Beyond pay rises, how else can bosses help people cope with the cost of living crisis?
The cost-of-living crisis is resulting in the biggest decline in real income in more than 50 years, with inflation already at 10.1% and expected to go much higher in the coming months. It is undoubtedly a difficult period for consumers, but businesses are also suffering.
According to a recent survey commissioned by Mintago, the majority (56%) of UK adults in full-time work say their personal finances are the largest source of stress in their lives. In many cases, this will impact on their overall wellbeing as well as their professional performance.
Businesses, then, have a major role to play in ensuring that the financial wellbeing of their workers is protected over the coming months. But now comes the difficult question: how do managers and business leaders effectively support employees through the cost-of-living crisis?
Due to budgetary restrictions, employers may not be able to provide their workers with inflation- beating wage increases. Fortunately, they can support their workforce in a number of different ways.
Some employees can feel awkward talking to co-workers about their finances. However, numerous studies have shown that simply talking about financial worries helps reduce financial stress. Therefore, it is imperative that managers try to deconstruct the so-called ‘money taboo’.
One way to do this is to have more discussions about personal finance at the top of the organisation. A supportive environment that encourages employees to speak openly about any concerns that may be affecting them could be created, for instance, if senior members in the organisation spoke more freely about the value of financial wellbeing in internal communications or company meetings.
Additionally, in order to better serve the needs of their employees, managers could adapt their company’s pay review processes. For instance, many workers would profit from having their pay reassessed prior to October’s £1,600 increase in energy costs. Conversely, if the company insists on rigid and inflexible pay review procedures (such as only considering salary increases every 12 months), then staff’s financial wellbeing and job satisfaction could take a hit.
Elsewhere, managers could look to improve financial education for employees. This will be vital in the coming months. Indeed, because financial literacy is not given enough attention in most schools, businesses must step up and give their staff the resources they need to fill any knowledge gaps that may exist.
Motivating staff to acquire more financial literacy can be difficult. However, by providing
complimentary financial education workshops and programmes to give their workforce the skills and understanding they need to make better financial decisions, businesses may help make tasks like creating budgets or boosting savings less overwhelming.
Expanding on this, giving employees access to private sessions with financial advisors or charities that can provide guidance may help employees who are reluctant to discuss their financial worries in front of co-workers. It would certainly be beneficial to make financial advisers freely and easily accessible; Mintago’s research found that 33% of UK adults need help managing their finances but do not know where to look for it.
It can be easy to overlook the importance of long-term financial preparation in the midst of a short-term crisis like the one we are facing at the moment. Indeed, a troubling 72% of UK adults prioritise short-term financial commitments over long-term financial goals, and this could have an impact on their financial wellbeing in the future.
Therefore, managers have to be able to give their team the resources they need to manage their current finances and make long-term plans. In light of this, managers should think about providing their workforce with a platform that helps them improve their financial wellbeing.
The best aspect about these platforms, such as Mintago, is that they allow employees to gain a much clearer image of their overall finances, which can help them plan for the future. Through a combination of access to free financial advice, savings benefits and pension tracking services, employees can make decisions about their money with confidence.
Promoting the organisation’s pension plan is another method for ensuring the financial wellbeing of employees during the cost-of-living crisis. According to Mintago’s research, this is an approach to financial support that has a lot of support amongst employees. In fact, nearly half (46%) of employees would like their employers to increase engagement with their pension scheme.
The cost-of-living crisis is also an excellent opportunity to promote HMRC’s salary sacrifice pension programme, which can save employees (and employers) money on national insurance (NI) contributions and income tax. Employers’ NI costs can be decreased by implementing the salary sacrifice pension plan, and employees’ take-home pay will increase as a result of paying lower NI contributions.
Businesses must consider all their options before deciding how to best assist their staff members amid the cost-of-living problem, and it does not have to involve pay rises or financial outlay. Instead, managers should empower their staff to take control of their own finances by increasing discussions about financial wellbeing and promote the various options for support available to them.
Chieu Cao is CEO of Mintago.
The Cost Of Living Crisis: How Managers Can Best Support Employees