What are the effects of inflation on businesses and employees? And what can employers do to stay ahead and secure both their company and their people?
For one thing, if you’re not already considering inflation, how it affects your team, and what you can do to alleviate the strain, you’re already behind. Perhaps you haven’t made any changes yet because you simply don’t know the best strategy. Or perhaps you haven’t thought about it at all.
In a July 2022 Society of Human Resource Management (SHRM) study, 87% of employers said their primary concern was their employees’ well-being. However, more than half of those surveyed said they’re either not considering inflation or are unsure if inflation will be considered in annual pay raises.
Interestingly enough, small organizations (with less than 100 employees) were most concerned for their employees and were more likely to consider inflation in annual pay increases.
Essentially, employers that adjust their strategies accordingly will be most successful. Those that don’t will face personnel and operational challenges down the line.
Let’s take a look at the impact of inflation on your company and team and where you can make the most difference for them.
Potential Effects of Inflation
Employee Retention & Resignation: When the economy is good, employers are typically able to pay better wages and employees are generally more satisfied and willing to stay. But when costs of living skyrocket, workers may be driven to seek opportunities with higher pay and better benefits.
People Problems: Of course, to manage and prevent employee retention issues, your business may need to increase wages and benefits. Inflation could also impact how and when you hire or terminate employees, based on how you need to manage costs.
Increased Costs of Goods & Services: Inflation could also cause your vendors and suppliers to raise their costs due to their own expenses. Be sure to monitor these changes and negotiate or find new partners when necessary.
The Bottom Line: All of the above can impact your business profits significantly, causing your company to shift its own operations and prices. Stay current with inflation and patterns so you can better prepare.
5 Ways to Combat the Effects of Inflation
At the end of the day, inflation results in a vicious circle of events. But when you have the right human resources partner to guide you on personnel decisions and you put your people first, you can insulate your business and team more effectively.
Compensation Strategy
While it may seem obvious, many employers are still failing to keep up with the rising inflation. Compensation is still the primary method for retaining employees.
Consider your team’s wages and salaries as well as bonuses. How can you structure them to ensure employees live more comfortably and experience less financial stress? If you can, raising wages will go far in helping you stay competitive in the job market.
Health Benefits
If your employees’ well-being is front-and-center, so should their health benefits. Offering more affordable medical insurance along with dental and vision can significantly reduce their health concerns and costs.
You might wait to increase employees’ premiums or encourage them to opt for health savings accounts (HSAs) to make their medical costs more manageable. Some are even offering HSA matches!
Retirement Plans
Another major area of opportunity is retirement plans. While people understand the importance of saving for retirement and many are unsure how they will do so considering inflation effects, this is often one of the first places employees cut costs. They are forced to prioritize their essential living costs, like mortgage or rent, utilities, and food.
Many employers are working to educate their teams and offer additional financial resources and benefits. Some are even increasing employer contributions to support employees in this difficult economy.
Employee Benefits & Perks
In addition to healthcare and retirement plans, employers should consider unique benefits and perks that will help their employees save more money and time. Impactful benefits include:
- Tuition and student loan assistance
- Childcare
- Adoption and fertility coverage
- Flexible schedules and PTO
And if you haven’t updated your benefits package past the traditional must-haves, it’s well past time to do so. Many believe their employers are not keeping up quickly enough.
Remote Work
One more influential perk that has been a main theme since the start of the COVID-19 pandemic is remote work. While many organizations have started requiring employees to return to the office, others are hesitant due to inflation effects.
By allowing your team to work from home, they’ll save on commuting and fuel expenses at the very least. Many will also save on food costs by no longer buying lunches or coffee.
Do you need help to combat inflation and better support your staff? Our HR specialists will assess your company’s situation and team to provide you with the best strategies and protect your organization. Contact BlueLion at 603-818-4131 or info@bluelionllc.com to learn more today!
The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.
