4 ways HR can help employees in the cost of living crisis

HR helping employee with cost of living
Lumina

If you’re in HR, you haven’t had it easy the last few years – a pandemic, a talent crisis, and now a cost of living crisis. The good news is that you’ve been rising to the challenge. You’ve likely been fighting tooth and nail to make hybrid working work, to retain a new generation of talent with new priorities, and you’re about to pull out all the stops to get your people through the latest financial storm.

The cost of living crisis has become the greatest challenge of 2023 for 70% of HR professionals. So how do we face this challenge? Is there such a thing as a ‘cost-of-living solution’? And just how complex is this going to be to navigate?

Here are some of the strategies we’ve compiled:

It’s probably no surprise to hear that there is no silver bullet. Not unless you have the surplus cash of Apple Inc. or Alphabet. The rest of us HR professionals need to work with tight budgets – which have also been affected by the crisis – and find ways to make our employee’s salaries stretch further than before.

1. Consider the financial wellbeing of individuals

To do this well, we need to address the whole picture, not just the amount dropping into employee bank accounts each month. In other words, we need to tackle financial wellbeing.

Financial wellbeing includes a person’s ability to afford everything they know they need now to enjoy life (necessities, entertainment, nights out, etc.), to cover unexpected living costs and expenses (emergency repairs, increases in bills, rent) and meet their future goals (travelling, buying property, raising children, retirement, etc.).

If an employee’s financial wellbeing is good they’ll feel in control and vice versa. Either way, it’ll have a knock on effect on their mental, social and physical wellbeing – and their work too.

Stigma doesn’t help anyone here. Just as with physical and mental health, it’s easier if people can talk about financial worries openly in your organisation, and if we can all acknowledge the ways the cost of living crisis is affecting us, aware that some people will be feeling the squeeze more than others.

That last point is important. Few people have no money worries right now but everyone is affected differently depending on life stage, family circumstances, previous debt, and so on. Catch-all strategies won’t make the most of your budget or meet people where they are – hyper individualised support will.

How Lumina can help:

Our financial wellbeing benefits bundle includes a financial wellbeing and money management platform, powered by Maji. This helps you to track employee financial wellbeing, so you can adapt your support according to what your people need on a person by person basis.

2. Give people access to financial advice

So what kind of hyper individualised support can you give? Well, there’s almost nothing better than giving your people access to a financial advisor.

By giving your employees a chance to talk through their personal financial anxieties with a professional, you’re providing an opportunity to take some of the stress out of the situation, to get to grips with financial planning and to regain a sense of control.

Financial advisors will help your employees to be savvy in the present, keep an eye on the long term and work towards their life goals – a vital part of financial wellbeing.

Afterwards, any other means of support you offer will then help support your employee’s individual financial plan. Financial perks such as employee benefit discounts, salary advances, cost-of-living bonuses become far, far more effective this way.

How Lumina can help:

We can give your employees access to financial health webinars, workshops and 121s with our in-house financial expert, part of our veteran HR company Amba Money.

3. Consider offering smart employee discounts

Saving money on purchases has always been a perk but at times like this it can make a real difference to people’s ability to carry on enjoying life while covering their bases.

In recent YouGov research, 73% of respondents said that the ability to save money is the most important quality in an employee benefit – more so than helping mental wellbeing (42%) and physical health (39%). While these remain important, financial savings are clearly at the forefront of most employee’s minds.

This might be as simple as offering employees lunch on expenses but you could also form discount schemes with local businesses or, if you’ve got a distributed workforce, provide access to discounted online marketplaces.

Of course, it’s not just a matter of providing discounts to anything and everything. You want to be attuned to what your people care about, and so you can provide discounts that fit with their lifestyle, life stage and values.

How Lumina can help:

Our financial wellbeing package includes access to two discounted marketplaces which you can switch on overnight with little to no admin:

  • Lumina Perks, our one-of-a-kind discounted ethical marketplace
  • Lumina Tech, a discounted refurbished tech and re-selling marketplace

The package also includes the Lumina Film Pass, giving employees up to 60% off cinema tickets.

4. Look into a salary sacrifice scheme

Although the term ‘salary sacrifice’ sounds like the opposite of what employees want, the benefits are right on the money.

In short, if your employees agree to sacrifice a portion of their salary, you can make a purchase on their behalf. You pay it out of their gross salary, rather than NET, and so it saves them tax and National Insurance. The main caveat is you can’t take their gross salary below minimum wage.

It’s a great way to make a salary stretch further – giving your employees more power to cover things like insurance, childcare costs, electronics and electric vehicle purchases, and so on.

You can set up a salary sacrifice arrangement by changing the terms of an employee’s contract with their consent or, with the right benefits tech, you can give employees the power to opt in or out with the click of a button.

How Lumina can help:

Lumina gives you all the benefits of salary sacrifice with none of the admin. Employees can toggle it on or off whenever they make a purchase through our platform.

As part of our financial wellbeing package, we also offer salary sacrifice on tailored breakdown cover in partnership with the RAC.

Best of luck out there

Now more than ever, employers play an essential role in supporting their employees’ financial security. It’s not going to be easy but we’re determined to find ways to make it easier.

To learn how we can support you, download our financial wellbeing package brochure, or see our thoughts on how small businesses can compete with competitor salaries.