How Employers Can Respond to the Rising Cost of Living

The rising cost of living has been a recurring theme making headlines around the world. The annual inflation rate in the United States topped 7.1 percent for the 12 months ending November 2022 and reached 10.7 percent in the United Kingdom during the same time period. Although the most optimistic analysts suggest that inflation will subside in 2023, companies have had to pivot from handling one crisis (Covid-19) to another in an incredibly short amount of time.

What are the implications of the rising cost of living on employers’ reward and benefits programs, and what practical measures can be taken to address this trend?

There is no debate that inflation has caused employees’ living expenses to go up, but in most circumstances, salaries have failed to rise commensurately. Employees are paying more for groceries and homes, as well as for important services like childcare, medical procedures, and behavioral therapy. Because of this, more employees are turning to their employers in hopes they may offer covered or subsidized services to help with such needs.

Where possible, some employers are offering one-off cost-of-living bonuses or are providing more frequent pay reviews (biannually instead of annually) to help employees cope with the increase in cost of living. Sequoia has also observed companies offering support with caregiving, care navigation and virtual care, and packaged therapy visits. In addition, some organizations are rolling out financial planning tools to help employees understand how to better save, allocate, and budget their money during times like this.

While benefits that help lessen the burden of costs on employees are understandably the most well-received, not all companies have a budget robust enough to accommodate such programs. In that case, employers should focus on providing education internally to increase awareness of existing benefits. For example, many carrier programs include care navigation and guidance services to help employees understand and find discounts on medical procedures, or they include free preventative care services. In addition, policies that allow employees to take time away from work to sort out financial issues or help with caregiving needs can help reduce stress on workers.

It’s also important for companies to remember that, for many employees, job stability may feel uncertain during tough economic times. Workers notice as organizations around the world are announcing layoffs or hiring freezes. Such changes in the broader employment climate have an impact on employee morale and retention, even as retaining great talent and fostering a productive environment remain top-of-mind for employers.

Employers must focus on the well-being of their employees, particularly their mental health. Benefits such as career coaching and therapy can be a great combination to make employees feel supported in their role. For companies requiring employees to return to the office, it makes sense to highlight commuter benefits and in-office perks, and to foster events where employees can both collaborate and catch up.

Overall, corporate leaders should take time to purposefully review their reward and benefits packages, and should consider whether their efforts and budgets are being directed to programs that will have the most impact for employees, while balancing organizational priorities.

Rochelle Spencer is the global consulting director at Sequoia.

From: BenefitsPRO