At the beginning of the year we published our annual research into the trends shaping benefits in 2014. Top of the list was helping employees with the cost living.

As I write this a few days after midsummer, a poll on the Guardian website shows 78% of people think the UK still has a cost of living crisis. A headline in a column opposite links to a story highlighting the fact that for yet another year, pay rises are below inflation.

So while the improving economy may be adding a bit welcome of optimism to workplaces around the UK, it is clear this is a stubborn issue which has yet to go away.

It is also an issue which could cause your organisation big problems in the year ahead.

Employer budgets for pay and benefits in the new financial year from April 2014 may have been set at the end 2013 but many employees will struggle with the idea that, at a time when business is supposed to be improving, they are being paid less than they were a year ago.

You could argue that pay restraint is good because it will churn out the people whose loyalty is only linked to money. But that overlooks the fact that the people who are first to leave are likely to be your best people who will find it easier to find work elsewhere. It also sidesteps the major issue that, aside from the loss of talent, you are left with poorly motivated people.

Lastly, after five years of pay restraint there is likely to be significant pent up demand to move for better wages: employers could face a costly exodus.

So how do we minimise the impact of pay restraint on our organisations and people?

For me there are three issues to consider on the path to a solution.

The first is that although pay is the problem, increasing it won’t equate to better motivated people. A recent poll in Employee Benefits magazine acknowledged that while it is an important motivator, only 26% of employers rate it is the prime driver of performance.

The second is that we know that many employees are oblivious to the full – and frequently generous – remuneration they receive in the form of employee benefits.

The third is the issue of the ‘recognition gap’ –  the gap between work done and thanks given by employers  – which emerged in the 2014 Edenred Barometer  which looked at how 8,800 employees look at their work.

What this means is there is a lot that employers can do to stem discontent, performance and staff turnover before reaching for the chequebook. Much of this comes down to communication.

Improving and prioritising employee recognition within an organisation is an initiative which will bear short and long term benefits for a business. A thank you for work well done costs nothing and has more profound impact that a one off pay rise.

Doing a better job of communicating your benefits is a fantastic way of underlining the support and commitment you have for your people. Again, this will have short and long term benefits for the business.

While this may not stop some people leaving, these efforts will go a long way to stop those who are wavering and / or negative about the extent to which they get a fair deal from you as an employer.

It will also make your organisation a better place to work.

Andy Philpott is sales and marketing director at Edenred – you can read more blogs at or follow Andy on twitter @andy_philpott