Pay Rises and the Cost of Living
The ONS suggests that while pay rose 4% in the last quarter it was far outstripped by inflation, which is expected to reach almost 9% this year. The Bank of England is advising employees to keep their pay rise requests to a minimum so as not to feed rising inflation. At the same time the government says it isn’t their role to influence conversations between private businesses and their employees about wages. The UK’s biggest union, Unison, is backing above-inflation pay rises in the public sector.
So, should we be paying our people more to make up for cost of living increases? Or should we be taking a ‘responsible’ approach?
Real living wages
The increase in my electricity bill has had an impact on my monthly spend. I, like many people, immediately shot around the house switching appliances off at the wall when the latest bill arrived.
But it will be my discretionary spend which is impacted.
For many employees there isn’t any discretionary spend.
If you’re serious about organizational culture and you really mean it when you say you put your people first, your initial response to the cost of living crisis must be to check your most junior and lowest paid employees can afford to live.
Of course, this should have been a priority for you anyway. But if people were scraping by before they are now in big trouble.
Financial Education
A pay rise may be the quickest and most useful fix for some of your people. But it may not be the most creative approach, or affordable for your business which is also impacted by spiraling costs and supply issues.
The greatest support you could offer may be through financial education. Helping employees work through their finances and see where their money is going and where they can make quick savings without impacting quality of life could be beneficial. The easiest fix for some might be to cut back on their pension contributions or even stop paying altogether. But the long term impact of this can be significant and other quick fixes might be more sensible.
Without education around the impact of decisions, employees could be storing up problems for later. Financial education can help them make informed choices.
Well-being support
Sometimes what people need is hard cash. But sometimes the anxiety over finances is the biggest issue. Alongside practical financial support, counselling and coaching can help employees talk about their fears and reduce their worry.
I’ve spent many a night worried about money over the last 30 years and it doesn’t enable me to make wise choices or focus on doing my best work. Usually those fears are unfounded, and certainly I’m in no position to resolve them at 3am.
Having someone to talk to and become more rational with can help people focus on practical actions.
Benefits that reduce costs
Companies have greater buying power than individuals. Is there something you can buy in bulk, get a good deal on or negotiate on behalf of your employees so that they can benefit from your scale?
And what can you provide internally to help people out? Can you subsidize the canteen food further, or negotiate deals with local sandwich shops? Can your canteen be open later so families can pop in with their children after school and get a bite to eat?
Can you work with suppliers (satellite TV companies, energy companies, mobile phone providers, food delivery companies) to get good deals for your staff?
Check your WFH policies
Working from home can reduce costs for some but it can also be too costly for others. Especially during cold weather, having to heat your home because you’re working in it all day can bump up your bills considerably. At the same time, having to drive to an office daily with spiraling petrol costs can tip some staff over the edge.
Listen to your people and find out how much working for you is contributing to money issues and find ways together to reduce the cost of having a job at your company.
Sell annual leave
Many people have unused annual leave at the end of the year. They may like to roll it over, or they may prefer to sell it back to you and get the cash. Asking for ideas like this from your staff may generate more practical ways to put money back in their pocket.
A whole company approach
We all know of cases where employees have all chosen to reduce their hours in order to prevent redundancies. Given the huge disparity in many businesses between the highest paid and the lowest paid, there may be an appetite in your business for some to make a sacrifice to their salary in order to support their lower paid colleagues.
The cost of living crisis isn’t affecting everyone equally and a bit of generosity now will go a long way, reducing staff turnover and the associated costs, improving engagement and feelings of being valued, and giving those who’ve made a small sacrifice a feeling that they are making a difference at a difficult time.
I’d love to know what your company is doing during this difficult time and how you are handling requests for pay rises.
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Stories like this are discussed on the The Human Revolutionaries Show on Apple Podcasts. Each week Blaire talks to her guests about leadership, culture and wellbeing at work. Blaire also speaks about the leadership, culture and the future of work at online conferences. To book Blaire to speak at your upcoming conference contact your preferred speaker bureau or email her blaire@thatpeoplething.com.
