A recent survey of 1,000 UK employees found that 45% said that pay rises and bonuses would help with the cost-of-living and 44% wanted more education on available tax relief. Almost three-quarters (73%) said that employers in general should be doing more to support their workers with their rising energy bills.
Research from Canada Life reveals that four in five employees feel their employer should provide support to help with rising living costs.
The top ways employers are looking for support from their employers to help with rising costs are increase in salary (54%) and contribution to bills (23%).
Others include:
- Introduce a travel allowance - 23%
- Reduce mandatory office days - 18%
- Provide one-off support payments - 14%
Cost of Living Impact on Work Culture
This is an issue that can’t be fixed with the usual perks and benefits. Money caused the problems, and it might be that it’s only money that can fix it, but it’s not that easy.
Michael Alexis, CEO at teambuilding.com, says: “The magnitude of impact the cost-of-living crisis impact has on work culture is proportional to how much you rely on pay for culture.
“Workplaces that are strictly "pay for performance" and don't invest in areas like employee recognition, career growth and team building will be hit the hardest. On the other hand, businesses that have a broader culture support will be able to navigate more steadily.
“Whatever the makeup of your culture, the strongest support you can offer during a cost-of-living crisis is financial. If you are not able to increase all salaries and wages permanently, then consider a one-time bonus. We recently announced and gave substantial bonuses to our entire team -- it was a way to recognize their hard work and contribution to our success, and also a way to share the profits from it.”
If your business truly can’t provide more pay, then there are other benefits that cost less. Paid time off is valuable to employees and is relatively low cost, especially when the role is salaried.
Chris Murdock Co-Founder & Chief Sourcing Officer at IQTalent Partners, believes companies with an already strong culture and employer brand are best placed to help employees cope and retain staff: "If you have a healthy company culture, the cost-of-living issues that the employees might be facing will be addressed in an open an empathetic way. This will lead to better retention and morale through the tough times. Those companies have the “we’re in it together” mentality. When a company’s culture isn’t defined, lacks empathy, and it’s toxic, the cost-of-living issues will only magnify those shortcomings and lead to a mass exodus and create issues in recruiting their backfills when the economy rebounds."
Baruch Labunski, founder of cybersecurity specialist, Rank Secure, adds: “Everyone is tense today because their paychecks don't cover all the additional inflation of necessities to live. While most give the figure of 8.5% inflation, the reality is most items like food, medicines, and gasoline have increased anywhere from 30% to 200%.”
Leadership in the Crisis
But arguably, some companies can't adjust pay to accommodate such an increase, because of increases in operational expenses too.
“As a leader, you should provide a safe, non-judgmental environment where employees can share their stresses with you,” says Labunski. “Keep an open-door policy and share your struggles. Ask employees what they need to be financially well and do what you can to help.”
The answer would be money, of course. But, the long term aim, in addition to genuinely helping employees, is to retain staff and maintain the integrity of your employer brand. In which case, measures such as better remote options can relieve some stress if staff are having trouble finding or paying for childcare and free access to mental health services like phone counselling can help too.
Rachel Kanarowski, Founder & Principal Consultant at Year of Living Better, says however they tackle it, leaders must lead: “If your executive leaders feel comfortable posting personally on LinkedIn, this is a great topic for them to post about on the platform since it highlights their long-term thinking on both the economic and human success of their organization.”
Companies are struggling through the crisis too but retaining staff will help both them and the company recover financially. If “downsizing” is an unfortunate reality, then it must still be done with an ‘employee first’ approach that maintains reputation and retains goodwill.