Now Is The Time For Managers To Step Up And Help Their Workers
We’re in a precarious situation. Rapidly rising inflation, at a 41-year historic high, is causing concern for workers. The U.S. is still experiencing the lingering effects of the virus outbreak, worried about the potentially ruinous confluence of inflation, recession, layoffs, the possibility of stagflation— not seen since the 1970s— a bear market in securities, war, and increasing costs.
Rather than wait for employees to ask for a raise, empathetic leaders should proactively look after the financial well-being of their staff, and discuss options to help them cope with this new economic environment.
Smart managers should increase pay. Although we are dealing with a challenging economy, employment is still holding strong. If businesses don’t address the needs of their people, the best and brightest will be recruited away or they’ll leave on their own volition to pursue opportunities that offer a substantial increase in pay.
Business leaders can’t be complacent about the new reality. The U.S. Bureau of Labor Statistics reported the consumer price index, which measures the cost of goods, outstripped the wage gains as it grew by 8.5 percent year-over-year in March. This was the biggest yearly increase since 1981. As inflation rises it will only get worse for people.
Companies have options. In addition to raises, businesses can offer bonuses, stock options and other forms of remuneration. In a January 2022 survey conducted by Gartner of 71 companies, around 37% of organizations self-reported that they are planning to consider inflation with their compensation budgets. Unfortunately, only 13% intended to raise the compensation for all employees due to rising inflation. Since that time, inflation has continued to rapidly increase.
Starting from February 25 to March 7, “A survey of employers by compensation data and analytics firm salary.com shows that most U.S. organizations (73 percent) are targeting a payroll budget increase of 4 percent or more this year, and a plurality of organizations (43 percent) are growing their salary merit-increase budgets by 5 percent or more.” While it’s good to see that action is being taken, the single-digit increases may not be sufficient.
Remote Work May Help Alleviate Some Of The Pain
By now it should be glaringly obvious to business leaders that inflation is taking a big bite out of their employees’ paychecks. For many people, it feels that they are earning less money as the dollar is devalued and losing its purchasing power. As the costs of food, clothes, cars, rent and other essentials rise in price, a person’s paycheck isn’t keeping up.
Team leaders should be encouraged by executive leadership to sit down with their staff and discuss how they can enhance pay to compensate for the rapid rise in inflation. In addition to enhanced payments, the company could offer remote work options.
If a person is allowed to work remotely, she won’t have to commute, which will cut down on costly gasoline consumption. If she takes mass transit, which is expensive, there will be a reprieve on those expenses as well.
When you are forced to go back to the office, you usually buy breakfast, lunch and sometimes dinner or drinks after work. In big cities, this could easily run twenty to over thirty dollars a day, which is more than one thousand dollars a year. There is also the need for purchasing a new corporate wardrobe after being at home for two years. Working at home you can buy in bulk and save a lot of money compared to eating out or ordering in when you’re based in an office setting.
The most recent U.S. Census Bureau household survey found that over a third of Americans indicated that they are having challenges paying expenses. The number of people reporting that they are experiencing budgeting challenges ranks near the worst time of the pandemic in early 2020.
Seeing this problem, companies need to get creative with their benefit programs. Progressive businesses could help by reducing costs associated with health care benefits, offering student loan assistance, providing subsidies for child and elder care, take advantage of the plummeting stock market by offering higher contributions to retirement plans that could grow tax-deferred and potentially lead to substantial gains years later. Management should also explore offering policies specifically tailored towards the individual needs of workers.
Attracting And Retaining Talent
Even the most cold-hearted executive must recognize that while the job market is still relatively hot, and it’s hard to find and retain workers, they need to take action. If they don’t offer higher salaries to job seekers, they’ll go elsewhere. When current employees aren’t offered increases in compensation they become disenchanted, disengaged, and will eventually join the Great Resignation movement. They’ll quit to pursue roles with companies that provide a better overall compensation package that will help them get through these tough times.