A whopping
As employers and employees alike work to mitigate the impact of this, a sensitive approach to the relationship between them is vital. While employers see escalating costs, talent deficits and team well-being challenges, employees see rising costs of living and a freeze on salary increases.
Ultimately, companies are facing pressure on salary increases by employees seeking to offset the increasing cost of living; yet at the same time, business leaders may be facing having to halt hiring and reduce headcount costs. As organizations navigate ongoing uncertainty and unpredictability, business resilience really has never been more critical — and HR leaders have a crucial role to play. Here's some levers HR leaders have at their disposal right now.
1. Manage fixed costs tightly
Smart HR and People leaders know that their people are their biggest asset and therefore biggest cost — but keeping your top talent will pay dividends as they could be the lynch pins that are needed to successfully ride out the economic storm. Also, factor in the cost to rehire and retrain, and weigh up if you can really afford to lose your shining stars to competitors?
If you are fearful that valued employees might be at risk of being laid off, look at your data to see if you can create a strong business case for retaining them. Any KPIs or productivity stats might be beneficial here. Likewise, if their requests for a salary increase are going to cause them to leave, can you be smart and offer other incentives such as a four-day week or a training course or qualification if there is pressure on fixed costs?
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Focus on productivity — ensure you're paying for performance — and look at ways to boost employee productivity in a sustainable manner.
2. Increase total compensation through variable cost incentives
During economic turbulence companies often put a freeze on pay increases, yet employees will be looking for ways to boost their income. Use bonuses, stock grants, and other incentives to offset lower base salaries, and offer gift cards or equivalent (company branded items, especially clothing) to help maintain motivation.
Be open and transparent about pay and benefits, communicating how the grading system works, and how wage levels and salary increases are decided. If employees understand what's going on at the top, they are more likely to respond better than if they feel they are being kept in the dark.
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Don't forget to remind employees of existing benefits your company offers — cycle to work schemes for example can offset the high cost of gas — childcare vouchers, and any discount platforms your organization is signed up to that offer reduced consumer goods.
Finally, consider wellbeing incentives, offer additional paid time off and remember recognition and spot awards as additional ways of recognizing successes in your workforce.
3. Offer flexibility as a financial incentive
It might feel like your hands are tied if the company has put a clamp on costs and financial incentives, but think outside the box and remember that flexibility is a strong bargaining chip for most employees.
A shorter working week — condensing someone's hours into four days for example — or offering an employee the chance to work part time could hold a lot of weight with some employees. Likewise, unpaid sabbaticals can be the perfect motivator for an employee that has been considering going travelling or taking some unpaid leave.
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Although remote working and hybrid working feels like the norm, perhaps your company isn't offering it as freely as it could? Investigate to see if there is even more flexibility in the way employees work that could be offered as an incentive.
4. Personalize employee experiences
Paying attention to how employees are affected by the significant increases in inflation, food, and fuel prices enables HR to understand the sentiment across the organization. You can then decide whether action should be taken at the organizational level or at a group or individual level to reduce stress and keep employees motivated, engaged and productive.
In fact, each employee may need to be managed slightly differently regarding the stress they are under, to keep them motivated and engaged, so creating personalized, tailored employee experiences is a smart move.
Encourage leaders to adjust management styles and deploy situational leadership where necessary to suit individuals and teams or squads, and communicate early and often. Being open and transparent in discussing company performance will make employees feel valued.
Providing employees with more autonomy in decision making where possible and creating a listening culture so that you can act on feedback and communicate necessary actions or suggestions, are all ways of generating personalized employee experiences.
Also look at offering stretch assignments, growth opportunities, and meaningful and worthwhile work, as well as automating low value or boring work.
5. Implement a financial well-being policy
Having a financial well-being policy that feeds into your wider well-being strategy will show your organization's commitment to supporting employees with any money worries and concerns they might have. It can be as simple as signposting your employees to independent money and debt guidance, making sure your staff are aware of all the benefits you currently offer, and normalizing conversations about money worries at work.
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Helping your workforce know where they can access free, confidential and independent money advice could help some of them plan, save and make better long-term decisions.
Look at ways your own organization can increase financial support to staff. Some employers are considering commuter subsidies, hardship loans, support on maintaining retirement and insurance contributions and counseling.
Better prepared and ready for changing priorities
If 2020 taught us anything, it was how to deal with uncertainty in a constantly changing landscape. HR leaders rose to the challenge and successfully navigated their organizations through the pandemic, proving their ability to be leaders of change. In fact, 72% of HR leaders told us in recent
The current economic downturn is no different — it provides the opportunity for HR and business leaders to continue to innovate and make positive changes. Some might look to make bold, strategic moves, while others might strip back and focus on simple, cost-effective solutions. Whichever camp you're in, sitting still is not an option. Change agility is crucial and HR is perfectly positioned to lead the charge again.
Coupled with an agile, flexible cloud HR platform, you can enable rapid, data driven decision making, easily tailor employee experiences for individuals and teams, and support changing global policies and local compliance. Being prepared is always a smart move in uncertain times. That much is certain.
