The cost-of-living crisis – it’s a phrase that’s never far from the headlines and news bulletins. Unfortunately, the economic outlook suggests its ubiquity will remain for some time yet.
But while the term serves as a neat description of the budgetary pain that inflation is inflicting on individuals and households, it fails to communicate the corporate element of the current fiscal squeeze. Ever-rising costs have ramped up the pressure on employers and, in many cases, represent yet another existential threat, hot on the heels of the pandemic.
Perhaps, then, there should be more talk of the very real ‘cost-of-business crisis’. However, even that phrase fails to capture the complexity of the problem employers are facing. The inflated cost of living means there’s more pressure for salary increases than at any time over the last two decades or more – but bigger bills and other expenses mean it’s harder to spare more money for wages.
Meanwhile, a tough labour market and post-pandemic attitudes mean employee workplace expectations have risen considerably. This all adds up to an environment where employee benefits are more important than ever – but there’s less money for many employers to spend on them. So maybe ‘a perfect storm’ is a more fitting idiom.
So how can you navigate the resulting maelstrom and continue to attract and retain staff?
Understanding the value
According to Matt Russell, CEO at Zest, it’s important that employers remain committed to providing a benefits package that is fit for purpose. Moreover, it’s perfectly viable to do so even with straitened budgets, he insists.
“With businesses facing rising costs across the board, employers need to ensure they remain competitive without simply raising salaries alone, and cost-effective but personalised employee benefits are the answer,” Russell says. “Ensuring employees understand the true value of their benefits package is essential for businesses wanting to attract, motivate and retain talent.”
While Russell underlines the importance of personalising packages to match the demands and needs of employees, this doesn’t necessarily require the most expensive benefits, he explains.
“In fact, high-cost benefits that have little relevance to employees are likely to see low take-up and poor value for money,” Russell argues. “More targeted benefits are going to lead to increased engagement, improved employee experience and a more successful benefits strategy, regardless of the financial cost of the benefit itself.”
So, allowing for the need of a personalised approach, what kind of low-cost employee benefits have proven to be effective in attracting and retaining staff in the current environment?
Helen Payne, principal strategic benefits consultant at Aon, offers some examples that strike at the heart of recent financial challenges experienced by employees.
“Savings solutions such as discount platforms, retail vouchers and petrol cards are low cost to the employer but can save employees significant amounts of money if used regularly,” she suggests. “These benefits are growing in popularity as a result of the cost-of-living crisis.”
Payne also points out that many benefits – including technology loans, will writing, health screenings, health cash plans and dental insurance – can be paid via payroll.
“This allows national insurance savings on top of group discounts while offering the chance to spread costs over 12 months without borrowing,” she says.
James Tilley, director at Vivup, notes that low-cost salary sacrifice schemes are generally proving effective in helping employees deal with financial issues, but he also emphasises that education and communication are essential.
“They all work quite differently when it comes to tax and affordability, so it’s important for employers and employees to understand the differences,” he says.
In terms of specific initiatives, both Payne and Tilley have observed high usage levels for green car and cycle to work schemes. “These can save employees tax and national insurance on a significant purchase with little or no cost to the employer,” says Payne.
An example of an employer taking advantage of the opportunity is nursery and pre-school firm Storal Learning – a client of The Electric Car Scheme. According to managing director Varun Chanrai, the salary sacrifice offering was a “no-brainer” for the company.
“It costs the business nothing but offers a great benefit to our senior team,” he says. “There’s a little bit of paperwork at the start but once you’re set up, onboarding new staffers who want to lease an electric car is easy – they get big savings, your company’s overall emissions go down, and you don’t pay a thing.”
As another reminder of the importance of personalisation, Chanrai adds: “Obviously a leased electric car isn’t for everyone – some people already own a car or take public transport to work, and the savings differ based on how much an employee makes.”
A proactive approach
So you can’t please all of the people all of the time. But there’s another low-cost benefit that comes pretty close: flexibility.
Aon’s Payne recommends inexpensive – or even free – HR policies to improve the employee experience, such as working from home. “This could save employees considerable money on transport, food and childcare costs,” she observes.
“Flexible working policies and sabbaticals can also help employees manage their work-life balance, resulting in a happier and more productive workforce.”
In addition, wellbeing can be addressed through seminars and on-site activities such as yoga and meditation, Payne adds.
Vivup’s Tilley, meanwhile, believes that a proactive and preventative employee assistance programme (EAP) and wellbeing solution can also be low cost when return on investment is considered. “It supports employees’ mental health and wellbeing, plus helps reduce absence and presenteeism, and supports recruitment and retention,” he says.
Another cost-effective morale booster is showing appreciation for employees’ efforts.
“Simple and regular recognition will go a long way towards making employees feel valued,” insists Danni Rush, COO of Virgin Incentives. “Celebrate their long service milestones and personal achievements – such as getting married, moving house or having a baby – to offer a personal touch and demonstrate an investment in people’s lives,” she advises.
So it seems that budget needn’t be a barrier to benefits in the workplace. In many cases, another well-used saying rings true: it’s the thought that counts.