With news dominated by the ‘cost-of-living crisis’ and inflation rising, it seems likely that many businesses, entrepreneurs and employees may have a difficult few months ahead. So, an important question we should be asking ourselves as entrepreneurs is what can we do to support our own employees through this crisis?
What is the situation with inflation and the growing cost of living?
Inflation is one of the most important economic indicators there is. A small amount of inflation is indicative of a healthy economy, but it’s a fine balance and when the rate shrinks too much and becomes deflationary, or when it climbs rapidly eroding the value of people’s money, then it can mean trouble.
With inflation in the US, the EU and the UK now standing at around 8.3%, 8.1% and 9% respectively, economic policy makers are concerned and regular citizens are feeling the pinch. The inflation has been caused by many years of money printing since the financial crash of 2008, and exacerbated by the recent covid pandemic.
How can entrepreneurs support their teams throughout this?
While entrepreneurs and businesses may come under pressure as costs rise and consumer spending decreases during an inflationary period, we should remain focused on the fact that a business is nothing without the team who make it work every day. These are a businesses greatest asset and therefore protecting them as best you can through economic turbulence isn’t just the right thing to do, but it also makes good business sense.
The first step is to ensure that your key team members, those with responsibility for HR, compensation and staff wellbeing, are aware of the issue and how it might impact staff. A business leader should work to ensure that everyone understands what’s going on and what they can do about it – both as individuals and as a team.
You can also look into ways that your business can save people money, and what schemes there might be out there to help with this. Examples of this might include offering discounts on public transport or making people aware of tax relief on home office equipment.
Tips on what you can do
Other opportunities to help staff manage inflation will need to be balanced against revenue and forecasts. There are a range of things that leadership can look at however including;
Raise wages: raising wages to keep pace with inflation can be a real help.
Workplace benefits: Another way that you could help your workers is by offering more workplace benefits such as flexible working. These benefits may not make up for rising prices but they can help employees cope with the financial pressures caused by inflation.
Improving productivity: You can also look at ways of improving productivity which will mean that your business is able to deliver higher value without having to increase costs. This could include better training or better use of technology such as productivity software or mobile apps which allow employees to work remotely from home when needed. Any efficiencies found can then be used to further support the business and employees.
Inflation and the rising cost of living will likely prove to be a significant business challenge over coming months. With planning and creativity however, entrepreneurs can ensure that their businesses and teams come through the worst effects of inflation.