The CPI measure of inflation hit 5.2% this month. The highest reading since September 2008 and some way over the Bank of England’s target figure of 2%. Mervyn King will be expecting an increasingly tetchy letter from George Osborne any day now.
So what does this mean for employees? With inflation (and I could have used the higher RPI figure of 5.6%) having risen by 0.6% in the month, and wage inflation having fallen slightly to 2.8%, the news isn’t great. In fact, it’s getting worse. In real terms, and depending on which measure we’re using, salaries has fallen in value by very nearly 3%. That’s a 3% pay cut. Sorry about that. Really nothing I can about it.
Okay, not ideal, but what are the implications for employer branding?
Plenty, actually.
If you thought your employer branding, and the value proposition that underpins it, was already having to work pretty hard from an engagement perspective, it’s going to have to up its game some more. If the great talent within your workforce, the people putting in the sort of discretionary effort that defines your organisation, are being rewarded with a 3% pay cut, I wonder how engaged and recognised they’re feeling right now? And I wonder how they’re feeling about that discretionary effort too?
If organisations ever based the employee lifecycle on the prospect of constantly rising salaries, that probably isn’t going to work right now. What with remuneration actually heading south. And if your top talent and employee advocates aren’t feeling the love right now, then both your internal retention and external hiring initiatives are likely to be suffering.
There has rarely been a more pressing time for open, mature employee engagement. Many of your current employee base will have been with you through some testing, challenging times.
If a recovery of sorts does indeed lie ahead, organisations need to ensure that the internal value proposition that exists between employer and employee is based on authenticity, reality and a mindful recognition of the times in which we’re living, rather than something predicated on simple remuneration increases.
Getting to the heart of your employee mindset 
Great bit of thinking – I guess the big caveat is with unemployment high, and compensation only one part of the entire reward mix, it could be easy to over-emphasise this. But – point taken, indeed!
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