With inflation close to double figures, it’s natural there will be significant pressure from staff for pay increases that go some way to offsetting the rising cost of living. Otherwise, in real terms everyone will be worse off. It makes sense and yet is a terrible idea. If all businesses add extra wage costs and pass them on in higher prices, inflation continues to rise, quickly becoming endemic. It’s the scenario that economists and central bankers fear most, hence the somewhat ripe demands from the extremely well paid and financially comfortable Bank of England governor Andrew Bailey not to offer inflation-busting pay rises.
While it matters that staff can afford to live well, it is possible to overstate the importance of pay as a motivator. It often only has a short-term impact, as employees immediately “move into” their new pay and it soon becomes normalised. Employers should consider looking at non-financial rewards instead. How about giving staff an intrinsically rewarding role? Here, we pick out some other benefit tips from our members:
1. Make work the reward: OK, it’s not always possible. But lots of jobs, if structured the right way, offer some intrinsic pay back. If it’s just a transactional exchange of labour for money, price (wages) will feature very prominently in whether to stay or go. Take the time and effort to design roles that allow employees to build a sense of worth and happiness from their job. People want a sense of direction and knowing where their career is heading; some sense of how their contribution feeds into the overall objectives; and an idea of how they can improve and build skills.
2. Training and development: As part of the above, do all you can to preserve whatever training budget you have. It is often an early victim of cuts when times get tight, but that’s a mistake. Well-structured training keeps good people engaged and improves them and therefore strengthens the business. Everyone wins.
3. Recognition schemes: Before you’re too rude about cheesy employee of the month awards, listen. There is a way to do this kind of thing well. It has to fit your culture and be authentic and relevant to your team to have an impact. Being generous with carefully selected prizes or rewards can have a huge impact.
4. Flexible benefits: Staff want different rewards at different times of their life and career. One way to make sure employers and staff get the most from benefits is to offer a choice. Implementing a flexible benefits scheme can increase the value staff get from the whole package. Allowing staff to buy, sell and exchange benefits like holidays can be a powerful way to boost engagement. A regular benefits statement and invitation to switch benefits acts as a way to communicate the whole package. On the downside, it will add complexity and cost.
5. Voluntary benefits: Adding in small gestures can make a big difference at the right time. There are plenty of voluntary benefits schemes, where employees get discounts on a wide range of items, from phone insurance to cinema tickets or meals out. Such schemes are now often app-based and some come with the ability to create personalised employee celebration and recognition schemes within the app.
6. Join the four-day week revolution: “Time is the most valuable perk,” says Andrew Barnes, author and leading light in four-day week movement. Maybe now is the time to find out. Get more for less, without reducing pay and give staff a (relative) pay rise without spending more. There are different approaches being trialled, and it’s worth looking at the pilot schemes underway to find one that might work for you.
7. Health care benefits: There have always been mixed views on private health care schemes in the UK. Many of the larger insurers now target smaller companies with specialist packages. Post-Covid, as the health system struggles to catch-up, there is more enthusiasm than ever for offering health insurance or a cash plan.
8. Performance-based bonuses: If you do want to add money to pay packets, it might be more financially effective to do so via bonuses that can be more closely tied directly to performance. As your business grows, it is fair to share the rewards with the team and this is one way that shouldn’t break the bank.
9. Share options: Another option is options. Give staff a share of the long-term rewards of owning a business, through options using a tax-efficient route like an Enterprise Management Incentive (EMI) or go the whole way and pass the business to an Employee Ownership Trust (EOT). Either way, it is a massive decision to take and there are more factors to consider besides keeping staff happy.
10. Boost softer, cultural benefits: Access to a table tennis table or a fridge full of beers can’t replace hard cash to pay bills or feed children. But they can make things more bearable at the fringe. Such benefits can help to boost morale and have a startling effect on bringing teams closer together and enhancing productivity and performance.
There is no one-size-fits-all approach to benefits. Cultural sensitivity is key. But if you get the mix on offer right, it can have a huge impact. The more staff love the place they work, whether that’s due to the office environment, the free food and drink or the other people, the less likely they are to look somewhere else for something else and the less likely they are to leave if they do.