5 Ways HR Can Help with the Cost of Living Crisis
The cost of living in the UK has hit an all time high for the first time in thirty years, with rising energy and food costs affecting people and organisations not only in Britain but across the entire global economy.
According to the Consumer Prices Index (CPI), living costs in the UK were up 6.2% in February 2022 compared to early 2021 and there’s already been a whopping 0.7% increase in costs since January 2022 alone.
The Bank of England also predicts that inflation may skyrocket to 8% this year based on current trends.
While these increases are already overwhelming on their own, add them to the back end of a financially draining pandemic and the reality of inflation quickly becoming a genuine crisis is stark and daunting.
With that being said, it’s up to HR teams to do their part by stepping up and helping business leaders address the cost-of-living crisis and provide solutions to help employees – while remaining cognisant of the organisation's own financial pressures.
Here are 5 ways HR can help with the cost of living crisis.
What has caused the rise of inflation?
The Office for National Statistics (ONS) claims that the largest drivers of rising inflation are directly related to housing costs, including gas, electric, and other fuel bills as well as transportation costs.
It’s no secret that the war in Ukraine has also been a contributing factor to rising gas costs and subsequent inflation, with petrol and diesel prices rising astronomically over the past months.
Food costs, however, have also steeply increased due to the rising costs of oil, making shipping more expensive and also affecting the costs of recreational goods and services like clothing and footwear.
To add even more fuel to the fire (no pun intended), staff shortages and the Great Resignation have led employers to raise wages to attract and retain talent, further causing inflation to spike.
At this point in time, these factors are also major contributors to hiking interest rates, creating a spiralling cycle of inflation that individuals and organisations need to be aware of.
How HR can help with the cost of living
While it may seem that we’re all at either end of a double edged sword, HR leaders have the unique opportunity here to help manage the cost of living crisis for employees and businesses alike.
Some ways HR can help include:
1. Providing flexibility
Since not all businesses will be able to match pay rises with the rising level of inflation, it’s important for employers and HR teams to recognise that individual employees will be impacted by the cost of living crisis in different ways, ultimately influencing what they’ll need from their employer.
This is why it’s important for HR to encourage business leaders to remain flexible when it comes to remote and hybrid working models.
Some employees, for example, may feel working from home suits their financial wellness better by eliminating the costs of commuting to work, while others may have increasing concerns about rising utility costs and prefer to work from the office more often than not.
In other words, a one size fits all approach will not be enough to effectively manage employees, making flexibility a priority now more than ever.
2. Keeping the door open
While it may seem simple, one of the best things HR can do to help maintain balance in the organisation during this time is to implement and encourage an open door policy between their team and employees.
If HR teams are aware that employees may be experiencing financial troubles, it’s important that it’s made clear that they can always touch base with HR or their managers to discuss further.
Financial and personal concerns can be hard for employees to talk about, but if they know that their HR teams are there for them, the problem - once shared - can be a problem halved by way of HR providing useful advice and resources for those who are having a particularly difficult time.
3. Revisiting costing
The biggest question for organisations right now is how to deal with rising costs for businesses while still managing to provide effective support to employees.
To gain more insight here, HR should work in alignment with business leaders and revisit employee costs to see how much flexibility they have so that costs still line up with business objectives but also take into account employee and financial wellbeing measures.
Factors to consider associated with employee costs include:
- National insurance
- Workplace pension schemes
- Workplace equipment (i.e., desks, monitors, etc.)
- Talent retention & turnover
HR should also work to engage in communication with employees - in the form of an anonymous survey, for instance - so that employees can safely voice their opinions on these matters without scrutiny.
4. Discussing benefits
While many employers offer benefits like gym memberships and discount platforms, it can be difficult to determine what benefits are the best to offer employees, as everyone’s needs will vary.
To this end, perhaps the best approach is for HR to ask their employees outright how they can best support them through the cost of living crisis.
What benefits would employees like to see that won’t break the business’ budget? Can HR and business leaders trade in any specific benefits that are outdated or underutilised?
While employees may have loved fun benefits and perks like cycle-to-work schemes or access to mindfulness apps prior to inflation, employees’ needs may change moving forward and they could be looking for more for benefits like financial counselling or employee discounts on consumer goods.
5. Providing support
With over 15 million people in the UK already struggling to pay for basic necessities like energy, food and clothing, it’s not surprising to learn that the number of people finding it difficult to meet their financial commitments has doubled since the beginning of the pandemic.
A recent survey found that more than a third of millennials felt financial anxieties were negatively impacting their work performance.
So, what can HR do when employers don’t have the budget to increase salaries to match inflation during this crisis? They could offer financial wellbeing support, such as free financial advice and providing benefits that allow for savings where possible.
While these solutions may not be ideal for some, they’re - at the very least - valuable and easy to offer at relatively low costs to businesses.
The cost of living crisis is inevitable as prices continue to soar around the globe, but this doesn’t mean that organisations are doomed, only that they need to reassess business models where possible and utilise HR teams to further support and empower their employees.
We hope that we've given you some good insight into how HR can help with inflation, and we wish you the best of luck!
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