The rising inflation rates in 2022 has been a huge concern for employers and employees. With the damage from the COVID-19 pandemic compounded by the Russian-Ukraine invasion, countries across the globe are feeling stagnant growth and elevated inflation in 2022. According to statistics reported by the International Labour Organization (ILOSTAT), inflation increased up to 9.2% in March 2022 from 7.5% in February 2022. Closer to home in Singapore, the Asian Development Bank reported that inflation rate is forecasted at 3%, an increase from 2.3% in 2021.
With the rising inflation rates, workplaces and employees are undoubtedly feeling the pinch, with prices of daily essentials noticeably increasing. In fact, a recent Straits Times article reported that while 70% of workers saw their compensation packages increasing in 2022, the increases were diluted by inflation and overall spending power increased by just 1.6%. While white-collared professional and top executives may be able to bear the brunt of inflation, the rank-and-file workers are the ones who are typically impacted the most. This group of people are the ones who generally have to spend a larger proportion of their salaries on daily essentials. Yet, their salary increases are constantly lagging behind the industries’ overall salary growth.
There are ways for organisations to help employees cope with rising inflation rates without having to fork out pay increments that match inflation rates. Here are 5 ways business leaders can deal with inflation concerns among employees.
Actively seek out and understand employees’ concerns
The effects of inflation can differ from employee to employee depending on various factors, such as family background, spending habits, and expenses. In order to roll out measures that can benefit employee groups, business leaders need to proactively understand employees’ concerns. This can be done by providing anonymous communication and feedback channels to allow employees to voice their concerns or provide suggestions on ways in which the organisation can support. Not only does this help business leaders to tailor measures and approaches based on employees’ needs, it sends a message to employees that the organisation genuinely cares for their well-being.
Capitalise on compensation analytics
There are various ways in which organisations can help employees manage the rising inflation rates. The most obvious way is through monetary compensation, by giving employees higher salaries. That being said, organisations need to be mindful when managing employees’ compensation packages during this economic uncertainty. How much salary increment should employees receive and is it within the organisation’s HR budget? It may be worthwhile to conduct a market benchmarking study to analyse how other industry players are managing the rising costs and how much they are paying their employees. While employees’ compensation packages need to be reasonable in order to tackle inflation, it also has to be competitive enough to attract and retain key talent.
Allow for remote or hybrid working
Offering employees the option of remote or hybrid working can help employees to manage the rising cost of living. With the recent COVID-19 pandemic, most organisations have switched to a hybrid working arrangement, where employees have dedicated days to be physically present in the office while they can work from home or remotely for the other days of the week. This arrangement helps employees to be in better control of their finances, where they can cut back on certain expenses such as commuting fares or (pricey) lunches and coffee breaks with colleagues.
Communicate innovative perks and benefits
If monetary compensation is not an option, perhaps provide innovative benefits for employees instead. For example, giving out food or money vouchers to manage the higher costs of living, providing phone or internet reimbursement or ensuring a well-stocked pantry to help employees manage meal costs.
Take calculated risks with internal talent
Promoting employees internally as opposed to hiring externally is a foolproof way to retain employees and keep them motivated. Providing leading and development opportunities for employees to grow will equip them with necessary skills to thrive and tide through an uneconomic uncertainty. Investing in the internal workforce helps business leaders to keep key talent while managing the rising labour costs.
Additionally, ensure that the payroll vendors are continuously improving and upgrading their compliance and security measures. Ask when the last time was they did a user testing on their payroll system – that should give you an idea of the compliance measures that the payroll vendor takes.
Finally, there are bound to be some questions left unanswered as you conduct your payroll software testing. Instead of wasting time scouring the payroll system trying to navigate your way around, simply write them down and send it back to the sales representative for them to answer. A proficient salesperson will respond to your questions timely so that you can get on with your payroll software testing.
Do keep in mind that engaging a payroll software vendor for your company is a huge investment. Make use of these tips to maximise your payroll software testing process. It will also aid you in making a more informed decision when it finally comes down to purchasing the payroll software for the company.