Managing the Financial well-being of an employee amidst inflation

 


The devastating C-19 pandemic had many impacts on human health, social inhabitance and economy activities around the world in 2020. Restrictions in traveling, social distances, shutdown of companies, drawbacks in local and international logistics are few of impacts.

International trading has been freeze for a several months, in some countries this was almost a year amid the pandemic. This has led to close the revenue gates of companies which has affected to business profits at the end.

Persistent trade wars followed by military wars had impacted to the global economy during recent past as well. Sanctions on certain countries, invasion on other countries, and cold wars between powerful nations have destabilized the current economy.  



Inflation has skyrocketed during last couple of years as results of pandemic and the on going wars in countries. And this has enormously affected to well being of human in negative manner, and same can be replicated to a organization as employees are extremely impacted especially to their wages. What they earn at present is not sufficient to meet their day to day needs.

Well being of employees, should asses and finding remedial action to be made in a holistic approach as it focus in 3 main areas in the HRM;

> Physical Well-being

> Mental Well-being

> Financial well-being  

Fostering employee wellbeing is good for people and the organization. Promoting wellbeing can help prevent stress and create positive working environments where individuals and organizations can thrive. Good health and wellbeing can be a core enabler of employee engagement and organizational performance (CIPD 2023). 

This blog contains only the HR function on financial well-being in the context of inflations caused by trade wars, Covid-19 pandemic and followed by military wars in recent past.  


Financial well-being of employees

Financial well-being is the state of being healthy with regard to money. In regards to employees, it is in a company’s best interest to invest in the financial well-being of their employees to assure maximum productivity and minimal absenteeism. The employee who’s achieved financial well-being is able to live comfortably without worrying and fretting over money (Farber S).


  • Fair pay parallel to situation – Increase of the cost of living is normalcy in inflation environment. Employees are struggling for their daily meals as they are paid very less despite inflation. This will lead to a dissatisfaction of employees and company will not gain productive outcome from such employees. Therefore, it is prudent to assess current inflation, and adjust the pay scale according to that. HR can impose fixed or flexible benefits scheme to address this situation.

  • Retirement planning – Company cannot stop the ageing labor force, employees have to retire from work-force at some point. Some company’s practices pension scheme after their retirement and some does not. During the time of inflation companies could add beneficial packages to the pension scheme. Those who are not practicing pension scheme shall plan pre-retirement courses or consulting programs and offer retirement financial package to survive in a contingency situation. This will foster employee to retain with the company by looking their future financial stability is secured by the company.     

  • Financial advisory support – Company can offer programs such as debt counseling, signposting to external parties of free advice, provide access to independent financial advisers.

 

Labor market is very competitive and globalization has opened window of opportunities where people can scout global opportunities, hence organization must aware of talent mobility at current global context and should analysis employees financial well-being factor carefully as it may affect both company goal and employee job satisfaction. 




References

AIHR – Academy  to innovate HR (2023), 11 HR Trends for 2023:Seizing the window of Opportunity. Available at https://www.youtube.com/watch?v=qJYFRHgAs8Y (Accessed:13 August 2023).

The Chartered Institute of Personnel and Development – CIDP (2023), ‘Well being at work’, 22 June. Available at https://www.cipd.org/en/knowledge/factsheets/well-being-factsheet/ (Accessed:13 August 2023).

Farber, S. (no date) ‘ Employee Financial Well being’, Eddy.com. Available at https://eddy.com/hr-encyclopedia/employee-financial-wellbeing/ (Accessed:13 August 2023).

Fig 1 : Available at https://www.istockphoto.com/search/2/image?ethnicity=black%2Ccaucasian%2Ceastasian%2Cmiddleeastern%2Cpacificislander%2Csouthasian&mood=cool&page=4&phrase=inflation%20an (Accessed:13 August 2023).

Fig 2: Statista (2023) ‘ Most important problems facing the world as of May 2023’ Available at https://www.statista.com/statistics/946266/most-worrying-topics-worldwide/ (Accessed : 14 August 2023).

Comments

  1. Shiran MudannayakeAugust 13, 2023 at 3:58 PM

    It is an attempt to highlight the strategic implications of focusing on employee well-being in complex crises

    ReplyDelete
  2. B. Abeywardana (MBA/HND Supply chain)August 16, 2023 at 1:55 PM

    Yes. This bring back our dark memories. We all experienced the situation . Also the HR in said aspect did as much as possible. Thanks for them

    ReplyDelete
  3. SugandiAugust 17, 2023 at 8:13 AM

    Financial well-being, which is one aspect of employee well-being, is a good weapon for employee satisfaction and employee attraction. good job.

    ReplyDelete
  4. RANGIKA RANASINGHEAugust 17, 2023 at 9:21 AM

    When employees are financially secure, the benefits are readily noticeable. By ensuring each Team member feels confident about their future, can expect to see improvements in their work as well.

    ReplyDelete
  5. Shanitha Dinush ChandimaAugust 17, 2023 at 4:11 PM

    In times of inflation, managing employees' financial well-being becomes crucial. Offering inflation-adjusted salaries, financial planning assistance, investment guidance, and access to inflation-protected benefits can help employees navigate rising costs, reduce financial stress, and ensure long-term financial stability.

    ReplyDelete
  6. Rajitha MadhusankaAugust 17, 2023 at 7:25 PM

    Navigating inflation's impact requires strategic benefits, financial planning support, and employee assistance.

    ReplyDelete
  7. Muditha MaheshAugust 18, 2023 at 4:32 PM

    Inflation is the rate at which prices for goods and services are rising. It can make it difficult for people to maintain their financial well-being, as their money does not go as far as it used to.

    ReplyDelete
  8. LilanAugust 19, 2023 at 1:01 AM

    To manage an employee's financial well-being amidst inflation, consider implementing strategies such as providing cost-of-living adjustments to their compensation, offering financial education and planning resources, and promoting investment options that have the potential to outpace inflation, thus helping them mitigate the impact of rising living costs.

    ReplyDelete
  9. Ayodhya GalappaththiAugust 22, 2023 at 8:33 AM

    Companies that take the lead in promoting financial literacy and security contribute positively to the communities they operate in. Providing training on Personal budgeting , or personal financial management would be few examples.

    ReplyDelete

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