Next week (Sunday 4 to Saturday 10 November) is Living Wage Week when, from this year onwards, a figure will be published for the minimum hourly rate that staff should be paid in order for them to be able to meet the basic costs of living.
It’s a voluntary scheme where ‘Living Wage employers’ who support the campaign choose to set their pay in line with two figures published for employees within and outside of London.
Coming in the wake of last week’s research from the KPMG which showed one in five employees said their income wasn’t enough to live on, it is another reminder of the challenges which many workers face in ensuring that what they earn is enough to pay for the necessary bills each week.
Unsurprisingly, not everyone – from Government to employers – is happy with the idea of increasing the costs of employment for fear of its impact on jobs.
But while the extent to which it will curtail job creation may be up for debate, one thing where there seems to be less disagreement is that creating the conditions where employees are less worried about money is good for performance within organisations.
Looking at the figures from The Living Wage Foundation, employers can expect less absenteeism and better quality work from these employees. In short, looking after your employees financial wellbeing pays dividends for the individual and the organisations.
Although wages are an important area to address – and for many employees the most meaningful area of compensation – if employers are really interested in supporting employees while delivering improved performance than I think focusing on take-home pay is really just a starting point.
And that is where benefits come in to play. Here I think there are three areas that every employer should focus on:
1. Ask about the things which drain the finances of employees
Chances are this will be childcare, the weekly shop, fuel and the regular energy and household bills which seem to almost instantly empty bank accounts quickly after pay day. By building a picture of where employees feel most stretched, HR can think about the areas where benefits can come into play to help out.
2. Think again about what benefits you provide
Choice and access to benefits has dramatically improved – particularly for smaller and medium size organisations – in the past few years. This means that many organisations are able to meet a wider set of needs for employees through a combination of voluntary benefits, salary sacrifice schemes or employer funded benefits.
For many employees, the aggregate savings achieved through childcare vouchers, workplace savings schemes which offer money off at major retailers and health cash plans make a big difference to how far their pay packet goes.
Thinking again about how your organisation can really support employees through benefits should be a key task for HR.
3. Communicate what you are doing
Even if your benefits do not change that often, employees’ lives change frequently along with where they spend their money. Employers should work with their managers in their organisations to ensure that employees are aware of the benefits they can get as their circumstances change.
Unlike the Living Wage, investment in benefits is less about the money you spend and more about the money you can save employees.
It doesn’t make it a substitute for paying enough for employees to live on but any smart employer who is interested in both wellbeing and performance should think about it as an important part of the total reward on they offer.
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One Response
Dig deeper
An excellent blog on a contentious issue, and one that gets to heart of the matter. So many companies talk a good game on wellbeing and employee benefits but they throw their hands up in horror at the idea of the Living Wage, stating "There’s no such thing as a free pay rise."
It’s understandable in straitened times that pay increases are going to be beyond some businesses, but knowing and understanding the pressures on employees is essntial if employers are to offer practical help in the absence of a Living Wage/ pay increases. I urge all businesses I work with to dig a little deeper when they hear "I can’t afford to live on my salary"- finding out what the biggest expenses are is the first step to supporting them. For example, explaining to one hard-pressed and distracted employee that she was entitled to request flexible working and then developing and implementing a plan for that with her and her employer saved her over £160 a month in childcare costs. It made her a more focused, less stressed team member. Her employer hadn’t realised she was entitled to it- which alo illustrates the value of getting good advice on HR!
I will share this blog as I feel it illustrates the power of well-planned and delivered benefits beautifully. Thanks for posting.