Using Scenario Planning as Inflation Continues to Rise | Deloitte Reference

Workforce Planning

As inflation persists, workers’ real wages and buying power continue to decline despite wage growth. In the U.S. alone, consumer inflation is up 8.6% in May 2022 compared to May 2021—its highest level since December 1981. And with little signs of this trend slowing down soon, organizations are increasingly concerned about the impact inflation will have on their ability to attract and retain talent. For one, many organizations have already been struggling to find talent in a tight labor market. Second, while several reports on worker preferences indicate workers place a high value on the non-monetary aspects of an employee value proposition—such as company culture, meaningful work, and flexibility—compensation is a top reason why workers are leaving their jobs.  And in times of economic challenges, compensation is likely to carry even greater weight. A few organizations are implementing various tactics to address this challenge. Lloyds, the biggest bank in the U.K., announced this week that it would give 64,000 of its non-executive employees a one-time bonus of £1,000 (US$1,200) to offset the rising cost of living. As inflation continues, organizations will need to think through other talent responses depending on the scenario that arises. This 17-page deck provides a framework (page 6) of four scenarios that may occur in the context of inflation. The subsequent pages show how organizations might respond to each scenario, including human capital responses. The ideas can also apply to scenario planning in general and not just those driven by inflation.

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