If you're a business owner or HR professional, you know that happy employees are essential to a successful company. But how do you keep your employees happy when you have to put your prices up but can't afford to increase their wages?
For some tips on how businesses can keep their employees happy even when they're feeling the squeeze , check out our guide on the other forms of financial support you can provide. And for how to handle disgruntled employees following a price increase, read on!
Let's set the scene. Your suppliers have increased their prices, customers aren't spending as much as they were before and you desperately don't want to have to let any staff go. You've cut all the costs you can but more of a financial buffer is needed. So, you decide you're going to have to increase your prices and hope customers understand.
You have a large workforce who is probably unaware of the challenges that have driven you to make this tough decision. As a result, upon discovering the price increases, they might assume that the senior management team is just pocketing the extra money that will be coming in and will be deeply unhappy.
So what do you do?
Even if none of your employees use your business services or products as customers as well, they'll learn about your price increases pretty quickly. Consider those in the finance department who manage invoicing or billing, the marketing team who have to communicate the package prices to leads, and your customer service team who probably have to defend those price increases. Don't try to pull the wool over their eyes. Be honest with all of your employees about the price increase as soon as you can.
Let them know why it's necessary and be clear as you can about what you've done so far to offset the costs and how the extra revenue will be used. If you approach them with clear communication and a plan of action that expresses your commitment to taking the best possible care of both your business and of them, you'll make it through this transition together.
Explain how the price increase will affect them and their job duties
The decision to undertake a price increase won't have been taken lightly. It will have a huge effect on your company, influencing the way that you do business and how much revenue you generate. It will also affect the job duties of your employees.
With prices rising, it will be up to the organisation as a whole to ensure that the cost-effectiveness of operations remains high and that customer satisfaction levels continue unharmed. This will mean that you could be asking more of employees and potentially expecting them to find new ways of working smarter.
This is why the transparency is so important and with no carrot of a pay increase in return for the effort and commitment, what do you do to keep them on side?
What to do when you've already told employees there will be no raise or bonus that compensates for the price increase
If you've already told employees that there will be no raise or bonus to account for a necessary price increase, it's difficult news to break. Employees may feel frustrated and unmotivated, so emphasising the importance of continued hard work is essential. You can also make an effort to show your commitment to creating value - share ways that your team members can still make a difference and discuss initiatives they can take part in on top of their regular tasks.
Even something like creating a recognition scheme serves as not only a morale-booster but also lets employees know that their contributions are genuinely appreciated. Doing this acknowledges the team's efforts while giving them motivation to continue delivering excellence. After all, understanding the bigger picture and being clear about expectations creates employee satisfaction.
Offer other benefits, such as flexible working hours or extra vacation days
Everyone wants to feel valued for their work and to be treated fairly, which is why offering additional benefits to your working environment can be so important. Whether it's allowing employees to vary their working hours or give them extra vacation days, showing that the company cares about its staff is integral in creating a positive culture. It nurtures creativity, kindness and more within the team, as well as rewards loyalty – something that everyone appreciates.
After all, if when explaining why the price increases were being made, you said it was in the interests of looking after staff, then that focus and intention should be clear through other methods and initiatives until pay rises can be put in place.
Encourage employee input on how to make the workplace more enjoyable despite the price increase
It's no secret that price increases due to inflation can impact employees in the workplace, but by fostering an open environment of give and take, it's possible for everyone to come out feeling like winners. Inviting employee input on ways to make the workplace more enjoyable can not only help to offset some of the negative feelings associated with a financial increase, but can also go a long way in raising morale. With employee ideas being taken seriously and valued, your team is sure to have a renewed appreciation for their jobs - and you'll be well on your way toward making work life more enjoyable for everyone.
If you want to keep your employees happy when prices go up, make sure you're being transparent with them about the situation, include them in decision-making and offer non-financial benefits. Lodge Court can help you manage your people more effectively so that you can focus on running your business. Contact us today to find out more about our services.