5 steps to mitigate the effects of inflation
Stay cool and act now to prevent workforce meltdown.
Around the world inflation is soaring and the cost of living has, in some countries, reached unsustainable levels. Now’s the time to perform a health-check on your comp policies and see what you can do to stabilise a worried workforce. In our latest report, we dig in to the strategic and procedural detail – here are our 5 key steps in brief.
Salary benchmarking should be carried out on a regular basis. It might be time to update your benchmarks and check that your compensation is competitive against a fluctuating market.
Start with the data – make sure that you don’t have underpaid segments of your workforce. You could also collect internal data to learn how your workforce feels. Frame your questions carefully.
“If you ask your employees if they’re happy with their pay, most of them will say ‘no’,” says Gethin Nadin from Zellis. “Reframe the question in terms of how happy they are at the company, how supported they feel, and their perception of the culture.”
#2 Be transparent.
Transparency produces accountability, which builds trust. And it’s been repeatedly proven that trust is linked to increased performance, motivation and job satisfaction. Those intangible factors have value to your employees and the organisation. “Whether you choose to act or not, you have to communicate,” emphasises Virgile (Figures). “The closer we get to the end of the year, the more your employees are likely to ask about what your organisation plans to do.”
Create a strategy to openly share information. Then take courage and do it – bad news or good. “For lots of businesses, the communication they used during the pandemic will apply here,” notes Gethin Nadin.
“We saw a lot of businesses explain in transparent terms, ‘we don’t know how this situation will pan out. We’re doing everything we can to help you, but at the moment, we just can’t afford to give pay rises’.”
#3 Be fair.
Reviewing your compensation structure and recruitment policies helps you to be sure they are equitable. For instance, negotiations are known to disadvantage people who are in minority groups. A solid salary structure will help you to ensure fairness.
Ciara Lakhani from Dashlane says it’s important to build a structure which is scalable. “If we change our compensation philosophy every year, or give people more money when they ask for it, then that’s going to give people an impression that we can do something that would be unsustainable for the company.”
Orin Burg at Fiverr recommends an open-door policy. “Consistent meet-ups are important to keep employees informed of their next steps; from professional targets to raises and other benefits.”
When employees don’t get a regular flow of information from the top, they’re more likely to fill in the gaps with their own imagination. You can prevent this uncertainty by ensuring that senior leaders can provide clear, reliable updates or even financial resources, if needed.
Prepare comms documents and educate your managers so that they can clearly communicate your compensation policy. Make sure that employees know who they can ask about what.
Ciara from Dashlane explains: “We want there to be a safe space to ask and to receive education on the company's rationale, the benefits we offer and why. We guide people through all those conversations so we can provide that context.”
#5 Focus on wellbeing.
Absences are up and performance is down; the Great Resignation continues in waves. Many employees could be struggling with anxiety and insecurity.
Communication is key. Gethin Nadin shared this advice: “You have to give employees regular opportunities to articulate what’s stressing them out and support them to build resilience in their lives. They need permission to show that vulnerability at work."
Managers need to create a culture of wellbeing within their teams and that starts with leaders opening up and showing their vulnerability, as we know that this creates psychological safety.
What are other companies doing to tackle the effects of inflation? Download Making Inflation Pay to read our survey results – plus our expert-formulated, 5-point plan, in greater detail.