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8 ways to support staff through a higher cost of living
Read time: 3 mins Added date: 19/01/2024
The rising cost of living presents new challenge. Supporting your staff through tough economic times can help them feel valued and create a more resilient business.
For staff feeling the impact of rising prices, it can be hard to focus on day-to-day tasks. Economic news may be fuelling their anxiety.
Inflation, for example, isn’t falling as quickly as some may hope. Although significantly lower than its October 2022 rate of 9.6% (a 40-year high), inflation remains at a level not seen for over a decade. For many, it’s the impact on essential items that is most obvious. Food inflation reached 19.1% in the year to March 2023, driven by the war in Ukraine, labour shortages, droughts and cold snaps.
To try to manage inflation, the Bank of England has said that “monetary policy is likely to need to be restrictive for an extended period of time.“ In turn, mortgage and loan holders are facing increased costs of borrowing in addition to rising prices.
A recent survey from the Office for National Statistics found that around half of UK adults have reduced their home energy consumption in response to continually rising prices. Meanwhile, annual private rental rates continue to climb by 5.6% in England, 6.9% in Wales, and 6.0% in Scotland from September 2022 to September 2023.
Balancing needs
The hidden cost of inflation is the toll it takes on individuals and it’s likely that many employees are finding the rising cost of living hard to manage.
Business owners who are seeing their own overheads increasing and feeling the pinch, can face a dilemma between the need to run an efficient business and the desire to support staff and retain talent.
It can be a particularly fine balance for businesses in sectors already facing staffing pressures or shortages, such as retail and hospitality, or education. Other sectors may be struggling to find staff with appropriate skills, or like real estate, managing demand pressures.
Given these staffing pressures, businesses that support staff wellbeing could benefit by creating a more satisfied and productive workforce and retaining the talent and skills they need.
How businesses can help
Here are some of the ways you can support your staff and build a more resilient business.
Be open – talking honestly to your employees about the challenges facing the business and how you’re dealing with them can help build understanding and stronger relationships.
Review your wage structure – a first step could be making sure that your lowest-paid employees are earning a ‘Living Wage'. Over 14,000 employers have signed up to the scheme, with more than 90% seeing benefits ranging from a better reputation to more productive employees. If you can offer inflation-matching wage increases, that’s great, but fair and competitive pay is a good starting point.
Consider your broader employee benefits package – financial support doesn’t have to mean an increase in salary. Offering employee discounts on your own products or salary sacrifice schemes in exchange for childcare vouchers or travel cards can help.
Cost-busting incentives – schemes that promote car-sharing or cycle-to-work schemes could help employees manage rising transport costs.
Flexibility – hybrid or homeworking could reduce commuting costs where flexibility works. You could even consider implementing an ‘income streaming’ service to allow employees to draw down some already-earned wages before payday, giving them flexibility to avoid payday loans.
Financial processes – automating your payroll to ensure it is accurate and timely can reduce employee worries. Other tools such as accounting software, for example, can reduce your admin time while helping to manage your finances more efficiently.
Focus on the long term – talking to staff about the long-term benefits you offer, like your company pension scheme, can be reassuring. External resources like the government’s Money Helper service are also on hand to help your employees with their personal finances and many banks have also set up helplines to support customers.
Wellbeing – offering mental health support or the option of mental health breaks can make staff feel supported. Through Lloyds Bank’s partnership with Mental Health UK, businesses can access support to help employees manage their wellbeing.
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