24 January 2023
There is no denying that businesses are currently operating in tough times, with rising costs having an impact on most industries to varying degrees.
With inflation outpacing pay awards in many industries, businesses are focussing on how they might support their employees through the cost-of-living crisis, when already managing a tighter and more challenging budget, and with an uncertain outlook.
‘Our people are our greatest asset’. This is a phrase we hear a lot, and rightly so. Steven Bartlett, Entrepreneur, Podcaster and star of Dragons Den was recently quoted that he wished he had known that; ‘Your business is nothing without good people; the skills can come later’. Employees are the key to the success (or failure) across functions, teams, and overall welfare of a business, making the need to look after those assets to the best of your ability vital. Working to keep your teams engaged, motivated and feeling valued is important if you want to avoid them taking their valuable skills and experience elsewhere. It’s in difficult times that employees really see how much you value them, so being aware and proactive is crucial.Employee needs
It is important to consider the impact of the cost-of-living crisis for everyone in your business, including those earning higher salaries. Employers are not always aware of every aspect of an employee’s life, and so assumptions should not be made regarding who is and isn’t impacted and to what extent.
Employers may find that something that was important to their employees a couple of years ago may not be so important to them now and that as the financial outlook changes, employee needs may change too.
An increase in salary is likely to be number one on an employee’s wish-list at the moment. But in cases where that is not an option for an employer, what else can an organisation consider doing to attract and retain good employees?Being pro-active
In most cases, inflation level pay rises are unachievable. However, employees need to see that their employer is still doing what they can to help. There are some lower cost options that can deliver a pro-active, high value and meaningful service to employees. Some ideas include:
- sourcing some financial education and financial planning support at an appropriate and meaningful level (managing household budgets, efficient spending, moving suppliers, how to conduct a spending audit, financial planning etc);
- utilise Employee Assistance Programmes – many providers will provide sessions for employers to explain the benefits and resources available to employees;
- consider hybrid working models where appropriate – is it possible to reduce travel time and costs?;
- consider a four-day working week;
- train managers to be aware of the mental health implications of financial difficulties, and encourage discussion;
- review your benefits package – do your employees value the benefits they receive? Could a flexible benefits approach work?;
- review your expenses policy – are employees reimbursed quickly enough, can the employer purchase higher cost items such as train tickets to avoid out of pocket expenses?; and
- introduce a time benefit such as summertime working or an early finish once a month – not financial help but good for mental health and fits with ‘doing what you can’.
Of course, pay matters, and most indicators still point towards pay growth continuing to accelerate with some industries being reported to be offering average regular pay increases of 7.6 per cent in the latest quarter (source: ONS). If your pay rates are out of sync with the market this should be addressed to avoid losing valuable members of your team.
How we can help
If you would like to have a conversation with a people professional about pay rates in your industry, ideas around attraction and retention, or a for a wider discussion around people strategy, please contact Steve Sweetlove or Kerri Constable.
Our Employment Tax team explores other ways in which you can help employees in the article ‘The cost of living: How can employers help employees?'