Inflation, Staff & Your Business
Some of the driving factors:
1. Although the official figures don’t show rampant salary inflation, I am witnessing this differently. Minimum wage rates have increased significantly and in turn this is creating salary pressure further upstream simply because the gap between experienced workers and minimum wagers (especially the younger, less experienced workers) has narrowed. The general inflationary environment is also having a greater impact on the non-minimum wage earnings because often they have additional costs such as mortgages, loans and families to factor in.
2. Work life balance has become increasingly important over the years but even more so over the last two. Everyone has now had a taste for extended work-from-home, or rest-at-home periods and for many this has now become an expectation. Going forward, will your business provide them some of the benefits of this lifestyle that they have experienced?
3. Vaccination policies appear to be becoming a ‘hot potato’ in many businesses. The balancing act that the business owner needs to find is that of protecting the business, ensuring that the employees and their customers are safe and finally to manage the emotionally charged, varying perspectives of their employees and customers around unvaccinated or vaccinated. Such a hot potato, that I won’t comment further on this one 😊.
4. The changes in what do we do with our disposable income. I feel this still needs to play its course however when the borders do reopen, I imagine this factor will become increasingly significant. Over the last two years some industries have benefited significantly in the change of buying habits. With fewer holidays and international travel, disposable income has increasingly been spent with online shopping, construction, home improvements etc. How are you factoring this into your forecasts?
The feedback I'm getting from many business owners is quite varied. Some businesses are benefiting from the boom and their profits are up. Nearly all are facing significant cost pressures and especially for smaller businesses the work life balance of the business owner has deteriorated. The question for you as a business owner is how do you prepare your business for 2022?
A Multi-Pronged Fix
- Ramp up your dialogue with your staff. Have an open discussion regarding their intentions (career), their value to the business, their work life balance, basically dial into your coaching conversations with them.
If you have not done a performance review in the last three to six months, then do one now. If you have not performed a 360 review in the last year, then do one now. Both assessment types are excellent tools to use in building a performance-based culture.
- Create stability in your business - get the basics sorted such as reviewing job descriptions, KPI’s, share and discuss your business strategy, where required educate them on the financials. They need to positively envision themselves in your business.
- Protect and if possible, increase your margins. Without a profitable business you are hamstrung. Most businesses are facing significant inflationary pressures, make sure you are tracking your margins and wherever possible increase them in anticipation for further cost increases.
- Provide your staff with a stake in the game. The best businesses that I see are the ones where the staff are acting as if they were the business owner. Having market related salaries is a minimum requirement to avoid dissatisfaction however providing long term commitment to the financial success of the business requires more. By providing them a stake in the game you will direct their attention to the success drivers in your business. You could achieve this through bonuses, profit sharing, shares etc.
- Shed your C players. Most businesses that employee staff, have a combination of A, B & C players, while mostly they would like the A’s and B’s and none of the C’s. What I have personally learned the hard way was that not getting rid of the C players fast enough resulted in me losing some of my A’s.
Top performing employees get quickly frustrated if their talents are wasted or they cannot foresee their own career success – businesses with C players are toxic environments for your A players, thy will leave. Ensure your C’s leave before you’re A’s leave.
As your business grows you will become increasingly dependant on employing staff or subcontractors. From this vantage point you can easily correlate your business success with having outstanding staff. One of your primary roles as a business owner is to find and retain this top talent.
If your business has stagnated there will be many places to search for solutions, but one of the obvious places to look, is your current employee talent pool.
The 5 steps outlined above will all significantly impact on your business performance, I encourage you to consider each one in relation to your business.
If you would like to explore this subject further in regards to your business, then be aware that funding is still available through Activate Tamaki Makaurau. Make hay while the sun shines, this funding will likely not be repeated.