Everyone has tasted the throbbing pain of inflation – consumers with hiked interest rates and higher prices and suppliers with higher risks. Managing inflation as CEO has become crucial at this point because companies can control costs, but employees have to bid their wages onto the paradoxical wagon of higher prices. CEOs must share inflation strategies with employees to help them cope with the economic downturn.
The four-decade high inflation has indeed left industry leaders around the world to contemplate it as ‘permanent enough’ to demand their attention. But a CEO’s leadership in inflation can be a comforting way to assist employees.
Inflation Playbook For CEOs
Managing business as usual is not a likely situation in the present turn of events. Leaders must develop a playbook with inflation strategies to be implemented in specific areas. In a world pervading supply chain shortages, CEOs can transform their procurement approach from cost control to making it a core part of value creation.
Another strategy for CEOs in inflation can be to unravel vertical integration as acquisitions have always provided more control over value chains for key products. Companies’ inflation management can also consider investing in process automation and technology where new cloud-based businesses are providing flexible scaling of capacity.
While this strategy sounds utopian, strategic repricing and strengthening customer relationships should be one of the top priorities of a CEO’s inflation strategies. With inevitably higher prices, companies can manage inflation by working with customers. Addressing common inflationary pain points with customers can make it easier to stop passing on higher costs and arrive at a good strategy.
Furthermore, a CEO’s leadership in inflation can help in declining the stigma attached to employment gaps and the cost of switching jobs. Employees cannot put up with uncaring leaders and hence, CEOs must focus more on connection and work culture rather than competitive pay and control. A strong culture gives better returns to stakeholders and is an impressive strategy in the inflation playbook for CEOs.
Managing inflation as CEO is not enough – coping with inflation must be a company-wide strategy by leaders breaking internal barriers and bringing expertise together.
Ways To Assist Employees With Inflation: CEO Inflation Strategies
If there is a silver lining to inflation being at the highest levels in decades, it is that the challenge is shared between all classes of employees and CEOs even though some can cope better than others. When the world is adjusting to the horizon of trials and tribulations of higher prices, how can CEOs help employees deal and cope with inflation?
There are higher costs for employees as the demand for skillful talent continues to expand. While companies’ inflation management involves control over essential aspects of rehauling prices, employees have no power – the post-pandemic wages don’t cover the increased prices of grocery or gas like they used to.
Inflation has eaten up the purchasing power of US households which cannot afford to absorb an unexpected $500 expense.
For managing inflation as a CEO, a leader could increase wages which employees would certainly be grateful for. But increasing salaries also increase fixed costs which may not reflect in boosted outputs or productivity. The rise in fixed costs will be binding if an economic downturn comes into the picture.
Leaders must convey to employees of their commitments and acknowledge the priorities of compensation accordingly. If CEOs and employees collaborate on ideas for increasing performance metrics, productivity may leap. The upturn in performance and reduced costs of hiring new talent can give more profit potential and fund the promise of incremental wages.
The importance of employee engagement has been suggested over time and again – from recognition ceremonies to employee retreats. But if employees can’t make ends meet, CEOs must step up to help employees cope with the inflation problem by providing more compensation.
