Next week 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) Asking 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) Thinking 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.
Andy Philpott is sales and marketing director at Edenred
www.edenred.co.uk
