These can be difficult and depressing times. Just ask anyone about to head to the US for a holiday. Ouch. "The pound reaches record low against the dollar" won't make for happy newspaper reading before any such trip.
But what a luxury to be worrying about the value of holiday spending money, when people face much harsher economic realities. Last week - a day before Kwasi Kwarteng's mini-Budget bombshell - a group of Helm members joined a digital discussion on how the real cost-of-living crisis is affecting their teams.
Helm is a community for the CEOs and founders of scale-ups worth over £1m.
Every team has a different crisis
One obvious takeaway from the discussion was that not many members felt it was that big a deal for their teams. No one had the sense of it as much of a topic among their teams, let alone being something keeping people awake at night. The severity of the winter, and the impact of rising costs may yet change this.
This was where consensus ended. It was striking how wide the range of responses from the businesses represented at the session had been. Some had acted quickly, offering staff 10% pay rises and one-off cost-of-living bonuses. Others had adopted a pragmatic, wait-and-see approach. All agreed something had to be done. Some of the key points made were:
- Pay rises of between 5% and 12% (which is quite a range) were now routine. A few people tied these to targets and milestones, others offered them to staff most likely to leave (or be valuable to competitors), while some offered it to all.
- Some had paid one-off, cost-of-living bonuses. Several more were considering doing so. Always well received when handed out, members recognised the danger this is a short-term fix, quickly forgotten. One member is spreading out payments from November to February.
- Some were using non-pay aspects of reward, including upping pension contributions, offering extra financial planning advice (often available for staff through your bank) and mental health support. One member also suggested the employee insurance provider Yulife and its app.
- Keep your regular pay review process and pattern, and tie large pay rises to promotions or taking on extra responsibilities. One-off payments could be used outside whatever the normal framework is for the business.
- So-called one-off payments may become expected if inflation remains high.
- The energy price cap has helped ease concerns where they existed and should (at least it was expected to at the time of the discussion) reduce inflation. This may make it easier to not keep upping pay or making one-off payments.
A long-term shift in culture
The shift away from office-based teams has had a negative impact on company culture, especially where the old office-based culture had been heavily based on social events. The long-term effect of this shift has been to allow staff to fall into a more transactional relationship with their employer. In this new paradigm, money becomes a much more powerful motivator than ever.
And because market pressure and demographics mean a very tight labour market, there can be as much as a 20% to 50% pay premium available to those moving jobs. Thus, the challenge of retaining talent is getting both harder and more crucial than ever.
The cost-of-living crisis may not be a crisis for your business, yet. It may not be an issue for your teams, yet. But one message that came though loud and clear from the session was that whatever you do for staff and however you seek to help them, financially or emotionally, remember to let them know what you are doing.
Failing to effectively communicate the support on offer and the value of any help and benefits you are providing (both financial and non-financial) is in some ways worse than failing to help at all.