A 9% rise in inflation has triggered a cost-of-living crisis. And just like any other crisis, that’s going to have an impact on your business. It’s time to anticipate what that might look like.
Why is there a cost-of-living crisis?
Inflation levels have reached a 30-year high. That means everyone feels the effects in their day-to-day lives, from what they pay for a bag of pasta to how they get from A to B. Bundle in the energy price cap review, and we’re all spending a lot more in general.
But for many, it’s not just a case of tighter pursestrings. 29% would likely not be able to absorb a cost of living increase (based on the number of adults reported they couldn’t afford a necessary added expense of £850). So considering the impact on your workforce is worth doing.
The cost-of-living crisis: UK businesses, here are
1. Preferences for office or home-based work might shift
There’s two ways that workplace preferences could be affected by the cost-of-living crisis. On one hand, 79% of people have reported a rise in gas/electricity bills. Heating isn’t such a concern during the summer months, but as colder weather comes in then the cheaper option might be coming into a preheated office.
On the other hand, the rising price of fuel (and increases in public transport fees) might make commuting a less attractive prospect. Coughing up the cash to journey into work could even be impossible in some cases.
2. Employees may be pushier about progression and pay reviews
When times are tough, salaries will be on the mind. Yes, money isn’t everything – people care about having a purpose too, for example – but it may become more of a priority than ever.
With nothing to lose, you might expect employees to push more for progression opportunities, to ask for bigger salary increases, and to be less satisfied by arbitrary pay adjustments. When inflation is up by 9%, a 4% rise isn’t going to feel as positive.
3. Turnover may rise, as people leave for jobs with higher salaries
Everyone would like to think their employees are loyal, and that their head can’t be turned by a higher wage packet. But at the end of the day, your teams have mouths to feed – including their own. So you might see attrition rise.
One study found that 37% are considering changing jobs due to the cost-of-living crisis. After all, job hopping is often the fastest way to boost your salary. During hard times, employees might be forced to make difficult decisions – even if they genuinely love working for you.
4. Productivity could dip, and you could see absenteeism rise
The research is clear. 10% of workers missed work due to financial issues, contributing to the £1.56 billion lost annually due to wellbeing-related absenteeism/presenteeism. Your employees’ bank accounts might be their business, but it can still have a negative impact on yours.
Having money problems also affects productivity, due to stress – with a fifth of employees performing poorly due to being preoccupied by financial concerns.
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How can managers support employees? Here’s a few ideas:
- Consider boosting salaries: an across-the-board pay increase can show that you acknowledge people’s daily realities, even if you can’t match inflation levels
- Provide financial education: only 11% of businesses consider financial wellbeing, but offering access to online courses and mentoring could help out here
- Review employee benefits: consider revising your perks so they cover practical things like food vouchers, fuel discounts, and contributions to childcare
- Be flexible about workplaces: be understand of the costs of commuting and the need to avoid at-home costs, by allowing people the choice of where they work
- Stay sympathetic, encourage honesty: supporting employees means understanding their needs, and cutting them a little slack (within reason, of course)
Use Qlearsite to listen insightfully & prioritise employee wellbeing
Now is a good time to send a wellbeing survey, and check what outside influences are impacting your employees – plus get ideas for supporting them within the workplace. Our wellbeing survey is perfect for this, and if you sign up today, you can send it (and view the results) for free! Click below to get started: