It’s not all about the money…
As the days grow longer and the mercury starts to rise, and life begins to return once more to a sense of normality as Covid restrictions are eased, a degree of optimism could be forgiven among an exhausted population. But, for businesses, the start of the year is not without its problematic side. With January and February traditionally a time of year for staff pay reviews, inflationary pressures mean that employers will not find it easy to keep their workforce happy.
In January, The Guardian reported that, after taking account of inflation, average wages dropped in November for the first time since July 2020 amid growing concerns over the hit to living standards this year from high inflation and surging energy bills. “The Office for National Statistics said although average total earnings grew at an annual rate of 3.5% in November, the impact from soaring rates of inflation meant workers suffered a real-terms cut in their pay packets. The official rate of inflation reached a 10-year high of 5.1% in November, effectively meaning a 1.6% cut in pay.”
Hannah Slaughter, a senior economist at the Resolution Foundation, said “despite widespread talk of returning wage spirals, Britain is instead experiencing the return of shrinking pay packets. The latest period of falling real wages – the third in a decade – is likely to have started as a far back as last summer, and is likely to continue beyond next summer too.”
Underpaying is a huge retention risk for businesses
In short, many companies will struggle to give employees a pay rise in line with inflation. This presents employers with something of a problem. According to HR services company Croner, “underpaying is huge retention risk for businesses—according to one survey, 22% of employees who left their jobs did so for more money.”
The problem for businesses is exacerbated by a jobs market where employees appear to hold all the aces. The Chartered Institute of Personnel and Development (CIPD) said the proportion of employers who reported hard-to-fill vacancies had jumped to 47% from 39% in its previous quarterly survey, while hiring intentions were the strongest since the survey began in its current form in late 2012.
Last month, The Times reported: “A red-hot jobs market is one of the unexpected side-effects of the pandemic. Instead of the feared 1980s-style unemployment levels — when three million were out of work and jobless rates shot above 10 per cent — employers are reporting labour shortages. Workers can call the shots — and, it seems, push up wages. The percentage of workers moving reached 3.2 per cent of the workforce in the third quarter of 2021 — the highest level since records began in 2001. The pace of increase was such that if it was maintained in the fourth quarter, one in five people will have moved jobs in the past two years.”
It would appear, then, that if you can’t offer increased wages, you’re going to lose your best talent. Williams Kent Recruitment Consultants says this: “If an employee feels valued, they are less likely to look for another job. If your competitors are recognising the rising price of living and individual performance, and you aren’t, you are giving your employees a reason to consider a move.”
Valuing employees without a pay rise
At first glance, it appears rather gloomy for those employers who haven’t got a pot of gold at the end of the rainbow. But look again at the phrase “If an employee feels valued, they are less likely to look for another job.” What if it was possible to make an employee feel valued without setting fire to your balance sheets?
Niki Turner-Harding from Adecco, argues that a decent benefits package can work wonders for staff morale. “The battle for talent will continue to burn bright – with flexible working, childcare, and learning and development offerings pivotal to effective talent attraction and retention.”
Bobby Hotaling, president and CEO of The Hotaling Group, agrees: “There are many ways to supplement salary by assisting employees in other areas of their lives. You can offer an extra level of life insurance or disability insurance for employees to protect their incomes. Other ancillary benefits, such as dental, optical and wellness, are all well received by employees. And gym memberships and transit benefits are great perks to keep employees happy and healthy. It is important to provide higher benefits so your employees know that you truly care about them and their families.”
In the frantic modern world, and in particular one that has been turned upside down by the small matter of a pandemic, one of the key ways of making your employees feel valued is to look after their physical and mental wellbeing. If the pandemic has had an upside (for those of us who don’t own hand-sanitising companies) it is in the increasingly open discussion of mental health, and the role that companies can play in ensuring that their workforce is looked after in that respect.
Tackle pay expectations with wellbeing solutions
Engaging an organisation like BuddyBoost can help companies care for the wellbeing of their staff. BuddyBoost is a proven employee wellbeing tool, where participants commit to doing at least 26 minutes of physical activity for 26 days in a month. They form into groups of buddies in the BuddyBoost app to help and motivate one another to complete the challenge. Participants rate their mood after exercise, and the data from thousands of participants shows that on average people get a 25% mood boost from the programme.
This boost in mood cannot be underestimated. Business News Daily says: “Happiness spreads and affects the energy of the entire team. When you create a pleasant company culture, it maximises the positive impact throughout your business. This boosts overall employee engagement and strengthens camaraderie among your staff.”
Furthermore, when a workforce is happy, it is more productive. Wellbeing People says: “Not only does the wellbeing of employees directly correlate to higher levels of productivity and engagement, but it also helps to reduce absenteeism and staff turnover.” The CIPD concludes that “if employers place employee wellbeing at the centre of their business model, and view it as the vital source of value creation, the dividends for organisational health can be significant.”
Another key aspect of the BuddyBoost experience is that it strengthens camaraderie and fosters a strong team spirit among co-workers. Everyone taking part in a BuddyBoost challenge stays in touch on their company’s private community feed, posting messages and photos, boosting engagement and sense of unity.
According to an article published by Toggl, a company that builds software to elevate productivity and eliminate stress, this unity is worth its weight in saffron. “When employees go the extra mile, they are usually doing so for their colleagues. While the salary may motivate them to accept a job offer, camaraderie with co-workers encourages them to stay even when financial rewards are not possible at the moment… Remember: you’re not running an apartment complex where neighbours can go years (or indefinitely) without needing to know each other’s names. You’re running a department or organisation where everyone can achieve great things when they all work together.”
“To enhance a sense of community,” the article continues, “make opportunities for peer-to-peer interaction. For example, if you work at the division of a larger corporation, start a friendly competitive rivalry with another division.” The BuddyBoost app encourages just such friendly rivalry, with a facility that allows different departments or teams to compete against one another.
So how to tackle spiralling employee pay expectations
In a world where employees are in greater demand than ever, employers have to go the extra mile to woo the workers they want, and to persuade their valued staff to stick around in an increasingly fluid jobs market. They also have a duty of care, and employees are ever more mindful that a company that looks after its own is one that they want to be involved with. The companies that switch on to the idea of a tried-and-tested health and wellbeing programme may just find that money talks, but wellbeing talks louder.