How to sustain employee cost of living support in 2024
At the end of last year, HR teams were still expecting to be dealing with the effect of the cost-of-living crisis into the first half of 2024 at least, according to the Edenred 2023 People Barometer. In fact they said it is their second biggest priority, just behind investment in HR artificial intelligence (AI) systems.
While AI offers exciting opportunities, nearly two-thirds of employers (64%) said they were still struggling to retain staff, a similar number (62%) reported falling levels of employee engagement, 39% were getting more requests for extra financial support and one-third (33%) said their employees had taken second jobs.
Worryingly, around half of all employers (48%) said financial wellbeing is the biggest threat to performance this year.
3 ways to provide tactical support
It’s clear from this research that any drop-off in support for employee financial wellbeing will stifle employee performance in 2024.
Last year many employers awarded pay rises and one-off payments to plug the cost-of-living gap. But this isn’t a sustainable solution long-term. Instead, HR will need to explore a wider range of options to provide support that will also help them to retain, motivate, and engage people. This means that while every organisation will need a long-term strategy to drive employee performance, they also need considered and practical tactical responses.
These responses should include:
1. Cost of living support through retail discounts
Although inflation is slowly starting to come down, many employees won’t notice an improvement to their personal finances until at least 2027. Even then, the National Institute of Economic and Social Research warns the forecast fall in inflation to 3.9% is unlikely to be achieved due to significant inflationary risks. Employee discount schemes now play a critical role in helping employees to offset rising costs, whether that’s for grocery or energy bills or increased rent or mortgage rates.
2. Help with cost of food at work or home
Throughout the cost-of-living crisis, the inflation rate for food has remained worryingly high. While all employees are feeling the pinch of high food costs, some, especially those on lower wages, are visiting food banks or eating just one meal a day in order to feed their children. This means employers who want to show they understand and support employees need a way to get money into employees’ pockets quickly and securely to offset increased food costs. They must also strive to ensure any financial support is ringfenced for food – for example, by deploying prepaid cards that can be used at supermarkets, restaurants or takeaways.
3. Year-round recognition and reward
Even in the most challenging times, employers who value staff have higher levels of retention, engagement and motivation. In the context of the current climate, employers should look towards a year-round appreciation plan and not simply rely on a few points in the calendar year (typically, year-end reward or annual performance reviews).
How you deliver also matters. Today, employees want and expect digital reward and recognition vouchers. Happily, this also works best for employers, as digital rewards are easily distributed across a dispersed workforce, irrespective of employee work location. They also give you the opportunity to personalise messages and the reward value while ensuring each employee receives the intended gift – something which isn’t guaranteed with physical reward.
Digital reward also ensures employees can redeem their gifts without fuss at the right moment for them. And, crucially, use them for the things that make a difference based on their personal circumstances.
In partnership with Edenred
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