Supporting staff through the cost of living crisis
May 13, 2022
The pandemic brought huge disruption to businesses of all shapes and sizes; over the least two years, their staff have had to endure once-in-a-career disruption as business model wheels had to be re-invented at warp speed. Loyal employees were put on furlough for extended periods and sometimes asked to make great financial sacrifices, or else they were plunged into working from home under less than ideal circumstances.
Now those same staff are facing the worst cost of living crisis in living memory as the price of just about every component in their household budget soars. The latest Official for National Statistics figures for consumer inflation in March showed a figure of 7%, but within the overall calculation there were some much steeper rises: clothing was up 10.2%, transport 13.4%, cooking oils and fats 18% and furniture 16.8%.
Pay increases may have been 4%, but that is well short of compensating for runaway costs. The expectation is that inflation may well peak at 10% or even more and stay at unusually high levels even after it starts to fall back again.
Recognising the impact on staff
However dedicated they are, staff making choices between heating or feeding themselves and their kids, or having to resort to using food banks for the first time are unlikely to be the most motivated or productive contributors to a business.
Financial pressures from unpaid domestic bills are hugely distracting and may force people to take second or third jobs, compounding the physical and mental exhaustion that going hungry can cause. Money and mental wellbeing are inextricably linked.
Those running businesses must understand and acknowledge the stresses their staff are experiencing. That recognition needs expressing openly and publicly, so that employees know their bosses ‘get it’.
Staying in touch with staff
Some staff will suffer in silence, fearful of the stigma of admitting that they are struggling. Every business needs to find ways to enable and encourage the sort of open (but private) communication about these issues, which means that managers know about problems before they become a crisis and can take prompt action to help.
Pay rises
In an ideal world, businesses would protect their employees by raising pay to compensate for rising prices but commercial life does not work that way. There are as many inflationary pressures on businesses are there are on their staff and not every one can raise their prices to cover the damage to their profit margins.
Staff retention
Despite this, competition for good staff will be intense, so that managers should be mindful that replacing those who leave for more money elsewhere is a frustrating and expensive distraction, to be avoided if possible by selective pay reviews in exceptional circumstances.
Pensions
People struggling with their finances will be looking at all outgoings. One option could be to seek a reduction in their pension contributions, despite the potential long term damage to their retirement income. Employers will be wise to make sure that staff considering this route have had independent pension advice before taking such a decision.
Financial counselling
One curse of modern education is the almost total lack of financial awareness and skills given to people, so that dealing with this sort of overwhelming cost of living crisis is a seriously scary and upsetting experience. Offering one-to-one counselling for staff to express their concerns and get guidance on managing their income and outgoings, or providing support in negotiating with energy suppliers or about other mounting household expenditure could be a priceless positive at such a negative time for them.
Staff welfare
Not every business has the capacity to provide a traditional canteen, but staff can be given simple nutritional support through the provision of free fruit, biscuits, chocolate and other snack items wherever there are drink-making facilities. If there are food vans that visit, firms could set up discount arrangements for staff, so that the costs can be subsidised. There may be other local businesses, such as smaller food stores and other independent retailers, willing to set up a discount scheme for a company’s staff.
Travel costs
Many firms have season ticket loan schemes to help spread costs for their commuters, but fuel and parking costs are issues for other staff, as can be car maintenance. It is worth investigating what other help can be provided to take away the fear factor of the unexpected major repair bill.
Tact and self control
When staff are struggling to pay their rent and feed their families, this is no time for conspicuous consumption in the board room. Taking delivery of a top end Bentley with personalised plates at your premises smacks of unthinking self-indulgence. Far better surely, to cut executive pay and donate the savings to the staff welfare fund instead?
Business as a team game
Ultimately, businesses succeed or fail because of their people, from the most senior to the most junior. It’s a team game, played best where everybody believes that they are cared about and that their issues and concerns will be addressed. Leaving staff to wallow and sink in this cost of living crisis is unwise and will ultimately damage the business to one degree or another.
Taking expert professional advice
If your business is affected by these issues, Opus is here to help. We have extensive experience. Our nationwide network of offices gives us the invaluable insight into local conditions, which leads to identifying workable solutions and achieving positive outcomes. You can contact us at your nearest local office to arrange a no obligation and confidential call with one of our Partners.