5 Ways to Help Employees Deal with Inflation (Without Boosting Salaries)
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With inflation hitting its highest levels in almost 40 years, prices for gas, food and clothing are hurting your employees’ pocketbooks. The average household is spending $5,200 more this year just to purchase the same amount of goods as in 2021, according to Forbes.
It’s little wonder employees have been switching jobs in record numbers in search of higher salaries. But salary increases aren’t the only way to retain employees. To help retain key employees and help them cope with inflation, look to the following strategies:
- Make use of bonuses.
- Maintain or reduce health care premiums.
- Provide additional benefits.
- Give the gift of time.
- Communicate potential benefits.
Make use of bonuses
Perhaps the most obvious solution for helping employees deal with inflation is to increase salaries. And many companies are doing just that. More than 90% of organizations have increased salaries in 2022, according to the employee rewards company Tango Card. However, it’s unrealistic to provide salary increases that match an inflation rate pushing 10%.
Bonuses offer a way to lessen the impact of inflation without tying future business costs to salary increases. And bonuses can be provided through different means, including:
- One-time payments based on cost-of-living needs or performance
- Monthly or quarterly payments tied to employee merit or company profits
- Retention payments that entice employees to stay with your organization for a set period (for example, six months) to receive the full amount
Maintain or reduce health care premiums
Another popular tactic is maintaining or reducing health care premiums for the same level of benefits. In fact, most employers have chosen to maintain or even reduce premiums, deductibles and other cost-sharing expenses, according to 2021 data from Mercer.
This strategy allows employees to keep more money from each paycheck, helping them meet immediate needs like grocery, housing or vehicle costs.
Provide additional benefits
Allocating funds to employee benefits can provide a huge boost to your employees, without being tied to future cost-of-living raises. High-impact benefits that are growing in demand include:
- Student loan benefits
- Child care subsidies
- Fertility benefits
These benefits will be highly valued by some employees, but not all. To reach your entire workforce, you could provide benefits with smaller monetary amounts, such as:
- Gift cards for gas, groceries, restaurants, etc.
- Corporate discounts on household goods
- Gym or museum memberships
Note that gift cards may constitute taxable income to your employees; check with a tax professional before distributing these or other cash equivalents.
Give the gift of time
According to the U.S. Census Bureau, the average commute time is over 27 minutes each way, or nearly an hour a day. And commutes can be much longer in certain areas. That’s where remote work can be a big difference-maker.
In addition to saving on commuting costs like gas and vehicle wear and tear, remote work can help your employees save valuable time. And time is something employees are seeking. According to the BBC, more than 30% of employees would accept less pay for more time off.
Remote work isn’t the only way to provide your employees with extra time. Other options include:
- Offering additional paid days off, either on a one-time basis or moving forward
- Shortening the workday by an hour or offering a half day each week
- Switching to a four-day workweek on a trial basis or for the summer or holiday season
Communicate potential savings
Salaries and bonuses come with clear dollar amounts, making it easy for employees to see the immediate impact. But with strategies like maintaining or reducing health care premiums, offering new employee benefits and providing additional time off, you need to communicate the monetary value.
- Provide a summary of health care costs, including your total employer contributions and employee cost savings from maintained or reduced premiums.
- Send emails about each new benefit, with specific examples of their value. For example, if you provide up to $5,250 in tax-free student loan repayment benefits, note the tax and interest savings. Or if you provide $50 toward a monthly gym membership, mention ways employees could use that extra $600 a year.
- Print posters estimating weekly commuter savings from remote workdays. Graphic visualizations of the savings on gas costs, mileage, vehicle wear and tear, and commute time can be powerful reminders of the value of this benefit
An ongoing issue
Inflation isn’t going away anytime soon. The rate will likely stay around 9% for 2022, followed by a gradual decline to about 3% by the end of 2023, according to the business forecast company Kiplinger. Helping your employees through this time can ease their financial concerns and boost your retention rates.
For more information on helping employees handle inflation, talk with your insurance broker or benefits adviser. They can help you examine compensation and benefits strategies that provide value to your employees and your organization.
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