The following was first published in Thrive, a new limited email series by Courier, designed to help small businesses make some sense of the current economic climate. Subscribe here.
US inflation has come down after hitting a 40-year high in the summer, but price rises are continuing to hit our lifestyles hard. And, with people paying more for the same product, it's likely that employees will come asking for more cash. But how do you manage expectations when your business costs are rising? It's an issue that tons of small businesses are dealing with right now – with different strategies and successes. Here are some tips from those in similar positions.
• Do what you can. Sustainable teeth-whitening business SmileTime is fielding internal requests for pay rises from its staff in the UK, US and Asia. Founder Natalie Quail had to compromise when some of her warehouse staff risked going to a competitor – so she agreed to a 10% pay increase for workers in the UK. ‘It's been phrased as a link to the cost-of-living increase, and it's not a permanent increase,’ she says. It'll be re-evaluated in February and March, when UK energy payment support ends, Natalie explains.
• Be honest and offer alternatives. While Natalie could find the cash for a 10% pay rise for warehouse staff, she's conscious that the sums don't add up to enable a pay increase for the whole workforce. So, she's offering alternatives, including putting on professional development programs. ‘They can have allocated time for that, and we provide a budget so that they can do additional courses to support their professional development,’ she says.
• Be proactive. ‘Employees' decisions to stay or go are, I believe, affected by their beliefs about whether or not they're being paid appropriately,’ says Jonathan Merry, co-founder of German blockchain company CryptoMonday. ‘Rather than waiting for employees to raise queries, managers should take the initiative to dispel any lingering doubts and correct any misinformation about inequalities.’
• Find those struggling. ‘My recommendation is to pay particular attention to the workers who are most impacted by inflation,’ says Simon Brisk, CEO of UK digital marketing company Click Intelligence. ‘Low-wage workers worry about making ends meet because of the spike in food and gas expenses, which keeps them up at night.’ Simon suggests considering lump-sum awards, stipends or commuting assistance to aid staff with costs.
• Empower managers. For businesses in a growth phase with some level of hierarchy, it's less likely to be founders who field queries and more likely to be managers. Empowering them with information and skills is vital, says Kelley Van Boxmeer, co-founder of Canadian web marketplace company Motion Invest. ‘Pay conversations can overwhelm managers,’ she says. ‘Tell management what they should and shouldn't plan for.’
A version of this article was published in Courier's Thrive newsletter. For more insights, analysis and inspiration, sign up here.