Leading through a financial crisis
The past two years have been undeniably challenging for employees. Following the outbreak of the Covid-19 pandemic, which saw many employees face huge upheaval, both personally and professionally, employees are now contending with a cost-of-living crisis.
Soaring inflation, spiralling energy prices and an eye-watering rise in groceries have pushed standards of living to their lowest level in 70 years, placing employees under greater financial pressure than ever before.
A report by Totaljobs found that 80% of businesses are concerned about the impact the rising cost of living will have on their organisation, with 37% worried about their employees’ quality of life and 38% concerned about staff retention levels. Their fears are not unfounded; almost half of employees already have limited disposable income, living from pay cheque to pay cheque, which has only worsened since the pandemic.
In a bleak picture for employers, the same report showed that as many as 37% of workers are considering changing jobs as a result.
Many employees are already working at a frenetic pace, with a growing number suffering from stress, fatigue and burnout and financial woes will only add to the burden.
If employees are struggling financially, leaders could find themselves with an unengaged, distracted or unwell workforce and this could have a detrimental impact at a time when many businesses are still recovering from the pandemic.
If there is one silver lining to be taken from the events of the past two years, it is that it shone a spotlight on the integral role employees play and the importance of investing in and taking care of employee wellbeing.
Raising wages to keep pace with rising costs is the obvious solution and for companies in a financial position to do this, it is absolutely the right thing to do. The cost of losing and hiring talent can run into thousands of pounds and at a time when competition is already fierce, it’s important that leaders do everything possible to retain their people.
Leaders should be transparent about their business results and authentic in their communication with employees. If the business is growing and leaders are able to balance their commercial responsibilities with paying employees more, a willingness to share that success with everyone within the organisation and help to ease the financial squeeze can go a really long way.
Of course, for some businesses a company-wide pay rise to keep pace with inflation may not be feasible, particularly for those who struggled during the pandemic. Fortunately, there are lots of different ways employers can support and help their employees weather the storm.
As a very minimum, businesses should ensure that their salaries are in line with the real living wage. In contrast to the national living wage, which is mandatory and applies to the whole country, the real living wage and London weighting take into account the different costs of living across the country, with higher rates for those living and working in the capital. Not only is it morally right, but it also makes business sense, with over half of employers reporting better recruitment and retention as a result.
Offering access to financial wellbeing tools can also be a great way to help employees feel more empowered and more in control, with research showing that 67% of employees want more financial wellbeing support from their employer.
The link between financial worries and mental health is well known, triggering or worsening conditions such as anxiety, depression and stress. Nabs, the wellbeing charity for the advertising and media industry, said a quarter of the calls it had received in the first quarter were for mental health-related reasons, up 15% on the same period of 2021. Emotional support was the top reason for people calling Nabs, accounting for almost half of total calls, followed by financial support.
There are several different ways employers can help, including running financial wellbeing workshops, signposting to employees where they can receive free and confidential money and debt advice and making sure all employees are aware of the benefits on offer and how to make the most of them.
Offering additional benefits such as private healthcare, subsidised gym membership, subsidised travel and vouchers towards childcare costs can also help employees’ juggle their financial commitments.
Open and honest leadership
Leaders should not be afraid to have open and honest conversations with their employees around financial wellbeing. Seeking feedback about the kind of benefits and help that would be most beneficial will not only give employers a deeper insight to their employees’ needs, allowing them to better tailor their support, but sends out a clear signal that the organisation values them and is invested in their wellbeing.
A study by Catalyst found that demonstrating empathy can have a direct impact on the workplace, with 61% of employees more likely to feel innovative and 86% reporting that it made them more able to balance the stressful demands of work and life. The ability to show empathy and understanding towards employees has long been a key leadership attribute, but with the pandemic prompting many people to reassess what truly matters to them and what they want from an employer, it is more important than ever.
Building cultures that care and invest in their people can make a huge difference to how people feel about their job and sense of purpose. Leaders should consider ways they can invest in their employees’ development beside monetary support and provide a sense of pride and motivation. This includes upskilling, training, mentoring and putting in place a career development plan that really reflects their individual goals and ambitions.
If employees feel they matter, they are much more likely to feel aligned to the organisation and have a shared ambition to see it succeed.
However, it’s important to remember that leaders are not expected to have all the answers. It is ok as a leader to feel unsure and leaders may be worried about how to juggle the cost-of-living crisis themselves, with nearly half of employers admitting they feel concerned about their own overhead costs increasing.
There is no shame in being honest or showing vulnerability to employees – on the contrary, employees value honesty and openness. In fact, leaders may find that employees have ideas or ways to help the business weather this latest storm and collectively, they can help drive the business forward.
Leaders should also ensure that they have a support network they can turn to. It can sometimes feel overwhelming, and even lonely, leading a business so it can be a huge source of support and comfort to be able to turn to others who are or have been in the same position for advice, guidance and experience. As the saying goes, alone we are strong, together we are stronger.