7 minute read

Interv I w

The impact of inflation on the new world of work

The future of the labour market remains uncertain as some companies scale back on hiring to prepare for the unknown. However, we are still in a hot job seeker's market, says Leslie Tarnacki, SVP of HR at WorkForce Software

Companies of all shapes and sizes, from small businesses to global corporations, are susceptible to the consequences of inflation. But how will inflation impact the labour market and broader world of work? Workers are requesting more compensation to offset the growing cost of living, while employers are forced to find ways to reduce expenses to make a profit. In conversation with People Matters, Leslie Tarnacki, SVP of HR at WorkForce Software, talks about inflation and its impact on the world of work and companies’ return to work plans.

Leslie Tarnacki brings more than 22 years of executive level HR experience to her role at WorkForce Software. She is responsible for all global HR functions, including talent acquisition and onboarding, employee relations, organisational development, compensation and succession planning. She also partners with the leadership team on employee engagement strategies and sustaining a high performance culture. Prior to joining WorkForce Software, Leslie led HR teams for companies such as New World Systems (now Tyler

Technologies), Dorado Software, AiMetrix and Frontier Communications (now CenturyLink).

Here's what she told us.

Do you think the soaring inflation will impact the future of work?

With a sudden influx of highly skilled professionals back into the market due to job cuts and hiring freezes, inflation will certainly have an impact on the new world of work. Plus, many former retirees are finding their way back to the workforce and putting their retirement plans on hold, as the money they saved for retirement isn’t going as far. However, there are still millions of job openings available throughout the larger economy – many of which offer gig work opportunities. In this new world of work, I expect to see workers looking for flexible/gig roles to help them manage financial demands and to support a desire for more flexibility to accommodate their post-COVID-19 lifestyles. Company leaders need to think beyond the traditional 9-5 work pattern and provide their staff with flexible scheduling to ensure retention and satisfaction – especially as they seek ways to balance company needs with labour availability.

What do you think about rising commuting costs and how it might impact businesses' decisions to require employees to work on-site? Are we seeing more employers postpone plans once again?

With gas prices on the rise – company leaders continue to receive pressure to reconsider their policies on in-office work. Many are providing their officebound employees with the option to choose where they work (in-office or remote) and right now, it's essential for businesses to show their employees this support in order to retain great talent employees to feel supported and increases productivity within the workplace.

Can inflation result in more job cuts, hiring freezes, and rescinding of job offers?

The future of the labour market remains uncertain as some companies scale back on hiring to ensure security and prepare for the unknown. In some industries, we expect to see more businesses follow suit and implement hiring freezes and rescind job offers. However, we are still in a

Company leaders need to think beyond the traditional 9-5 work pattern and provide their staff with flexible scheduling to ensure retention and satisfaction

and mitigate any additional financial burdens caused by inflation. Where remote work is not an option, more employers will need to offer alternatives to support employees. Deskless frontline workers can use technology to support them in these moments when they may want to pick up extra shifts to make ends meet, or even to request being scheduled with certain coworkers so that they can share rides to and from work together, saving on gas. This type of flexibility allows hot job seeker's market and there are plenty of businesses that are actively looking for ways to retain their current employees and capitalise on this influx of coveted talent now circulating back in the market.

As inflation continues, what impact will it have on employee satisfaction and wages?

As the cost of goods and services continues to rise, employees may begin to feel underpaid and overworked – leading to an unhappy

In the face of uncertainty, business leaders must be prepared with the proper tools to maximise their labour spending and find ways to retain employees

and unmotivated workforce. Some staff may go as far as requesting a pay raise or increased benefits packages to compensate. While most companies cannot match wage increases with the inflation rate or increase benefits for all staff, it’s imperative for them to invest where they can as it will show employees that they are valued and supported during this challenging time. Some ways employers can invest include providing technologies that make employees feel seen, heard, and connected, and encouraging workers to use these systems every day.

Meanwhile, even as fears grow about a looming economic slowdown, the Great Resignation hasn’t really slowed down, according to reports. What’s your take on this?

It has felt like a hot trend to quit and start a new job – despite the economic slowdown. Employees who are discouraged in their position are quitting in search of a better, more fulfilling role, without fully thinking it through or identifying what benefits, perks, and opportunities they value the most and the potential impact a recession could have on their search for a new job. We expect to see a slow down on the significant compensation growth of the past two years as access to capital becomes more challenging and companies begin to prepare for an economic slowdown.

How do you see the future of the labour market? What’s your advice for business and people managers?

The future of the labour market is still unknown. In the face of uncertainty, my advice is that business leaders must be prepared with the proper tools to maximise their labour spending and find ways to retain employees. As a first step, leaders need to think about how they can implement technology to optimise their workforce, as well as to engage and support (not just manage) their employees – no matter where they are in the world. Implementing the right tools will allow companies to create connections and positive experiences, improve productivity, engage and motivate staff, in order to ensure successful business outcomes. Younger, digitally native employees are expecting to be armed with consumer-grade, highquality applications to help them successfully navigate the organisation, connect and collaborate with colleagues and managers, and be successful in their roles.

The hybrid model is still a work in progress, and so is the kind of leadership that will be relevant to it. How much of a difference are leaders making?

How do you effectively lead and manage a hybrid workforce? Just as the remote and hybrid working model forced people to re-evaluate what performance really is, leaders have also had to review the nature of leadership. What is necessary, what is nice to have, and what could really be done without? Just as importantly, what needs to change with a distributed workforce?

Just a couple of years ago, leaders and managers' response to the 'great work-from-home experiment' was wildly varied. Those who were more far-sighted and progressive quickly adapted and brought their organisations along with them. Some attempted to go about business as usual, while others tried to find a balance between embracing change and maintaining parts of the status quo. And a few, finding it exceptionally difficult to adapt, ended up falling back on micromanagement. Today, that same spectrum of responses continues to play out in the post-pandemic period, as organisations either settle into the new hybrid world or resist change.

It's clear by now that certain aspects of leadership need to change in the hybrid working model. Leadership styles, for example, have to be more trust-based and more people-centric – a step back from the highly empathetic approach that emerged during the crisis, but still a narrowing of the power gap that tends to exist in the majority of organisations. Leaders need to be more attuned to issues such as employee wellbeing, employer branding, and even employee experience – a concept that might have originated in the realm of HR, but which is in practice profoundly affected by the attitudes of top leadership.

Organisations are also reviewing their succession planning: the leaders of tomorrow might need to be selected and trained quite differently from those of today. And members of the leadership team may even have to change the way they collaborate, as the leadership team itself becomes as distributed as the workforce.

Most importantly, leaders' attitudes toward hybrid work is still very much a work in progress. A form of polarisation has emerged between those who are working on being more open-minded, and those who have given up trying to adapt and simply ordered their workforce back to the office.

This month, our cover story looks at how leaders and their organisations are changing in the hybrid model, and how their ability to adapt is influenced by which end of the spectrum they are closer to. In the broader picture, how much of a difference will leadership make to hybrid work?