Inflation has been creeping up steadily over the last few years, but recently, responses to Coronavirus and other concerns have resulted in unprecedented levels of domestic price spiking. As of February 2022, U.S. inflation has hit a staggering 7.9%, the highest recorded since the recession of 1980. Moreover, the trend of rising inflation doesn’t seem to be slowing down anytime too soon, and its effects have already begun to ripple through everything from the ease of getting a mortgage to prices at the grocery store. In short, inflation presents a significant and rising challenge not only for any employee in the modern American workforce but by extension, for their employers as well; when an employee is part of a larger and more complex organization, their problems are never an isolated issue.
It’s clear to see how inflation can lead to a problematic domino effect within the workplace, contributing to a wide number of issues from employee turnover to rising pay raise expectations. But the battle against inflationary effects isn’t purely a downhill slope, and industries across the country have responded to the challenges posed by inflation in new and creative ways.
Responses to the problems caused by inflation have been diverse, and largely dependent on the individual situation of the industry responding; hospitality and direct-exchange industries such as fast food, hoteliers, and the healthcare industry on the whole are faced with the most direct impacts. But although inflation affects every industry differently, there are a number of common factors that should be taken into account when addressing the impacts of inflation – and in planning a proper response!
Rapidly rising inflation causes a spike in employee pay expectations and turnover alongside increasingly expensive equipment costs; all while rapidly rising prices discourage business. This triangle of inflationary effects can be deadly for any organization, regardless of industry. Let’s take a look at all of these concerns individually.
Inflation has a direct correlation with the price of labor, as pay raise expectations soar in an attempt to outpace the decreased value of money. This effect is most pronounced with high-skill positions, but impacts employees of all stripes who notice prices rising. The need for additional and more significant raises to keep employees happy can have a serious impact on the company’s bottom line.
Employees who don’t feel they’re being paid enough to keep up with inflation also boost turnover numbers, by jaw-dropping amounts in some industries. Overall, the increased seller’s market means that job offers must be more competitive than ever to keep turnover low since inflation has an overall negative effect on new jobs and vanishing jobs alike. All the while, factors such as sticker shock make sales, in general, more difficult.
While certain forms of equipment (such as pharmaceuticals) have skyrocketed in price to truly obscene degrees, every industry is experiencing rising prices in necessary equipment. From lumber to oysters, virtually all products needed to run a business are becoming expensive, often faster than sales can keep up. The combination of productivity going down alongside price hikes means that non-profit generating departments like HR should prepare for potential budget tightening in response to inflationary pressure and have a plan ready in advance.
To successfully counter these inflationary challenges, it’s clear that a fresh, creative, and most importantly meaningful approach is needed – in a nutshell, the core challenge is to find a way to reduce turnover, increase employee satisfaction and help employees deal with the rising cost of goods associated with inflation in a way that doesn’t kill your pocketbook. And to get you started, we’ve got a few key tips that can help fight back.
These crucial tips can help fight against the effects of rising inflation.
Employees have qualitative differences in everything from age to experience to values, and those differences express themselves as unique, individual needs; to accurately assess the needs of your workplace, you’ve got to understand the diverse needs of the individual that make it up. As work-from-home, COVID-19, and rapidly evolving economic situations shift everything that it means to be at work, those needs often look completely different than they did twenty, ten, or just five years ago. Dealing with inflation means first understanding your unique workforce, and then being aware of impacts on individual employees, with a keen eye to both morale and deeper economic impact – and a recognition of the fact that that impact is qualitatively different on technicians, administrators, and everyone in between.
It can be easy to fall into the trap of responding to inflation with broad stroke cutbacks, but all too often, the administration only realizes the surprisingly deep real value of a not-obviously-profitable initiative until after it’s gone. Instead of immediately looking for cuts to make, take the opportunity of inflation to bring a critical eye to current HR processes (or even wider organizational programs) and closely determine just how much each individual program is providing to your organization – keeping in mind both employee benefits (wellness, reduced turnover, work-life balance, and so on) and costs (monetary and opportunity) instead of purely looking at the price tags. Strategic impact, especially in Human Resources, is often more nuanced than a P/L sheet – burned-out employees are almost always more expensive than an effective wellness program!
Modern employees are interested in a wider range of benefits than ever, ranging from traditional 401k matching to work-from-home options and even employer-sponsored wellness programs. The only problem with expanded benefits suites is that typically, businesses are limited to offering the goods and services their company actually provides – meaning while it’s easy to offer free or discounted food as a restaurant, it’s a lot harder to do so as a consulting firm without paying expensive catering fees. And frankly, even paying those expensive fees will still only offer a generic experience to employees, instead of a creative solution that feels personal. Bridging the many needs of a diverse workplace in a single well-rounded benefits package can be difficult, especially when what some employees want seems to be at odds with others. But a single solution that brings each employee the individual benefits they care about? It is possible.
Schedule a demo today to find out how PerkSpot can improve your offerings and help retain top talent with your benefits suite.