Category: Economy

• 4 Ways Inflation and Higher Costs Impact HR

  June 6, 2022

  Tags: Cost-of-Living, Economy, Inflation

  U.S. Pres­i­dent Joe Biden recent­ly laid out his plans to com­bat infla­tion and the high cost of liv­ing. The aver­age fam­i­ly is spend­ing an addi­tion­al $327 per month com­pared to pre-pan­dem­ic costs, accord­ing to a CNN broad­cast May 10. At the time, the nation­al aver­age price of gas was $4.37. While the Fed­er­al Reserve can do more to influ­ence infla­tion than the Pres­i­dent, his announce­ment is wel­come because peo­ple are suf­fer­ing and some econ­o­mists believe a reces­sion is looming.

  Under nor­mal cir­cum­stances, the econ­o­my can cause bur­dens for HR lead­ers. In this case, busi­ness­es are still con­fronting uncer­tain­ty that comes from an ongo­ing pan­dem­ic, war in Europe, and a labor short­age. This is not to men­tion a men­tal health cri­sis and increased oblig­a­tions for employ­ers when it comes to employ­ee engage­ment and expe­ri­ence.

  The first step in address­ing the neg­a­tive impact of the econ­o­my is being real­is­tic about the cur­rent sit­u­a­tion and under­stand­ing how it impacts HR:

  Some Can’t Afford RTO

  Many com­pa­nies are final­ly deploy­ing their return to office (RTO) plans from 2020. Employ­ees and lead­er­ship are at odds, in many cas­es, about whether to return or con­tin­ue to work from home. One of the argu­ments work­ers have about WFH is that it is cheaper.

  Some employ­ees are quit­ting because they can­not afford the com­mute or lunch costs that come with return­ing to the office. Child­care, which has always been a prob­lem for work­ing par­ents, is anoth­er huge expense. In some cas­es, peo­ple end up pay­ing to work, and it becomes more afford­able to quit. HR must keep this in mind when con­sid­er­ing wages and salaries.

  Compensation and Benefits Packages

  Dur­ing this time of his­toric labor short­age, HR lead­ers are reassess­ing their com­pen­sa­tion and ben­e­fits pack­ages because they want to be com­pet­i­tive. Employ­ees have lever­age and high­er wages has been one of the most request­ed ben­e­fits for obvi­ous reasons.

  “The tal­ent short­age has boost­ed pay, but not enough to keep up with infla­tion,” accord­ing to The New York Times. “Wages grew 5.6% in the last year.”

  Anoth­er obsta­cle for HR pro­fes­sion­als is that increas­ing offers for new hires end­ed up cre­at­ing an uneven divide between them and their vet­er­an coun­ter­parts. Now, in some cas­es, loy­al employ­ees who stayed with their employ­ers are earn­ing less than new hires. With this kind of infla­tion, they may be lured by the prospect of high­er pay else­where, which could con­tin­ue the cycle of the Great Res­ig­na­tion.

  Budget Concerns

  Mon­ey is obvi­ous­ly not going as far as it used to go. There­fore, HR pro­fes­sion­als should wor­ry that this eco­nom­ic real­i­ty could cause bud­get cuts. For now, 79% of cor­po­rate finance exec­u­tives say their bud­gets will be larg­er in 2022 than in 2021, accord­ing to Billing Plat­forms annu­al 2022 Trends in Finance Sur­vey. With infla­tion as high as it is, they should pre­pare for cuts at some point. This could mean few­er resources for learn­ing and devel­op­ment, employ­ee engage­ment and expe­ri­ence ini­tia­tives, com­pen­sa­tion and ben­e­fits pack­ages, and more.

  Travel Constraints

  At the moment, most head­lines point to Amer­i­cans’ desire to get back on the road and see peo­ple face to face for per­son­al and pro­fes­sion­al meet­ings. How­ev­er, with gas prices and infla­tion this high, many bud­get con­scious employ­ers may pull back on trav­el budgets.

  The Unit­ed States is also prepar­ing to con­front anoth­er surge in COVID-19 cas­es. RTO pos­es risks, espe­cial­ly for vul­ner­a­ble employ­ees with comor­bod­i­ties or those who live with at-risk peo­ple. In addi­tion, par­ents of chil­dren under 5, who are not yet eli­gi­ble for vac­ci­na­tion, have expressed con­cerns about both RTO and hav­ing to trav­el for work.

  Solutions

  Every depart­ment in every busi­ness must face the real­i­ty of infla­tion and high­er costs. HR is no excep­tion. In the case of HR lead­ers, ris­ing costs is a peo­ple prob­lem. Employ­ees will need more mon­ey to sup­port their fam­i­lies and to make work valu­able to them. In addi­tion, the busi­ness itself will have to con­strain spend­ing in areas like trav­el and perks. Maybe those free lunch­es will have to stop.

  Still, there are some solu­tions avail­able to HR. Pro­mot­ing peo­ple from with­in the com­pa­ny as opposed to hir­ing new employ­ees is a way to save mon­ey and improve reten­tion. Being trans­par­ent about the lim­i­ta­tions on wage increas­es and offer­ing oth­er less expen­sive ben­e­fits to com­pen­sate are oth­er ways to address the problem.

  Of course, trav­el can be replaced with video­con­fer­enc­ing and dig­i­tal events that can be con­duct­ed from home. HR lead­ers have had to stretch resources before and will cer­tain­ly have to do it again in the future.

  By Francesca Di Meglio

  Orig­i­nal­ly post­ed on HR Exchange Network

• 4 Ways Inflation and Higher Costs Impact HR

  June 6, 2022

  Tags: Cost-of-Living, Economy, Inflation

  U.S. Pres­i­dent Joe Biden recent­ly laid out his plans to com­bat infla­tion and the high cost of liv­ing. The aver­age fam­i­ly is spend­ing an addi­tion­al $327 per month com­pared to pre-pan­dem­ic costs, accord­ing to a CNN broad­cast May 10. At the time, the nation­al aver­age price of gas was $4.37. While the Fed­er­al Reserve can do more to influ­ence infla­tion than the Pres­i­dent, his announce­ment is wel­come because peo­ple are suf­fer­ing and some econ­o­mists believe a reces­sion is looming.

  Under nor­mal cir­cum­stances, the econ­o­my can cause bur­dens for HR lead­ers. In this case, busi­ness­es are still con­fronting uncer­tain­ty that comes from an ongo­ing pan­dem­ic, war in Europe, and a labor short­age. This is not to men­tion a men­tal health cri­sis and increased oblig­a­tions for employ­ers when it comes to employ­ee engage­ment and expe­ri­ence.

  The first step in address­ing the neg­a­tive impact of the econ­o­my is being real­is­tic about the cur­rent sit­u­a­tion and under­stand­ing how it impacts HR:

  Some Can’t Afford RTO

  Many com­pa­nies are final­ly deploy­ing their return to office (RTO) plans from 2020. Employ­ees and lead­er­ship are at odds, in many cas­es, about whether to return or con­tin­ue to work from home. One of the argu­ments work­ers have about WFH is that it is cheaper.

  Some employ­ees are quit­ting because they can­not afford the com­mute or lunch costs that come with return­ing to the office. Child­care, which has always been a prob­lem for work­ing par­ents, is anoth­er huge expense. In some cas­es, peo­ple end up pay­ing to work, and it becomes more afford­able to quit. HR must keep this in mind when con­sid­er­ing wages and salaries.

  Compensation and Benefits Packages

  Dur­ing this time of his­toric labor short­age, HR lead­ers are reassess­ing their com­pen­sa­tion and ben­e­fits pack­ages because they want to be com­pet­i­tive. Employ­ees have lever­age and high­er wages has been one of the most request­ed ben­e­fits for obvi­ous reasons.

  “The tal­ent short­age has boost­ed pay, but not enough to keep up with infla­tion,” accord­ing to The New York Times. “Wages grew 5.6% in the last year.”

  Anoth­er obsta­cle for HR pro­fes­sion­als is that increas­ing offers for new hires end­ed up cre­at­ing an uneven divide between them and their vet­er­an coun­ter­parts. Now, in some cas­es, loy­al employ­ees who stayed with their employ­ers are earn­ing less than new hires. With this kind of infla­tion, they may be lured by the prospect of high­er pay else­where, which could con­tin­ue the cycle of the Great Res­ig­na­tion.

  Budget Concerns

  Mon­ey is obvi­ous­ly not going as far as it used to go. There­fore, HR pro­fes­sion­als should wor­ry that this eco­nom­ic real­i­ty could cause bud­get cuts. For now, 79% of cor­po­rate finance exec­u­tives say their bud­gets will be larg­er in 2022 than in 2021, accord­ing to Billing Plat­forms annu­al 2022 Trends in Finance Sur­vey. With infla­tion as high as it is, they should pre­pare for cuts at some point. This could mean few­er resources for learn­ing and devel­op­ment, employ­ee engage­ment and expe­ri­ence ini­tia­tives, com­pen­sa­tion and ben­e­fits pack­ages, and more.

  Travel Constraints

  At the moment, most head­lines point to Amer­i­cans’ desire to get back on the road and see peo­ple face to face for per­son­al and pro­fes­sion­al meet­ings. How­ev­er, with gas prices and infla­tion this high, many bud­get con­scious employ­ers may pull back on trav­el budgets.

  The Unit­ed States is also prepar­ing to con­front anoth­er surge in COVID-19 cas­es. RTO pos­es risks, espe­cial­ly for vul­ner­a­ble employ­ees with comor­bod­i­ties or those who live with at-risk peo­ple. In addi­tion, par­ents of chil­dren under 5, who are not yet eli­gi­ble for vac­ci­na­tion, have expressed con­cerns about both RTO and hav­ing to trav­el for work.

  Solutions

  Every depart­ment in every busi­ness must face the real­i­ty of infla­tion and high­er costs. HR is no excep­tion. In the case of HR lead­ers, ris­ing costs is a peo­ple prob­lem. Employ­ees will need more mon­ey to sup­port their fam­i­lies and to make work valu­able to them. In addi­tion, the busi­ness itself will have to con­strain spend­ing in areas like trav­el and perks. Maybe those free lunch­es will have to stop.

  Still, there are some solu­tions avail­able to HR. Pro­mot­ing peo­ple from with­in the com­pa­ny as opposed to hir­ing new employ­ees is a way to save mon­ey and improve reten­tion. Being trans­par­ent about the lim­i­ta­tions on wage increas­es and offer­ing oth­er less expen­sive ben­e­fits to com­pen­sate are oth­er ways to address the problem.

  Of course, trav­el can be replaced with video­con­fer­enc­ing and dig­i­tal events that can be con­duct­ed from home. HR lead­ers have had to stretch resources before and will cer­tain­ly have to do it again in the future.

  By Francesca Di Meglio

  Orig­i­nal­ly post­ed on HR Exchange Network