The cost-of-living crisis is battering workplace performance – and HR leaders need to act

You don’t need to look far to find gloomy statistics about the ongoing cost-of-living crisis.

Inflation is still double the Bank of England’s 2% target, mortgage-holders are seeing their payments soar by thousands of pounds a year, and debt on energy bills has hit the highest level ever recorded. 

Wages haven’t kept up with inflation over the last couple of years, meaning people’s pay isn’t going as far.

The HR leaders I speak to understand the problems their employees face in their daily lives.

They know how much rising bills are clobbering household budgets. After all, it’s happening to them too.

What hasn’t been so clear is the impact the cost-of-living crisis has been having on employee performance. 

I kept hearing the same concerns about this – leaders are worried about how stress around bills is affecting how people show up to work, but often struggle to find solid evidence to prove what was going on. 

So, the team at Nous decided to do some digging.

Our research found:

• 74% of HR leaders said the cost of living crisis is affecting employee performance
• Two in five said employees are doing additional ‘life admin’ on company time specifically due to recent cost of living pressures
• A fifth said employees at their companies had taken annual leave just to manage their bills 

The results make sense. Money worries take up a huge amount of headspace – that’s not going to stop just because you’ve set foot in the office. 

Clearly businesses need to think seriously about the impact rising prices are having on performance. 

These figures show us why a strategy to support teams’ financial wellbeing isn’t just a nice-to-have – it’s a key building block of an effective workforce.

It’s a retention issue too.

Employees are understandably looking to earn more money. 

What that means is workers are more likely to look for a new job in order to bag a pay rise – even quite a small one.

What should HR do about the cost-of-living crisis?

The companies that handle this best are those that grasp the reality of the problem and take practical steps to make things better. 

Firstly, HR leaders need a good understanding of the financial issues people are likely to be dealing with, and a solid estimate of how team members are likely to be affected. 

We built our Employee Financial Wellbeing calculator to help with precisely this. By analysing official data sources alongside company information, we can help leaders understand how teams are being impacted by the ongoing squeeze on household budgets.

Managers also need to be equipped for conversations about financial difficulties. This might require specific training, or agreeing policy guidelines that leaders can refer to.

Crucially, businesses must also look at financial wellbeing support, focusing on solutions that tackle the problem of rising bills at the source. 

The reality is that 90% of us are overpaying for our household bills.

This is typically by many hundreds of pounds each year – but often far more (just ask Rob, Dean and Christian, who all saved in the region of £1,000 after they were offered Nous membership by their employers).

It’s a real issue, but it’s an opportunity too.

At Nous, we constantly see just how much of a difference HR leaders can make by supporting teams to save money on their bills.

By offering teams access to our money-saving tool, and carving out time for their employees to engage with the problem, leaders can save people hundreds of pounds, as well as freeing them from countless hours of admin.

As Rohan Maheswaran, co-MD of digital recruiter Futureheads put it: “As a business, we’re always trying to find ways to be creative to offer more benefits for our staff, and having a benefit or service which people can use and save themselves money has obviously gone down pretty well. 

“We want to try and support people as best we can and make them feel valued. 

“Of course, more confident and satisfied employees tend to do a better job, so it’s a win-win.”

We’re now working with more than 70 companies to manage employees’ bills and save them money. It’s positive to see more businesses putting time and effort into solutions that improve wellbeing, and performance too.

While the cost of living remains workers' biggest concern, it should be HR leaders’ priority too. 

‍