It’s a question I’m getting asked constantly by employers – what should we be doing? And what are others doing? Some of the biggest UK businesses are weighing up if and how they should support their workforce through the cost of living crisis, and with good reason.
Employees’ financial struggles are costing businesses. The Centre for Economics and Business Research found that 10% of UK employees missed days at work due to financial problems – that’s a lot of stress-related absence. A further fifth of the workforce was less productive due to financial anxiety. Do the maths and we could be looking at a cost of £6bn to businesses annually.
The business case for addressing the crisis is compelling – and people will expect their employers to do so. Things are going to get worse after the summer, when we all have to turn on the heating again. The government’s £400 household energy grant is a start. But it won’t be enough.
COVID-19 demonstrated the need for employers to adopt a more ‘person-first’ approach to their workforce. Once the pandemic hit, leadership teams quickly reviewed how they could support their staff and we saw a rise in the human-centred leadership approach. 48% of employees surveyed in EY’s Work Reimagined Employee Survey felt company culture had improved post-pandemic, with a focus on employee wellbeing.
Then came the Great Resignation as people began quitting their jobs in droves. We continue to hear from businesses how acquiring talent is far more challenging - that’s not going away in a hurry.
Meanwhile, candidates are communicating their worth much more frankly. It isn’t simply a case of wanting greater flexibility or even higher salaries, it’s about businesses demonstrating value through empathy-led initiatives.
Hanson Search’s survey last year showed that company values, people and community ranked higher than salary on what people looked for in a career move. This means businesses need to not only live and breathe their values, but execute them in tangible ways.
The most obvious way to do this is financial incentive. Businesses are considering increasing base rate salaries to take a market-leading stance. Others are considering or offering lump sum payments of between £500 and £1,500 to their workforce to support with energy bills or unexpected costs that may arise.
This isn’t necessarily the best approach though. Lower income members of the workforce are disproportionately affected by this crisis, so a blanket percentage salary increase might not make the positive impact. On the contrary, it could tip some into the next income tax rate, whilst simultaneously increasing the salaries of high-ranking employees - not a good message.
Then there are ‘softer’ benefits - breakfasts and lunches, food vouchers and in-person wellbeing initiatives. The thinking behind this is multi-fold: supply a comfortable work environment and talent will be encouraged to travel in, saving them money throughout the day while also demonstrating your values and developing a community culture.
So what’s the best course of action for bosses? Employers who haven’t reviewed their salaries for a while should do so without delay. But they also need to build empathy into their talent retention and acquisition.
Just as we’ve seen surges towards brand authenticity, brand values, and brand impact, empathy could well be set to be a presiding differentiator between businesses that survive and thrive in the coming years, and businesses that don’t.
While the UK workforce might have some significant challenges facing them, they also have significant opportunities to permanently shift the work perspective. The reality is that workers are holding all the cards.