On March 22, the Federal Reserve raised interest rates for the ninth time in a row, marking the most rapid rate increase since the early 1980s. Intended to combat rising inflation, the .25-point rate hike has once again set off recession alarms, and employers and employees alike are unsure of what the future holds.

In this time of economic uncertainty, employers must focus on what they can control, and that includes cutting costs where possible, creating a supportive workplace culture and facilitating open and honest employee communication.

Cut Costs Without Cutting Corners

Organizations that want to retain top talent can’t combat increased costs by simply shifting the burden to employees. Instead, they must seek innovative ways to protect their bottom line while preserving their benefits offerings. Some ways employers can cut costs without cutting corners post-interest rate increase include the use of:

• Alternative Funding Mechanisms: To combat out-of-control benefits costs, more and more employers are turning to alternative funding mechanisms, such as self-insurance, level funding and health reimbursement arrangements.
• Reference-Based Pricing (RBP): Under RBP, the health plan determines a “reference price” — generally some percentage above Medicare reimbursement rates (usually 120 to 200% of Medicare rates in a geographic area) — for a given medical service, and the plan will cover medical expenses for that service up to that price.
• Health Care Captives: A captive is an alternative risk solution wherein employers partner with other employers to increase buying power for stop-loss coverage and pool money for larger claims while self-funding their smaller claims.

Foster a Supportive Workplace Culture

Economic uncertainty can lead to employees experiencing poor financial, and even mental, health. Now more than ever, your organization should cultivate a culture in which employees feel empowered to ask for help and have access to helpful resources, such as counseling services, financial coaching and education, budgeting tools and more. 

If you’re looking for tips on how to create a culture that enables employees to achieve financial wellness, check out our on-demand webinar, “Why Financial Wellness Programs Are a Win/Win for Employers.”

Keep the Lines of Communication Open

Talking to employees about the state of the economy and what it might mean for the future of your organization is not an easy task. However, it is essential to maintain a certain level of transparency with your workforce. Otherwise, you risk losing their trust and, ultimately, losing top talent.

Strong employee communication has only grown in importance as the economy has slowed, and this most recent interest rate hike has once again presented employers with the chance to exhibit honesty and compassion.

For more insight into how to talk to your team members about rising inflation, a potential recession and more, check out “People-Centric Strategies to Set Your Organization Up for Post-Recession Success,” featuring a CBIZ Employee Benefits’ Communications Specialist, as well as experts from CBIZ Retirement & Investment Solutions and CBIZ Talent & Compensation Solutions.

Your first impulse after the interest rate increase may not be to take action. However, this period of economic instability brings with it opportunities as along with the challenges. Our team of consultants at CBIZ Employee Benefits is ready to help you make the most of this moment — connect with us today to learn more.