Now they’re looking for help with the latest struggle: record-high inflation.
It’s not surprising: Inflation rose 8.5% year-over-year in March, the highest inflation rate since 1981, and then hit a 40-year high in June, according to the U.S. Bureau of Labor Statistics.
“There’s a lot of stress from employees. It’s certainly top of mind; [inflation] is something that employees are concerned about,” says Tony Guadagni, senior principal in the Gartner HR practice.
And employers are thinking about it, too. If they don’t, they run the risk of having distracted, stressed and unproductive workers—and worse yet, they risk losing employees to better-paying jobs—which is especially possible in today’s hot job market.
“Coupled with this really competitive labor market, that employee concern means that it’s something that organizations have to really be thinking about and cautious about,” Guadagni says. “It’s critically important employers address this.”
Salary increases and bonuses. An obvious way to help employees with increasing inflation? Give them more money. Employers are increasing salaries and handing out more bonuses to help employees. About 63% of organizations say that they’re going to adjust wages in response to inflation, according to Gartner research.
The latest: Inflation-driven paycheck concerns
And a survey of employers by compensation data firm Salary.com finds that most U.S. organizations (73%) are targeting a payroll budget increase of 4% or more this year.
Although higher than in recent years, those compensation changes still trail inflation rates, meaning that employers can go further—and likely should, if they are able. “The No. 1 thing that employers focus on is compensation when it comes to retention,” Guadagni says. “It’s not the only thing. But it’s the biggest thing. And if you have the opportunity, if you’re capable of raising wages, you’re going to do better in terms of retaining your employees than organizations that don’t.”
Allow for remote work. Offering remote work, hybrid schedules or flexibility can help combat rising cost of living, as it can allow employees to be in more control of their finances, commutes and situations. Importantly, employees who work remotely decrease commuting to help save on gas or other transportation expenses, and they can more easily prepare food and eat at home and avoid regular (and often pricey) lunches or coffee breaks with colleagues.
Permitting employees to work remotely also can allow workers to move away from expensive cities, says Stephanie Naznitsky, an executive director with human resource consulting firm Robert Half.
“If you can help in those areas, maybe you are saving your employees from a stressful commute and commuting costs or providing discounts that can help with other expenses,” she says. “Ultimately, the conversation begins with starting salary and sign-on bonuses, but we’ve seen companies get creative in order to help their workers and retain top talent.”
Hold off on premium increases. Reexamining employee healthcare costs and holding off on increasing employees’ share of their premiums is one way that employers often address rising inflation, says Julie Stich, vice president of content for the International Foundation of Employee Benefit Plans, a nonpartisan group that counts more than 8,200 organizations and 32,000 individuals as members.
That’s a big conversation this year as the recent inflation figures, and a number of other factors—from deferred care, missed preventive care and late diagnoses because of the pandemic to health system consolidation, COVID-19 infections and long-haul COVID—drive up healthcare costs.
“With the anticipated healthcare cost increases, employers need to discuss whether to pass those increases on to their employees,” Stich says. “Employers may be reluctant to increase cost-sharing in this tough job market.”
Communicate benefits that can help. A significant number of employers already have financial wellness benefits in place for employees—programs that can help workers budget, set aside money for emergencies or learn how to stretch their dollars. If that’s the case, now’s the time to promote them.
“Financial health benefits are more table stakes at this point, and now [employers] might be communicating about them a little bit more deliberately,” Gartner’s Guadagni says. “You know, saying, ‘Hey, you’ve got access to these resources,’ whether that’s something about budgeting tools that they may make available to employees or things like tax advice.”
Invest in other perks. Some companies are handing out gift cards for groceries and gas—sentiments that can go a long way in assuring workers they are cared for as inflation soars.
Other organizations may want to consider investing in benefits like student loan assistance, daycare subsidies or fertility benefits—offerings that can directly help an employee’s pocketbook. Those investments usually pay off for organizations, Stich says. “The return on attracting and retaining key employees can quickly outweigh any utilization costs,” she explains. “As always, the importance of communication can’t be understated. Employers need to stress the value of the benefits they provide to their employees.