If you’re running a small business in the UK right now, you’ve probably noticed how costs keep creeping up and it's not easy for anyone.
In “Awful April” we saw water and energy bills shoot up hard, driving inflation back to around 3.5%. Since then, food prices have climbed even more, reaching a 17-month high at about 4.2% in August.
On the business side, employers have been hit with higher National Insurance and minimum wages, pushing costs up and even leading to job cuts.
So how can HR teams help? Here’s what your HR toolbox should include right now:
1. Talk Openly with Your Team
Be transparent. Let your employees know you’re aware of what’s going on, rising bills, tighter budgets, and that you're working on solutions together. Honesty builds trust and eases worry.
2. Review Pay and Benefits Thoughtfully
While a big across-the-board pay increase might not be feasible, small gestures can go a long way like one-off bonuses, help with transit costs, or subsidising meals. Just be clear that these are discretionary, to avoid creating expectations.
3. Boost Flexible Benefits
Tie in flexible benefits like financial wellness platforms, emergency funds, or short-term advance pay (if possible). It helps people feel more in control when household costs like food and energy are skyrocketing.
4. Prioritise Morale with Smart Perks
Keep team spirit up with low-cost moves: flexible hours, work-from-home options, casual team lunches even small shoutouts in team meetings go a long way. When people feel seen and appreciated, they stick around longer, even in tough times.
5. Watch Your Costs Carefully
Time to do a quick audit. Can you switch suppliers, shop for better deals, renegotiate rent, or trim unnecessary overheads? That slack could be reinvested into the team.
6. Keep an Eye on Hiring and Retention
Businesses are hiring less and more are cutting jobs right now. Make retention a priority with stay interviews, flexible policies and advocacy for employees well-being. Even small efforts can help you hang on to your best people.
7. Stay Updated and Be Ready
With the UK budget coming in November, likely including more tax changes and spending shifts, flexibility is key. Have a plan in place so you can respond quickly to whatever comes next.
Finally, it’s important to stay alert. The government’s budget in November is expected to bring further tax changes and possibly more spending cuts. Preparing your HR strategy now means you can adapt quickly, instead of reacting in a panic when new rules land.
The cost-of-living crisis is hitting everyone differently, but one thing is clear: your employees need to know you’re in their corner. By combining transparency, small but meaningful benefits, a focus on morale and careful business planning, you can navigate the next spike in costs without losing your most valuable asset, your people.
At Dakota Blue Consulting, we know how tough it can be to balance rising business costs with keeping your team happy and motivated. That’s why we work with small businesses across the UK to build practical HR strategies that support both business owners and employees without breaking the budget.
If you’d like tailored advice on pay, benefits, or retention during the cost-of-living squeeze, get in touch with us today. Let’s make sure your people and your business stay strong through the challenges ahead.