The rising cost of living has had a significant effect on employee engagement and job satisfaction globally. After a turbulent few years, issues such as inflation spikes and increased living expenses have led to staff relying on salary growth and other financial benefits in order to supplement their basic pay. The scale of demand has been such that many employers are finding it unsustainable to deliver these financial incentives to the scale required without breaking the bank, leaving them at risk of higher staff attrition rates.

While fair pay is a must, inflating salaries beyond market levels isn’t a sustainable approach for firms, particularly given the skills crisis that is prevalent across many sectors. But what’s the alternative?

Supporting the modern workforce
Additional perks and benefits, like financial and education, are a natural move that can provide value and, I would argue, have a longer-term positive impact for workers and businesses alike.

In our recent study with Everest Group, we found that 57% of employees indicated that wellness programs, including those focused on financial wellbeing, have a positive direct impact on employee experience. And with so many firms competing for the same pools of talent, attraction and retention could be hindered without flexible pay solutions being put in place.

Employers are naturally committed to supporting reskilling their workforces for the digital era and the various other competencies required for growth, however the same is also needed for helping people manage their finances, particularly in today’s economic landscape. Not only does the current climate present unique challenges for our employees, the crucial skill of money management isn’t taught under the existing curriculum.

There is, therefore, an onus on employers to support not only the skills development of their people but also provide training to tackle real-life challenges, like financial management. This would benefit employers in the long run by providing an additional means of attracting talent without salary inflation, however, it also has the added benefit of improving general money management skills that can benefit the business. Many life skills such as this have added benefits to the broader business attributes of the workforce, helping them make more informed decisions on a professional, as much as a personal, basis. But this can only be achieved if people know how to support themselves financially to a higher degree than they currently do. Providing access to financial guidance from trusted sources could be a key step in helping to achieve this.

Financial flexibility
Financial education also fits into a wider trend that is accelerating across businesses worldwide, namely the modernisation of pay processes and payroll to provide better employee experiences. The traditional monthly pay cycle is losing its appeal, largely due to changing expectations of employees who want flexibility in more aspects of work, in line with a more on-demand and fluid consumer world. This is driving a rise in employers providing fast, flexible access to earned wages (EWA) as and when funds are needed. Many workers prefer autonomy over when they can access funds, rather than sticking to a company-wide defined timeframe. After all, if they can access their bank account from their phone, look back at their spending through an app and see their shopping history through their online profile, why shouldn’t they have a similar experience with their pay?

And, if they need access to data relating to their own salaries, taxes or anything else that is essentially their own information, why should they have to jump several hurdles to get it? These are the demands we’re seeing from employees and businesses that don’t adapt quickly will find it increasingly difficult to attract and retain staff, particularly when salary increases aren’t on the cards.

Making the most of your tools
Ensuring people are paid has long been considered more of a tick-box exercise, but in today’s world, payroll can be a hugely valuable and strategic tool for HR teams. While recent events have certainly posed challenges, they’ve also provided a golden opportunity to challenge the status quo and scrutinize the rationale behind established, ongoing practices.

Building a more holistic payment solution with a central focus on employee experience will deliver improvements to staff loyalty and engagement. In such a talent-short and highly competitive hiring market, employers that have provided innovative, impactful solutions to support their people will emerge as the ones that not only retain their top staff, but also become an appealing destination for potential new hires.

Employers need to rethink how they support employee financial wellbeing in the current landscape and in the future. While the need to modernise the pay process will certainly deliver longer-term value, right now the more pressing priority is helping staff navigate the financial struggles that many face. For businesses, the benefits extend beyond supporting their people. Equipping the workforce with better skills in this remit can also add value to the company itself, creating teams with more valuable financial expertise that could broadly benefit the business in the longer-term.

Throwing money at any problem won’t make it go away, but making finances work better for people will help. The focus needs to be shifted from over-inflation of pay that businesses often can’t afford, to more strategic support, if we’re to help people get through the coming months and years.