The crisis in cost of living, increases in interest rates, plus looming energy shortages this winter are another unprecedented situation following closely behind the pandemic and lockdowns. 

As an HR professional, you may already be witnessing the cascading impacts of our current climate on employees. These include:

• Acute financial stress as well as worries about family members and ability to maintain homes
• Physical and psychological impacts from cold environments and malnutrition
• Struggles with working from home in cold conditions (for businesses that shrunk office space during Covid-19, it will be harder to accommodate staff who wish to work in a warmer office)
• Incurrence of higher costs from commuting by car or disrupted travel from energy blackouts (if they occur) or industrial action
• Risk of blackouts and energy costs limiting the times that offices can remain open
• Amplification of stress from uncertainty regarding the energy crisis, coupled with political and economic disruption
• More frequent problems relating to theft, challenging behaviours and emotional responses to financial hardships among staff and the public
• More staff deciding to leave their current job to work for a higher salary elsewhere
• Higher risk of suicide among employees experiencing significant hardship and mental health issues
• Increased vulnerability to fraud, phishing and cyber security risks 

Trust may become a casualty if processes are used that are perceived to be unfair or intransparent.

HR’s wicked problem

This situation leaves HR with an abundance of seemingly unsolvable problems to tackle – especially for businesses that cannot afford to raise wages or offer bonuses to help buffer employees against financial stress. What makes such problems wicked is that they are interconnected, therefore requiring interconnected thinking.

A trend in staff leaving for higher salaries across the labour market may drive up wages in some job categories as companies compete in recruiting staff in critical roles. As a result, retention of workers using non-salary-based approaches will be a crucial strategy in avoiding skill shortage and dysfunctional attrition.

Job marketing and developing an attractive and trustworthy recruitment brand are essential for focusing potential applicants’ attention on positive reasons for working at a company. Flexibility, support and people values will attract applicants to work with you. However, keeping an eye on salary trends developing within the market is important to anticipate emerging challenges in recruitment and retention.

Due to recessionary pressures, many companies will be restricting expenditure and so investment in new training, coaching and other career development perks that may attract applicants may also be decreasing in number.

New job hires may be frozen, so people are not replaced when they leave, potentially impacting on increasing workload relative to staff availability. In addition, redundancies in response to anticipated problems with financial performance may create negative experiences for employees concerning their job security and working conditions within a shrinking organisation.

Trust may become a casualty if processes are used that are perceived to be unfair or intransparent.

Appreciative inquiry is an excellent way to develop solutions to problems in a way that involves the organisational community.

Collective problem solving

Resilience developed during the pandemic can contribute to your organisation’s ability to solve challenging problems. While the dynamics of the cost-of-living crisis are different to the dynamics of Covid-19, perhaps one of the biggest lessons from the pandemic is that collaboration and conversation within the organisation are critical in solving problems collectively.

How to cultivate a community for wicked problem solving

To paraphrase Friedrich Dürrenmatt, the Swiss playwright and writer of ‘The Visit’ and ‘The Physicists’, the problems that concern us all can only be solved by all of us. This is why we need community.

Your workplace may already have community groups in operation, either formally or informally. To help informal groups grow and evolve, give them organisation-wide recognition for their work and effort, and grant individuals the autonomy and resource to set up and lead new groups.

Community-shared goals and a clear sense of purpose are vital to the successful formation and longevity of a community – so encourage your community builders to work on these from the start. 

On the flip side, be mindful that common barriers to a thriving community include a lack of diversity and inclusion. If your community of problem solvers does not include a healthy mix of different voices from across the business, their suggested solutions may not be viable. In addition, If a community does not feel they are recognised or valued by senior stakeholders, they may lose motivation. 

To get the most from community-shared problem solving, consider giving your employees time for committing to social projects or volunteering in communities both in and outside of the organisation. 

Try appreciative inquiry

Appreciative inquiry is an excellent way to develop solutions to problems in a way that involves the organisational community. It is a positive psychology approach to organisational problem solving combining a consultative framework with solution-focused design.

Solutions are developed based on what currently works well (so you do not lose it) and/or what worked in the past, drawing on what helps people to be at their best. Based on the learning that takes place through this process, effective solutions can then be designed to reflect these qualities.

Appreciative inquiry requires commitment from key stakeholders to be successful. It takes time and planning to bring together a diverse representation of the workforce to ensure relevant and inclusive solutions are being developed, but is worth the effort as solutions developed will be better supported by employees.

The scale and potential adversity of the cost-of-living crisis suggests a need to engage proactively beyond measures already in place.

Double down on employee wellbeing support

Alongside drawing on the collective to work up solutions, HR should prioritise employee wellbeing support. This can take more traditional forms such as coaching, staff development and awareness campaigns, which have proven to be successful in the past, most recently during Covid-19. Such measures may not only enhance wellbeing but also built commitment and trust. 

There are already existing frameworks for dealing with hardship, job retention, wellbeing and crises. The scale and potential adversity of the cost-of-living crisis, however, suggests a need to engage proactively beyond measures already in place. As an HR professional, your role is critical in leading this organisational response.

The looming energy and financial crises also offer an opportunity for you to explore what the organisation’s values regarding corporate social responsibility mean in practice and to demonstrate these values in action. 

Act now

There are a variety of ways in which organisations can act responsibly and encourage measures for addressing the ongoing crisis.

1. Set up a cost-of-living project appointing staff to roles with a brief to initiate, support and champion actions across the organisations 
2. Audit and review what activities and schemes are currently available for staff to save money and reduce costs; provide information regarding initiatives and trustworthy third-party advice (e.g., money-saving expert) on a companywide highly visible intranet page
3. Consider making the above information visible to the world, thereby amplifying corporate social responsibility and employer brand as well as providing helpful information
4. Set up resource sharing (e.g., car shares), recycling and reuse schemes, food sharing and bulk shopping schemes to help employees save money 
5. Organise a skills-sharing initiative for increasing resilience and sustainability (e.g., teaching sewing, food growing and nutritious low-cost cooking) to develop employees’ skills to become more self-sufficient 
6. Be open to solutions by inviting employees to share ideas for helping others and saving costs and energy. Cultivate a participatory grassroots approach 
7. Provide emotional and stress-relieving support to staff such as mindfulness approaches. These can be paid for services or emergent from the grassroots 
8. Explore the notion of sharing initiatives with other organisations to minimise costs; for example, sharing mindfulness programmes, food-sharing, or other money-saving schemes. These may work particularly well where organisations share buildings

Having deeper, searching conversations about the meaning and values at the heart of your organisation’s mission should help you align better with a changing world.

This is only the beginning

Dealing with the cost-of-living crisis following so shortly after the pandemic raises strategic questions for decision-makers about the role of organisations within their environment and the broader communities in which they are embedded.

Having deeper, searching conversations about the meaning and values at the heart of your organisation’s mission should help you align better with a changing world.

We are progressing into an era of increased disruption, resulting from the ongoing crisis in Ukraine, Brexit (in the UK), and the impact of climate-related risks such as flooding, food shortages, and political and social instability. What may emerge from weathering first the pandemic and now the cost-of-living crisis could produce vital learning for an increasingly uncertain and disrupted world. 

Interested in this topic? Download a report written by Volker Patent on how to boost HR’s psychological literacy to tackle future crises.

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