The Cost of Living crisis is continuing to affect everyone, and so profit margins are looking slim for many companies regardless of size and industry.
Businesses like yours are worried
A survey published in The Times recently suggested that a quarter of businesses are expecting to need to increase prices, with another quarter worrying about decreased profit margins. Data shows that the hospitality industry in particular is bracing to feel the pinch of the increases. If this sounds familiar to you, then this article is for you. And here’s the key take away I’m hoping you’ll be able to get from me: this increase in the living wage may be an opportunity for you, as well as a risk.
A mental health crisis
While there’s no denying that the financial situation is worrying for organisations, there’s also a huge impact on individuals. Financial worries are the leading cause of mental ill health amongst people in work. The situation is dire – data from Financial Capabilities, a UK not-for-profit organisation, shows that 1 in 4 workers have lost sleep over financial worries. Not only this but 59% admit that their financial worries are impacting their performance of work.
A potential opportunity
However despite all this there is a silver lining. Neuroscience tells us that safety is really important when it comes to employee engagement and happiness. We can think about this in terms of Maslow’s hierarchy of needs. Without that feeling of safety, it’s hard for people to engage other parts of their brains. This is because the amygdala is triggered by perceived danger. When this area of the brain is activated, it takes many of our higher functions effectively offline. And it’s here that the opportunity lies. By increasing pay to a living wage, you’re able to alleviate some of your employee’s financial stress.
This will start to allow your people to think creatively, perform better, and work more efficiently and effectively.
Benefits to your bottom line
Increasing wages can often have a direct impact on employee happiness. This is both because of the effects on safety, but also because acknowledgement is a key driver of employee happiness. A person’s benefit package makes up an important part of how appreciated they feel. It might seem as though you can’t measure happiness. It’s an attitude I’ve come across a lot in my role. But the truth is that there is plenty of data that shows that increasing happiness has a positive effect on an organisation’s financial health.
I always push people to look up my pal Alex Edmonds’s work. His book Grow The Pie is an academic look into the effects of increasing happiness. But if you’re looking for something a bit more business focused, my first book looks in detail at the business case for happiness.
Focus no the positive
I never encourage toxic positivity and there are likely to be challenges ahead for many organisations. But I do think there’s a lot of good that might come from this change for organisations and individuals.
It’s always good to highlight potential challenges, particularly when it comes to internal communications. Your people aren’t stupid and will likely know whether a big change like this is likely to affect your organisation. However, you should also discuss the positives you see both for you and for your people.
The commercial reality
Many companies are currently faced by a stark commercial reality and their priority is to pay the bills and keep the lights on. My summary point is that where companies can also acknowledge and plan for supporting their employees through tough times it will help retain your best people. The commercial reality may be stark but if your highest performers leave your business things may get worse. Communicating with your employees about what you can and can’t do in tough times is key.
Transparency of where your business currently is and how your employees can positively contribute to the commercial success of an organisation can be win / win for the employee and the organisation.
Communication will be the key to your success.