This year has brought about a lot of uncertainty, as the past two years have (and it’s only March). Conditions abroad and local continue to shift how we navigate both our personal and work lives. And having to be responsive as an employer goes far beyond what is expected of employee adaptability. Being an employer in 2022 seems to be a game of strategy. From “poaching” employees to offering increasingly generous working conditions, many employers are changing how they find and retain talent. But rising inflation is proving to be more of a challenge than anything else the workplace has seen in the past two years.
So, let’s talk (very briefly) about inflation in 2022 and what it means for you and your employees alike.
The Effects of COVID-19 over the past Two Years
Over the past two years, we’ve seen a drastic change in workplace conditions. We saw the highest rate of work from home (WFH) conditions in 2020, with only some companies continuing full-time WFH to this day. And though WFH meant a decrease in some consumer products, it also meant a rise in energy prices.
In 2021, we saw the long-term effects of COVID-19’s prompt for working from home shifting employee working conditions. This was dubbed the Great Resignation. And with forecasted inflation and salary averages in mind, experts did suspect a pay increase in 2022, particularly in the wake of the Great Resignation. But many did not expect the conditions under which these increases would come.
Last month, for example, overall consumer prices in the States rose 7.9% in comparison to February 2021. Forbes notes that this is the fastest prices have risen in 40 years, and these prices will only climb higher with Russia’s continual invasion of Ukraine.
“Today’s inflation is caused by a unique mixture of shock waves stemming from Covid-related surges in consumer demand and supply shortages […] As Covid persists and people make alterations to their lifestyles and consumption, demand will continue to be relatively erratic both from time to time and from product to product” (Byrnes and Wass 2022).
As such, for many looking for a new job or looking to negotiate their compensation, salary will be at the top of the list. That is, being able to keep up with steady increases in rent, groceries, gas, and other costs, is proving to be more crucial than many other deciding factors. And while the Canadian government has announced its federal minimum wage to rise by 55 cents in April 2022, not all employees will or are able to follow suit.
Your Next Steps to Battling Inflation This Year
Even if you’ve offered your employees a raise in the past year, they most likely have actually lost money. What’s more, experts have shown that keeping employees happy is not as simple as offering them a raise. Of course, hybrid working conditions and shorter work weeks will make you a competitive employer. But ultimately, with employee poaching as popular as it has become, maintaining employees will require that much more from you. And if your employee isn’t poached, they may turn to going on strike to acquire their demands.
1. Building retention in other ways
As Forbes notes, many executives are recognizing the loss of talent, but less than a third of them are willing to increase salaries. With that said, this article focused on executives from mostly Fortune 1000 companies. However, if you aren’t able to increase salary, there are other ways to increase retention. Flexibility and employee benefits beyond working from home can go a long way. Even more, some companies are offering retirement plans to sweeten their deals. In addition, offering interesting projects and professional growth opportunities that are beneficial to the employee can give your company a competitive edge.
2. Communicating and making compromises
One point of conflict between employers and employees these days is the lack of communication surrounding salary. While some companies base their salaries off of the cost of living, others determine it based on the cost of the labor itself. Having a clear sense of communication from the very first interview is key to ensuring an employee feels appreciated and well-compensated. And with this conversation, employers should be equally as open-minded to recognizing real concerns required to meet the cost of living, even as it rises.
3. Precision pricing where possible
In order to rethink the salary offered to your employees, you may need to revisit and restructure the costs put into and received from your products/services. Byrnes and Wass offer some strategies on how to do so in their article here.
If you’ve come to the end of this article with questions, that is a good thing. Start examining your options. Discuss new ideas for the short- and long-term with higher-ups and even your colleagues. And above all, maintain clear communication with your employees.