With inflation soaring over the last 12 months, employers are under increasing pressure from employees to ease the burden of the rising cost of living. However, with businesses feeling the financial strain too, pay rises simply aren’t possible for many employers. Here are alternative methods for motivating and supporting staff through the cost of living crisis without breaking the bank.
The rising cost of living has had a substantial effect on all bill-payers. Everything from rent and mortgage repayments to energy bills and food shops is now costing us all considerably more than they did pre-pandemic. As a result, many employees are finding it harder than ever to keep up with their monthly costs, let alone save. With the challenge unlikely to improve in the short-term, employees are increasingly turning to their employers for support.
Whilst in an ideal world, employers would support by offering pay rises to employees to help keep up with inflation and increasing living costs, this just isn’t possible for many businesses, where finances are already tight. For these employers, it will be crucial to find alternative methods to engage and support staff, or risk losing workers and undergoing the costly process of recruiting and training new employees.
So, what options are there available to employers?
Offer flexible working
One cost which has risen significantly in recent years is the price of commuting. The cost of public transport, petrol and parking have all risen in the last year. In fact, in a survey conducted of London employees, it was found that the average amount spent commuting added up to £64.19 a week. This equates to over £3,330 a year.
Whilst the simplest way to reduce this cost is to introduce remote working, this option is not available to all workforces. For example, deskless workers such as those in the care, construction and hospitality industries cannot work from home, with the majority of roles reliant on in-person duties. One way around this is by offering employees flexible hours. By starting and finishing work earlier or later than usual, employees will have more control over their working hours and can better manage their subsequent commuting costs. Plus, it allows employees to find a working schedule that suits the needs of both the business and themselves. This type of lifestyle benefit is an effective way to boost an employee’s loyalty, and can often be valued more than a small pay rise being offered by a competitor.
Invest in employee training and development
Another powerful way for businesses to engage employees amid the cost of living crisis is by providing effective training. By investing in employee training and development, employers can help staff develop new skills, allowing them to take on new roles and responsibilities, and increase their earning potential to offset the rising cost of living. Not only this, but investing in upskilling employees can also help to improve job satisfaction, which can reduce turnover and improve retention rates. When employees feel valued and have opportunities to grow and develop, they are more likely to stay with the company long-term.
In fact, in our recent survey we found that two-thirds of workers agreed training opportunities have a strong influence on their loyalty to their employer. This is echoed by LinkedIn’s Workplace Learning Report 2023, which found that the most common way businesses are addressing concerns relating to employee retention is by providing learning opportunities.
Creating an effective learning programme for employees will require some financial investment, which will vary based on the delivery and training required. If carried out effectively though, the investment should be considerably less than company-wide salary increases and have the additional benefit of upskilling employees.
One of the most impactful and cost-effective forms of training delivery is ‘micro-learning’. Delivered in short, concise doses, micro-learning, which focuses on a single learning outcome in a brief session, is ideal for businesses looking to integrate learning into busy work schedules. When conducted effectively, employees can supplement their existing work schedule without needing to take extended hours or days away from their day-to-day duties to train. Not only does this save the business money and resources, but it also means productivity remains unaffected. This method also aligns best with a human’s natural learning style. So, it’s no surprise that studies have found that companies that have already adopted a ‘micro-learning’ approach have witnessed a 75% increase in employee engagement and an 80% improvement in learner retention.
Offer cost-effective benefits
Alongside training, there are a multitude of other benefits that can be offered to employees that only cost a fraction of rolling out company-wide pay rises. Perks like sell-back holiday days, free onsite parking, health insurance, subsidised lunches, and uniform provisions can often be relatively inexpensive for businesses to roll out but make a difference to individual employees and their day-to-day costs.
Small benefits like these can also go a long way in demonstrating to employees that they are valued, which will impact loyalty. In fact, a 2022 study by WTW found that companies with a benefits package that meets the needs of their employees have a 37% higher retention rate than those that don’t.
Provide financial education and support
Aside from benefits, another valuable way an employer can help their employees during the cost of living crisis is by offering financial education and support where possible. Many people struggle to effectively budget and manage their finances, particularly when living costs are so high. According to the Money and Pensions Service, a quarter of UK adults have less than £100 put away and will struggle to cope with unexpected bill increases.
There are several ways that employers can help support workers with this challenge.
Workshops or seminars on budgeting, saving and investing are usually good places to start, offering free advice to employees looking to maximise their salary and minimise their costs.
Going a step further, employers could consider offering workplace ISAs as well as pensions to encourage their staff to save with minimal risk. Workplace ISAs usually offer a discounted annual fee, meaning employees can benefit financially from setting up an ISA directly through their employer. Plus, payments come directly out of the employee’s paycheck, meaning they can be treated the same as tax or pension contributions, making it much easier for an employee to save every month.
Employers could also offer assistance with setting up financial planning tools or apps that can help employees track their spending, set savings goals, and manage debt. There are a few of these services on the market, such as MoneyHelper’s budget planner, which can help educate and inform your employees on how to save whilst costs are high. While saving may be daunting for many employees, businesses can play a role in helping workers feel more confident about their financial situation and improve their mental wellbeing, which will inevitably have a knock-on effect on their attitude and performance at work.
With the cost of living crisis showing no sign of easing, this will continue to impact the things that people value and prioritise most from their employer. As businesses look to future-proof their recruitment and retention strategies, it’s crucial that they take these important factors into consideration. Supporting employees through rising inflation doesn’t have to take the form of expensive mass pay rises, but action is needed if companies are to maintain loyal, engaged and productive workforces during these challenging times.
Rob Bright is the CEO of Cloud Assess, in the Greater Brisbane area, Australia. For more information about Cloud Assess and the value it offers to its clients, visit cloudassess.co.