Economic downturn has its place in the heart of employees. Key signs of recession that grace the desks and screens of workers first are layoff announcements from other companies, increasing gas prices, and denouncements of inflationary practices. According to payroll system ADP, employees feel inflation most readily when everyday goods—groceries, coffee, gasoline—are priced outside the threshold of expectation. An obvious answer to hardship affecting employees is to pay them more, but that’s not often on the table without performance assessments, annual budget changes, and addressing a board of directors. If employees feel that their pay is no longer covering their cost of living, they’re likely to start shopping; job shopping, that is.
First Off: What the H#!?k Is Going On?
Experts at McKinsey have examined the nuances and complexities of inflation. According to their report “How inflation is flipping the economic script, in seven charts”, the United States lands in the middle amongst all countries experiencing inflation with a 7% rise. Banks are raising their interest rates, damping out consumer spending. Ideally, this will lower prices in the long run. The catch-22 is that with strained material prices and the impending food crisis, reflexive action to counteract inflation only influences a portion of the market. Workers are noticing increased prices and interest rates, but the scariest part of inflation bares its teeth in the office: Many wages that were once drastically increased to counter a laborer’s market are flatlining, being revoked, or worse, cut entirely (i.e., layoffs).
How Can Stable Companies Show Support for Workers (Without Breaking the Bank)?
With tight budgets and an unpredictable market, what you can do for employees is likely daunting. Fortunately, IsoTalent has done some research around what employees see as supportive and helpful. When introducing these ideas it’s important first and foremost to make it clear to staff that changes are in response to inflation. This sets the expectation that changes are, above all else, to support employee wellbeing. Clarifying that changes are not a reflection of performance creates an even playing field amongst employees and sends the message that everyone is in it together. When HR and Execs are the first to raise concerns about employee well-being, it encourages a trusting and healthy work environment. Here are a few methods we’ve identified that will show your employees that you’re sensitive to their needs without breaking the bank.
Implement a Bonus Program in Response to Inflation
Employee bonus programs are often affiliated with quarterly reviews, productivity metrics, and leadership roles. Implementing a bonus program related solely to the economy not only helps employees experiencing hardship—it sends the message that you value their wellbeing during a time of distress. One of the greatest benefits to the company of granting a one-time (or two-time) inflation bonus is that this “grant” for employees is tied to external factors outside of their control. Giving money to workers shows them you recognize that the cost of living has skyrocketed, and that they don’t need to seek employment elsewhere to survive or feel cared for. They can trust that the company has their back.
Increase Workplace Flexibility
If you currently offer a hybrid work schedule for employees, consider dropping daily attendance requirements. Make it clear that the change is related to the cost of goods like gas and food, and will potentially be reinstated, but that for now employees are encouraged to save money by working from home. Studies suggest that companies attract employees with the values they exhibit. With this logic, employees who are flexible and can adapt to changing work environments and economic situations appreciate when their employer is also flexible and adaptable considering circumstances.
Increase Benefits That Assist With Inflation Impact
While not readily intuitive, many benefits available to employees through work alleviate the pains of inflation. Offering perks like healthcare assistance, improving retirement benefits, offering financial coaching services, and free mental healthcare prioritize workers’ mental and physical wellbeing. Online counseling apps like BetterHelp and HeadSpace can reorient workers’ focus on keeping a clear mind. Providing free subscriptions can improve productivity and show that the company is focused on what’s best for employees.
Financial planning services like Savology provide employees with tools and counsel on planning their financial future. While a recession/inflation period might be the last time people want to focus on money, in reality, planning can provide peace of mind.
Dole Out Resources Usable for Goods
Large grocery stores like Fred Meyer, Safeway, Walmart, and others offer gift cards that can be used on a plethora of items. From groceries to gas, people shop at local stores for basic needs items. It’s difficult to tell where (and which) individuals will benefit the most from specific financial assistance, but the reality is that a small amount of grocery money can go a long way. The single downside of this is that employees will still be taxed on their W2s for gift cards as they are considered cash. From an ROI perspective, contacting the upper management of grocery stores or other corporations directly about your plans to support your employees could spur a reciprocal relationship between your company and theirs. Who doesn’t love free advertising?
Bonus: Do a Wage Assessment
Notice how raising wages isn’t at the top of our list. Our list assumes employees are being paid within mid-range or higher than market rate. If your employees are paid on the low end of average for their work (or worse, below market average), then best way to increase retention and assist them during a recession is by giving a substantial pay increase. Henry Ford used this method at Ford Automotives in the early 1900s: Ford doubled the pay of production workers to decrease turnover. A beneficial symptom that prevailed thereafter was that productivity also doubled. Retain and support employees by ensuring you’re paying them what they’re worth to you given the market rate for their services. Need help figuring out what the average pay is? Check out the Bureau of Labor Statistics’ Occupational Outlook Handbook or a resource like payscale.com.
The ways employers can assist employees during inflationary periods are endless. The most important action an employer can take is any at all: employees need to feel seen and supportive to do their best work.
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