THE rising prices of essential goods and services are making it difficult for employees to survive.
When this occurs, employees attitudes, and devotion towards work inevitably suffers.
This in turn takes a toll on the organisation’s ultimate performance and attainment of its objectives.
Be it a worker from a small grocery shop, to an established business or a public service worker, they all have an objective of earning money when getting a job.
They acquire a skill to exchange for money in order to earn a living.
In this way, earning a living essentially means they have to pay rentals for their accommodation, school fees for their children and dependents, buy food and utilities like water and electricity as well as their basic daily transport costs.
The purpose of this article is to look at the effects of inflation and other economic turbulences on employee welfare.
Additionally, the discourse will also look at how employers can alleviate the effect of inflationary and other economic turbulences on their employees.
Ironically, increasing employee welfare is a topic that organisations feel least comfortable to talk about!
Is employee welfare an important aspect of an organisation’s strategy?
In the recent past, I carried out a research on of the country’s emerging agro-business suppliers – Syngenta Zambia Limited.
This study specifically looked at how Syngenta Zambia Limited alleviates the effects of the inflation and the turbulent economy on the company’s workers.
Remarkably, during my study, I learnt that Syngenta operates a system of annual performance appraisal on its employees.
Under this system, every employee is expected to meet certain key performance indicators (KPI’s) in relation to meeting previously agreed work performance targets during the year.
The company then rewards employees with an annual increment commensurate with the achievement of the pre-set KPI’s.
On the other hand, the company rewards “non-performing employees”- those that fail to meet the KPI’s with only an inflationary rate adjustment on their basic salaries.
This means that as it is now, with the Zambian economy’s inflation rate going at 25 per cent per annum, all things being equal, Syngenta’s existing policy is to award non performing employees with a 25 per cent salary increase.
This increment shields this category of employees from the effects of the national economy’s inflationary pressures.
Following on, employees who meet the KPI’s are rewarded with a rate of annual increment that is higher than the rate of inflation which is in this case is say 30 per cent.
Imagine the effect on Syngenta’s workforce of the ever rising cost of essential commodities, school fees, transport and so forth without such a remarkable company policy!
Therefore Syngenta Zambia Limited’s case study provides a classical high profile example of how a company could maintain its employee’s welfare amid the Zambian economy’s inflationary and other turbulent pressures.
Ordinarily, if an economy has higher prices for goods and services, workers too, will require higher wages to survive.
Indeed, labour costs account for nearly half of total pay, adding that such practices are an important component of organisational strategic decisions.
An understanding of the role of COL has significant implications.
Research shows that employees’ perceptions management being considerate towards their welfare during inflationary and other economic turbulences enhances both their effort and performance.
This in turn could go a long way to prevent burnout.
Other research has similarly shown that employee attitudes toward pay relate positively to job engagement and negatively to withdrawal Understanding how to pay employees more effectively can also decrease organisational turnover.
The wages paid for a given job can vary substantially across locations. Wage differentials occur for a variety of reasons, including labour market conditions.
Rewarding non-performing employees with inflationary adjustments and high achievers with performance related pay raises or bonuses can go a long way in building loyalty, retaining top talent and boosting morale.
The whole idea behind inflation adjusted remuneration coupled with performance based merit raises is to maintain employee welfare besides rewarding the most productive and the highest-performing workers.
This in turn offsets the effect of inflationary pressures and other economic turbulences besides incentivizing employees to perform better.
How do they go about this?
Companies like Syngenta come up with their strategic plans for the year, and then drill the plan down to departmental objectives and finally, create metrics for individual employee to meet to reach the business goals.
By building salary adjustments into their compensation structures to offset the effects of inflation on their employees, companies like Syngenta create a positive company culture.
This culture in turn spills over to increase productivity, improve business agility, offer better employee engagement, drive organisational purpose and ultimately improve the bottom line.
This further culminates into a strategy that empowers a company to deliver a clear competitive advantage.
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The author is the Managing Consultant at G. N Grant Business Consultant, a Chartered Certified Accountant (ACCA), a Master of Business Administration (MBA) holder, with a Specialism in Strategic Planning, and a candidate for the Herriot Watt University (Scotland) Doctor of Business Administration (DBA)