How employers can respond to the rising cost of living

The rising cost of living has been a recurring theme making headlines around the world. The annual inflation rate in the United States topped 7.1% for the 12 months ending November 2022 and reached 10.7% in the United Kingdom during the same time period. Although the most optimistic analysts suggest that inflation will subside in 2023, HR leaders have had to pivot from handling one crisis (COVID-19) to another in an incredibly short amount of time. What are the implications of the rising cost of living on employers’ reward and benefits programs, and what practical measures can be taken to address it?

While there is no debating that the cost of living and inflation have caused life expenses to go up, it is unfortunately not the case in most circumstances that salaries have gone up to accommodate. Employees are paying more for groceries and homes, but also for important services like childcare, medical procedures, and behavioral therapy. Because of this, more employees are turning to their employers in hopes they may offer covered or subsidized services to help with such needs.

Where possible, some employers are offering one-off cost of living bonuses or are providing more frequent pay reviews (biannually instead of annually) to offer support with the increase in cost of living. Sequoia has also observed companies offering support with caregiving, care navigation and virtual care, and packaged therapy visits. In addition, some organizations are rolling out financial planning tools to help employees understand how to better save, allocate, and budget their money during times like this.

While benefits that help lessen the burden of costs on employees are understandably the most well received, not all companies have a robust budget to accommodate these programs. In that case, employers should focus on providing education internally to increase awareness of existing benefits. For example, many carrier programs include care navigation and guidance services to help employees understand and find discounts for medical procedures or free preventative care services. In addition, policies that allow employees time away from work to sort out financial issues or help with caregiving needs can help lessen some of the stress for workers.

It’s also important for companies to remember that for many employees, job stability may feel in question given tough economic times. Workers are observing as organizations around the world are announcing layoffs or hiring freezes. These staffing changes have an impact on employee morale and retention at a time when retaining great talent and fostering a productive environment remains top of mind for all employers.

Employers must focus on the wellbeing of their employees, particularly their mental health. Benefits such as career coaching and therapy can be a great combination to make employees feel supported in their role. For those requiring employees to return to the office, highlighting commuter benefits, in office perks, and fostering events where employees can both collaborate and catch up are all well received.

Read more: Banner year? In 2023, 68% of employers will increase salaries

Overall, HR leaders should take time to purposefully review their reward and benefits packages and consider if their efforts and budgets are being directed to programs that will have the most impact for employees, while balancing organizational priorities.

Rochelle Spencer is the Global Consulting Director at Sequoia.