Recruitment agency, Anne Corder Recruitment is urging small and medium sized businesses to get creative when considering the benefits and support they can offer staff during the current cost-of-living crisis.
A recent survey by PwC showed that four in five (83 per cent) large employers are taking action or considering ways to help employees in the face of the cost-of-living crisis.
This support was found to come either through pay increases, additional pay reviews or one-off bonuses. This is on top of non-monetary interventions, such as increasing staff shopping discounts, financial wellbeing programmes and exploring employee hardship funds
This study however focused on companies with more than 250 employees. PwC itself announced in June 2022 that it was increasing pay for current employees and boosting starter salaries by 10%, to help fight the cost-of-living crisis.
The Guardian also recently reported that other large employers including HSBC, John Lewis and Virgin Media O2 are giving some workers extra payments totaling over £1,000 to help with the rising cost of living.
But what if, instead of 250+ employees, a business employs just a fraction of that figure? Small and mid-size businesses are under enormous pressure to support their employees and help them navigate the cost-of-living crisis, whilst feeling every pinch just to keep the lights on themselves (sometimes literally).
Nel Woolcott, Anne Corder Recruitment managing director, argues that for those companies that are struggling to balance the ever-increasing cost of living with meaningful pay, more creative benefits and resources, as well as genuine benefit transparency and understanding, is needed to support staff in the midst of this crisis.
Why throwing money at the problem isn’t a viable option for many
A recent survey from Paydata showed that 2022 pay awards have seen a sharp rise year on year, averaging 3.5 per cent, in contrast to the same survey carried out in autumn 2021 which captured an average of two per cent.
Tim Kellett, managing director of Paydata explained, “Responsibility to employees and maintaining affordability to sustain operations is a difficult balancing act for many small and mid-size businesses. Employers of this size are under pressure to keep pace on pay against ever rising inflation. Even if they can manage to keep up, it's easy to predict the problems this may cause further down the line, setting a precedent of pay awards that are significantly higher than those offered in 2021. Alongside straight-forward salary increases, our research showed that employers are utilising alternative ways to support their employees, such as offering financial advice, allowing working from home to continue in order to reduce travel costs, or a lump sum ‘cost of living’ payment, targeted at those who need it most. These options all benefit from avoiding permanently adding to the pay bill and offer more sustainable solutions for employers.”
Introducing a second pay award each year is another option open to employers, with Paydata’s survey showing one in ten employers choosing to offer a second pay increase in 2022 and three per cent the average level. Some reported using this second award to help all employees, others reported that they are targeting these at either lower paid employees or towards key talent to drive down attrition issues.
Nel Woolcott, Anne Corder Recruitment managing director, said, “These tactics may solve short term retention issues and provide much needed support for staff, but this approach is clearly not sustainable for smaller companies. The cash will run out at some point, especially as companies are also themselves impacted by rising costs and inflation, so making these continual pay rises, in whatever form they take is unviable.”
It’s no coincidence therefore that companies are facing retention challenges, as well as recruitment problems. Some companies are meeting recruitment challenges by offering new starters higher salaries than those paid to existing employees. The lack of pay parity and subsequent attrition this behaviour encourages is clear. With soaring inflation rates, it is understandable too that many employers are slightly hesitant to create new vacancies, or even replacing leaving employees immediately, meaning existing teams are forced to do more, with less.
Salary increases aren’t an option for many but worryingly, research by Black Hawk revealed only 5% of employees believe their employer is doing enough to support them through this crisis.
This comes at the same time as a huge 63% of employees saying that they would leave their current job in order to find an opportunity that provides better financial support.
It’s clear that employers, especially small to mid-size, must find alternative ways to help staff as cost-of-living support becomes critical to both retaining and attracting talent.
How can small and mid-size employers better support their employees with the resources they have?
Nel commented, “It’s clear that employee benefits are no longer just added incentives. Now more than ever they can be an effective and sometimes the only viable way some employers can help their staff and their financial wellbeing.”
According to Black Hawk, 83% of employees agree that workplace benefits play an important role in improving the cost of living, and 95% of employers agree.
But how many employees actually understand the benefits of their benefits? There is a lack of understanding from employees regarding their benefit packages and how to utilise them. Benefits can be useful, but if employees don't see their advantages or know how to make use of them, they become irrelevant.
Black Hawk reports that only 22% of employees feel they are fully aware of the benefits on offer. The same report also highlights the several barriers that employees believe are stopping them from either using their employee benefits or making the most out of them. 37% of employees surveyed said the benefits on offer lacked relevance and 30% said they did not know much about their benefits.
Nel continued, “Small and mid-size businesses that cannot offer across the board pay increases must look long and hard at the benefits they currently offer staff and ask themselves, are these benefits truly valuable right now, and do our employees have a solid understanding of them?”
Employers need to review their rewards strategy and ensure not only that it is transparent enough for employees to take the most advantage of, but that its application is not detrimental. For example, a cost-of-living bonus might inadvertently harm those who claim Universal Tax Credits.
If employers don’t have a financial wellbeing policy, now is the time to get one in place and ensure that their people know what help is available and how they can access it.
If there is a benefits package, is it working hard enough? What adjustments can employers make to ensure it is benefiting those who need it most.
What about second jobs? Employers need to understand the ins and outs of this option that might be attractive to some staff members to help them and their families with cost-of-living rises. Considering the legal and contractual implications and supporting staff to understand them too, may be more valuable than a discounted gym membership during this time.
Nel said, “Education is key, not only to ensure that the true value of current and new benefits is understood, but training managers to help offer useful support to staff and encourage honest, trusted conversations will maintain employee well-being and ensure they feel supported and valued.”
Employers are facing a precarious time, and the need to keep employees engaged, and supported is key in order to retain talent. Protecting and supporting their current workforce in any way they can is crucial for all businesses, but small and mid-size businesses are facing a tougher challenge than the larger players right now.
Offering non-financial but truly valuable benefits to staff, and the support shown to colleagues and employees during this time will make all the difference to these smaller businesses when it comes to retaining existing, and attracting new talent.