A people-centric CEO’s response to inflation

The inflation news seems to be getting worse and worse. This week it stands at 8.6%, an incredible change for the millennials and gen Ys of our workforce, but a familiar if long forgotten story for the older members of the workforce.

We’re not in the same boat

During COVID we talked a lot about how we were all in the same pandemic, but we weren’t in the same boat. That same truth is magnified in the inflation game. Those who have good salaries and fixed mortgages with savings in the bank from the lockdowns will weather the storm. Many others, with lower paid jobs, sky rocketing living costs and a carefully balanced budget – until now – will be feeling not just a pinch, but a terrifying squeeze where they may need to have to choose between food and fuel this winter – and yes – that could include people in our workforce.

And whether you are living in straightened circumstances or not, the rapid rate of inflation has a huge psychological impact on all of us. We are all likely to review our spending and try to make careful choices, showing how vulnerable the economy is to sentiment and the media.

That is at a personal level. But also, the playing field is not level for the many companies we support every month, a pattern repeated across the country.

Those with heavier reliance on energy will be feeling the cut to margins and the struggle to make profits. Richard Walker, CEO at Iceland, has gone public saying that firms must accept low profits to help our customers get through this crisis, whilst seeing an increase in shoplifting. Many of our clients at People Puzzles are joining with this idea, choosing to make additional payments to their teams to help with the demands of fuel costs through this winter, directly out of the bottom line.

But aside from the company response, there are clearly things that we can do to help our people through this difficult time. We must recognise that we don’t know what each of them are dealing with personally, so we can’t make generalisations, but we can respond with kindness and empathy.

The CEO response

Here are some ideas of how great leaders respond to their teams in a time of high inflation:

1. Josh Bersin, an American HR expert explains: “First, it’s time to focus on your pay practices and improve transparency, frequency of reviews, and the fairness of your performance process. People want and expect more money and you have to be sure you’re clearly and consistently explaining your policies.” He goes on to explain that it is ok to pay less than your peers or competitors, but that you need to demonstrate why you pay what you do, and why overall your company is worth staying with. This is where your employer brand, your purpose and your culture all come into play.
2. Take the time to properly review and revisit all your lower paid roles, casual workers and junior, entry level roles. It is important that you are considering those who may be struggling the most and see what support they may need. They may be the cheapest part of your workforce, but they do crucially important jobs for you and in a time of as many job vacancies as we have now, they are not guaranteed cheap labour even in the short-term.
3. Retention, retention, retention! We have been talking about how to hold on to your team since the post-covid job boom and labour shortage. Again, inflationary pressures mean people will again be looking to change jobs, perhaps even if it gives them 50p more per hour. Review what the cost of not addressing your retention will be if you can’t get your staff turnover under control.
4. As HR and People experts, we are always talking about culture, employer brand and purpose, and why these give you a competitive advantage. This is true more than ever, as you should be looking to support people with their cost-of-living pressures. Listen to your employees and see what they think you should be doing to support the team. We’ve seen ideas from fuel top ups, a fund that those most in need can apply to, even a food bank at work. How should your company culture respond to the rising inflation and the support that some of your team probably need but don’t want to articulate?

What next?

We are juggling from crisis to crisis at the moment – it feels like the world always changing is the new normal. The themes that run through HR and people-focused companies remain fairly stable – build a healthy organisation that has clarity, communicate well, build, and maintain a strong culture, and support people where they need it.

If you’d like some help making sense of this for your company, we would love to chat with you. Our sweet spot is helping companies with between 20 and 300 staff navigate the endless changes in the economy and getting the best out of people to help you succeed. Please do give us a call on 020 3633 6830.