February 10, 2023
After a disruptive and turbulent 2022, businesses and their employees are still experiencing hardship due to the cost of living crisis. Some organisations are crippled under rising gas and electricity prices, whilst the rising costs of everyday essentials affect a quarter of employees' ability to perform at work.
Yet with inflation rates, utility bills and fuel costs remaining sky high, with no sign of coming down, employers must continue to concentrate their efforts on employee financial wellbeing.
Some employers are combatting the effects of rising costs by offering cost-of-living support. Employers recognise the importance of supporting their people, from cost of living benefits to one-time bonuses. In fact, over 20% of organisations have introduced wellness programs to their teams to help them through this tough time.
But with more employees feeling the pinch, What else can employers do to support staff and manage the cost of living in their organisation?
How has the cost of living crisis affected employees
The cost of living crisis has had a significant effect on employees. It has left employees struggling to pay bills and put food on the table. The financial strain has led to employees' experiencing extreme levels of stress and developing poor mental health.
The effects of a poor financial position can be devastating for an employee. And without employer intervention, employees can go on to experience poor physical health, experience burnout and even leave their job. Here are some ways that financial pressure affects employees.
Rising stress levels
Employees facing financial struggles can experience high levels of stress. Concerns over current finances and worries for the future can bring high-stress levels to an employee. Stress significantly affects employees; stress affects mental and physical health and the ability to cope with everyday roles and tasks. Over 70% of employers have identified higher stress and anxiety levels within their workforce. The rising levels of financial stress have a knock-on effect on employees' performance and productivity. It is, therefore, in the best interest of leaders to intervene and support staff before it's too late.
Employee Burnout
Employee burnout is a state of physical, mental and emotional exhaustion experienced by employees when they face prolonged stress. Employees facing burnout feel overwhelmed, emotionally drained and are unable to fulfil their responsibilities. A build–up of financial stress can lead employees to burnout if it is not managed correctly.
Increased staff turnover
Today's workforce has experienced the difficulties of covid, and now has to deal with an ongoing cost of living crisis. Following these events, employee wellbeing has emerged as one of the most in-demand cost of living benefits today. Yet, whilst many HR leaders and employers agree that employee wellbeing is essential, many organisations fail to deliver sufficient support.
A lack of employer support can dramatically affect staff engagement, productivity and even turnover. Employees are no longer afraid to look for new positions that value and support their employees. Businesses could soon face high employee turnover by not investing in their people.
Decreased motivation and morale
When employees are dealing with financial issues outside of work, they can often become unmotivated and disengaged with their work. A lack of engagement can affect overall job satisfaction and job performance.
Investing in employees' financial wellbeing
Businesses are aware of the external pressure exerted on employees, yet many are still slow to act. Some organisations feel their current support is enough, while others have overlooked the importance of employee wellbeing.
Research shows that investing in employee wellness can actually benefit both employees and businesses. From reducing turnover to improving a brand's image, supporting employees during the cost of living crisis is a must.
So what are some of the benefits of investing in employee wellbeing and cost of living benefits?
Increasing motivation and engagement
Living costs have left many employees feeling distant and disengaged from their work. Implementing wellness programs helps to build a sense of belonging in the workplace. They can see employees become more involved and motivated with their work and can even improve their overall performance.
Bolster your company culture
By investing in employee wellbeing, employees feel valued and cared for by the business. This can lead to happier employees, higher job satisfaction and even boost loyalty. Cost of living benefits such as wellness programs can also help to build a sense of community within a business. Many programs offer challenges, requiring teams to work together to achieve wellness goals.
Improve your brand image
Word travels fast between employees and their peers. Investing in employee wellness can enhance a company's image during difficult times. Businesses helping their employees are considered socially responsible and caring workplaces. An improved brand image can help to attract the best talent and satisfy the talent currently employed. John Lewis gained a great reputation following the cost of living crisis. The department store giant, John Lewis, offers its employees one-time bonuses, increased pay and even free meals to help support their staff. Their actions have raised their reputation, and they are now seen as an attractive place to work.
Improve your bottom line
Many employers are yet to invest in employee wellbeing for fear of the bottom line. However, research suggests that prioritising employee wellness during a time of uncertainty is beneficial for organisations. Employees are businesses' most valuable asset, so they should be treated as such. Investing in employee wellbeing affects staff performance and engagement and, in turn, overall profits. Focusing efforts on reducing financial troubles can also lower absenteeism and turnover, dramatically reducing costs.
Improve job retention
As we know, investing in wellness can help to improve job satisfaction. The level of employee satisfaction has a dramatic effect on retention rates within a business. Happier employees are more committed and less likely to leave. Employers who value and appreciate their employers are returned with loyal employees to the organisation. Building loyalty within a team is crucial at this time as the cost of replacing staff is often extortionate.
Strategies for managing cost of living for employees
One of the biggest challenges for employers is understanding what to put in place to help employees tackle rising prices. Most current workers are looking for monthly payments to match rising inflation, but that is simply impossible for many businesses.
To help employers understand how they can support their staff, we have put together a list of low-cost strategies to help support employees' cost of living.
But with only 25% of UK employees receiving financial aid, employers must step up and find ways to support their staff.
1. Financial Education
Businesses are not immune to the cost of living, so it is understandable that many simply do not have the budget for comprehensive wellness programs and financial benefits. However, there are low-cost solutions that still provide value to staff.
Financial education is an element of many financial wellness programs and looks to improve employees' understanding of saving, budgeting and investing. Employers can improve employees' financial literacy by offering free resources, tools, tips and even financial advice from experts.
2. Work From Home
An employee's daily commute is often expensive and can easily be avoided. Flexible and remote working could help to provide financial respite. By working from home, employees can save on their weekly fuel costs and continue to work from home. Although remote working can help to save money, it is not an inclusive perk. For some employees, it is impossible to work from home. Therefore employers could offer a small sum of money for each employee unable to partake in remote working to cover their commuting costs.
3. Monetary Perks
Bonuses are effective ways to give employees short-term assistance and provide a financial boost. Although a short-term boost can relieve financial pressure, it is only temporary. To make monetary perks more sustainable, some businesses have opted for pay rises and incentive programs to ensure employees receive money monthly.
4. Discount Programs
Discount programs are one of the most popular cost of living benefits among employees. As the cost of groceries, clothes, fuel and travel have increased, employees are looking for ways to spread their money further. Discount programs have become invaluable with savings on lifestyle spending and everyday essentials. When choosing discount programs, employers must decide if the discounts are valuable to staff. Providing a program, no one wants to use can do more harm than good.
5. Financial Employee Benefits
Each month 1 in 3 employees run out of money before payday. To prevent this, employers can introduce financial benefits such as advanced salary payments, debt management, and salary sacrifice schemes. Financial benefits help employees save money, access their finances easily and save from building debt.
