Inflation is on everyone’s minds right now, and understandably so. Most Americans are aware that the purchasing power of a dollar is always decreasing to some degree, but rarely does the rise in the cost of living have such a powerful impact on our daily lives or feature so prominently in the public discourse.
As you may already know, financial pressure on American consumers reached an all-time high this year. Based on The Consumer Price Index – the best-known indicator of inflation – inflation rose to 8.6 percent in the 12 months ending in May 2022, marking the most extreme spike in that figure in over 40 years.
The Impact of Inflation on You and Your Team
Employees are justifiably concerned by this sudden and dramatic hike in the cost of basic goods and services. I think, these days, that employees also have a deeper understanding that, if their pay does not keep up, they are essentially working for less money. As employers, we must find ways to help them offset these increased costs while also controlling the cost of labor.
Of course, the cost of doing business is also increasing. And, with basic cost-of-living raises threatening to skyrocket from roughly three percent to closer to 10 percent in just the last few months, employers are also worried about how to address these developments in a way that supports both their teams and their businesses.
As a business owner, when I look to increase an employee’s satisfaction with their job, if the method I choose to help me increase satisfaction involves an out-of-pocket expense, I also look for ways to fix the cost. By “fix,” I mean ensuring that increases to those costs will always be small and incremental.
How we as employers find ways to support our teams and keep them happy without killing the bottom line is an interesting and increasingly important conversation.
There are several popular methods that many HR professionals have endorsed for addressing this problem. We think four of the five merit our full recommendation.
Of course, every reader will have their own business and HR model. That said, we want to go over all five options because you might find a couple of valuable nuggets in all of those ideas regardless of whether or not we deem them workable for the majority of small business owners.
The Top 5 Suggestions for Helping Your Team Cope with Inflation
1. Allow employees to have more autonomy about where they work.
This is my least favorite.
The idea here is that, in addition to helping employees increase their work-life balance, by allowing employees to work from home more and choose when they do or do not come into the office, employees will be able to save on gas and other costs associated with commuting.
Of course, there are limited opportunities to make this model work for medical and dental practices because most of the positions within our members’ practices are in-person and patient-facing. The need for employees to be face-to-face with patients takes precedence in your industries.
Still, we are getting more and more requests for guidance on remote work policies from many employers, especially as it pertains to administrative employees.
2. Provide more Learning and Development opportunities .
I honestly feel like this guidance is most appropriate for larger corporations and companies with multi-level managers.
The opportunities for advancement at small dental, medical, and wellness practices tend to be limited, and most open positions are filled based on prerequisite employee certifications and educational requirements.
That said, we know that many of our members, particularly our dentists, like to focus on learning and conferences, and that employees appreciate it when their employer demonstrates a commitment to their professional growth.
It’s never been more important to up your collective team game than it is now. Find ways to engage your team and keep in mind how rewarding and fun it can be to go to a conference or attend a meeting where work and pleasure readily intermingle.
Also, don’t forget the HR side of travel and training!
3. Provide Bonuses.
Typically, bonuses are given in return for a specific type of outcome. What I like about bonuses in almost all forms is that they are that “fixed” solution I discussed earlier.
A 10 percent increase in salary is a permanent and ever-increasing cost to your business. And, if that sort of increase becomes the expectation, it won’t take long for salaries and hourly pay to get out of hand.
During this period of high inflation, consider instituting a “retention bonus.” This bonus is telegraphed and intended to encourage employees to stick around longer by rewarding them for reaching a certain term of employment: If an employee makes it to the end of the quarter, the year, the third year, etc., there will be a $300 to $500 bonus reward. Presented to new hires as a temporary solution, this is something to consider.
Likewise, if you are running outcome-based bonuses, as many of you are, you could increase the rewards for your existing program on a temporary basis.
4. Avoid passing increased costs on to employees.
As costs go up for employees, so, too, will the costs associated with running your business.
All indications are that healthcare costs are going to continue rising across the board, for instance. Try to avoid passing increases in the fixed cost of things like healthcare benefits on to your employees.
Instead, prepare for potential rate hikes before they happen and offer to cover those increased costs without asking for more from your employees.
5. Seek out alternative benefit options.
Bonuses and benefits can take an almost infinite number of forms, which means that there are a myriad of ways that you could help your employees combat increased costs other than simply shelling out cash.
Find creative ways to relieve the pressure and lift the spirits of your team that don’t involve permanently increasing your costs. These can include closing your office for a day of well-deserved rest, providing a weekly lunch to your team to help them save on the costs of eating out during the workday, expanding your PTO offerings, or providing gas and/or grocery cards to help your employees maintain their quality of life without increasing their spending. Note that gift cards provided as bonuses are taxable and need to be treated just like any other type of income for your employees.
A word of caution on the gift card option: if you plan to go this route, make sure you offer enough to actually make a dent in your employees’ total bill. A $10 gas card isn’t going to go very far at the pump with gas prices above $5 a gallon, for instance, and may therefore actually frustrate some employees more than it helps them.
The last few years have been one nightmare after another for business owners, especially for those who didn’t have the option of working from home during the pandemic.
It’s been tough, to say the least. Our members have faced a series of “once-in-a-lifetime” crises, ranging from a three-year pandemic, to supply chain disruptions, then a labor shortage, and, now, an unprecedented surge in the price of, well, everything.
We’re exhausted. We’re weary, bleary-eyed and beaten down, but not defeated. If anything good can be gleaned from this series of ongoing struggles, it’s this: the more challenges we face, the more resilient we become.
As employers, we’re battle-tested now. We’ve weathered a great many storms already and, today, in the face of soaring inflation, we have once again been summoned to serve – not just as bosses, managers, and owners – but as leaders. And if there’s one thing I have learned from my more-than 15 years in service to employers in these industries, it’s that you don’t buckle under pressure. You rise to the moment. And, in this moment, I know that you will rise together yet again to set the example of what it means to thrive in the face of adversity.
What are you doing to help your team combat inflation? We’d love to hear about it! Let us know in our private, professional Facebook Group, HR Base Camp, or inside our private Members-only Forum.
At CEDR, we help employers protect their practices and build stronger teams. Because stronger teams build better workplaces, and better workplaces make better lives.