Your step-by-step action plan to what HR to support employees in 2023.

Despite most employers awarding pay rises this year, a brutal combination of skyrocketing inflation, the highest interest rates in 14 years and an energy crisis, mean employee wages have significantly dropped in real terms.  ONS statistics confirm pay increased in the private sector by 6.1% from August to October 2022 but taking inflation into account, actually fell by 2.7%.

Many employers are responding empathetically with a predicted 5% wage hike over 2023.  Unfortunately, experts say this won’t make wages inflation-proof.  No matter how much employers would like to pay to match inflation this isn’t a financially sustainable option for many. 

Employees are realistic about how far employers can raise wages.  Our own research found just 20% expect a pay increase in line with inflation.  Instead, 25% expect their employer to bridge the gap in different ways - financial wellbeing, shopping discounts and employee benefits. 

Bruising household finances

Money saving expert, Martin Lewis, describes the cost-of-living crisis as a shock greater impact than the pandemic. Many people (64%) say it is having a detrimental effect on their health and mental wellbeing and they are running out of options to contain costs, reduce personal expenditure or earn more money.

Business impact

As employers our first response is empathy and a genuine desire to shield our people from the worst of the crisis.  From a business perspective it presents the biggest threat to people performance and workforce stability. 

While the recruitment market remains fiercely competitive, employers cannot afford for staff to leave for better paid jobs, burnout or lose focus because they’re working a second job just to cover the bills.  Unsurprisingly, over half of employers say supporting employees through the crisis is their number one priority in 2023.  Those that do will find it easier to attract and retain staff.

With little room for manoeuvre around pay rises there are still plenty of non-pay-based options to achieve this goal.  Based on our experience helping thousands of clients develop a cost-of-living response we’ve produced an action timeline to guide HR through the process.

Here’s what HR can do to boost financial support for employees in 2023

Week 1: Rapid response initiatives

Don’t try to boil the ocean in one go or wait for your usual pay and benefits review cycle before acting.  Staff are affected now and need a rapid response.  Start with a small gesture to show the business cares.  This will buy time to plan a considered response. Keep solutions simple. This crisis is about getting more money into staff pockets as quickly, easily and securely as possible.

Coping with rising food and energy costs is the number one priority for many employees, so it makes sense to focus your first tranche of support here.

Then identify other quick wins to help reduce costs for employees.  Look at what you can do to support the cost of work including travel, lunch and for home workers, heating. Help with the cost-of-living: the everyday costs of shopping, and life in general. An employee discount scheme that is properly understood and used can save employees a significant amount of money over the course of a year.

Include a focus on wellbeing to help with the mental and financial impact of the crisis. Actively market the support on offer, through multiple channels and make it a talking point for managers to acknowledge impact on staff. Lots of employers have created a cost-of-living hub to bring support together in one place.  You don’t have to create this content yourself.  Link out to credible third parties that offer advice and financial management tools. Consider an EAP to assist employees experiencing financial or mental distress.

Ticket Restaurant

Employers can help manage rising grocery costs with Edenred’s pre-paid card, Ticket Restaurant, redeemable at major supermarkets and food outlets.Unlike additional payments to salary, this method ringfences the money for the intended purpose.

Employee Savings

Edenred’s digital platform is a low-cost option for employers to give employees access to discounts across thousands of big brands, UK retailers, including all major supermarkets.

First month

It is really Important to show a considered response as part of your EVP.  The business must demonstrate through its actions that it has really thought about the predicament staff are in and is proactively responding with empathy and practical support.

Review what you currently offer through a cost-of-living lens to identify which benefits will deliver greatest value to employees and the business. 

Survey staff and ask what support they most need and uncover any gaps in current provision. Don’t make assumptions about what support they need.  Leaders will likely be cushioned from the worst impact. Make sure you ask staff across all pay levels how they are impacted and what help they would most value.

Equipped with this information you will be in a position to pull together a comprehensive package of support.  Employee and business needs vary meaning a one-size-fits solution won’t be appropriate.  Instead, take time to agree core design principles appropriate to your business.  These might include:

• Flexibility – this is a rapidly changing situation.  Employers need to be able to adjust support in line with changing circumstances and ramp support up or down. This might include the ability to provide immediate, short term assistance as well as longer term support. Provide means-tested or discretionary support, one off or repeat payments. 
• Think digital first – to deliver support to hybrid and remote workforces quickly, safely and securely.
• Make it memorable – ringfencing money, for example through the use of pre-paid cards means employees associate a purchase with their employer each time they use the card.  
• Check for unintended consequences - of support for low-wage workers. Ironically, a one-off payment will likely trigger a subsequent cut in benefits for workers on universal credit or other state benefits.  Similarly, unionised environments have clear rules around benefits.

Over the coming months

Monitor use and impact – in a fast changing economic and political environment it is inevitable that employers will be to adapt support over the coming year.  Ensure the support you offer is easy to monitor and report on so you can justify the need for any adaptions to senior leaders.

Create a cost-of-living focused comms plan – even the best thought through support will only be effective if staff use it.  What are the key messages staff need to understand to use the support effectively?  Do staff understand how a specific benefit will advantage them? Do they know where and how to access support?

From an EVP point of view, even if you are repurposing existing support it is a good idea it up into a cost-of-living hub.  This acts as a visual reminder the employer cares and makes it easier for staff to access support in one place. 

A regular comms schedule will help to maintain a steady drumbeat to remind staff to continue to use the support on offer.

Businesses are operating in a fast changing political and economic environment.  Employers don’t know what challenges lie ahead for the business and employees just that there will very likely be more to come.  By having a plan in place and monitoring against it, HR and leaders can be confident staff are well supported by the business.  In turn employees are reminded why they like to work for you as an employer.

For more information on how your organisation can help employees through the cost-of-living crisis, visit our Cost-of-Living hub.