The impact of inflation is biting hard globally. As a result, employers and employees are devising strategies to cut costs and maximise their already depleting revenue and income. The National Bureau of Statistics (NBS) recently released showed that inflation has soared to 18.6 percent in June 2022.
As a result, the purchasing power of an average Nigerian employee will drop. While it is a hard reality, organisations, companies and businesses can adopt a few strategies to protect their employees and reduce the impact of inflation on their disposable income.
There are conversations, meetings and discussions on how companies can assist their employees with certain compensation packages. There’s a lot of stress on employees. It’s certainly a key concern; inflation is something that employees are concerned about,” says Tony Guadagni, senior principal in the Gartner HR practice.
Organisations should adopt a hybrid work pattern for their employees. The remote work pattern is one of the few introductions in the post-COVID-19 era. Employees whose services can be done virtually and can be categorised as being “physically unessential” should be encouraged to work from their homes. It will help reduce transportation and other costs associated with reporting at work every day. In addition, employers should consider a 4-day work model.
Microsoft, Unilever and other top brands in different countries have adopted this new model with a strong emphasis on output and delivery rather than the number of work hours. This new work model has seen employee productivity and revenue increase drastically. This will save employees some income and ensure they create a better work-life balance.
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Employers should consider a pay rise and the addition of bonuses. A compensation data firm Salary.com survey finds that most U.S. organisations (73%) are targeting a payroll budget increase of 4 percent or more in 2022. A percentage increase in salaries and wages would help employees to adjust and cushion the multiple impacts of inflation on their disposable income. In addition, staff could get transport and data bonuses. The cost of living is rising, and employers must review the employee’s remunerations to meet current economic realities. This would appeal to the mind of employees too should more commitment and give the employee the impression that their welfare is a significant concern to the organisation.
In addition, employers should enrol their employees on health insurance schemes to cut down their staff expenditure on health for themselves and their families. The threat from potential health challenges can gulp an employee’s income, especially those exposed to frequent health challenges. Adopting reliable health care plans for employees can be an excellent pocketbook strategy during an economic downturn.
Organisations should consider offering single-digit loans to employees as a strategy to douse the impact of inflation. These loans could be attached to certain expenditures like housing projects, school fees, cars, health and other essentials.
Employers can offer their staff gift cards for groceries, gas and other consumables. Companies need to re-educate their employees on financial management skills and emphasise a proper financial plan to improve their spending habits. Nigeria’s business environment is experiencing certain shocks and uncertainty, but employers with genuine concern for their employees can adopt these strategies.
Companies and businesses should also endeavour to reduce operating costs to stay afloat or break even in a worst-case scenario. Employers need to understand and communicate the value of the benefit they give to their employees as this would help in employee retention and job satisfaction.
