One of the most common topics of conversation in businesses amongst employees is the cost of living crisis and how fairly they feel they are remunerated. What is also evident across the country and shouldn’t be assessed in isolation to the remuneration debate is the challenge recruitment is currently presenting to employers. There are many ways businesses are finding to address these issues.
Some employers have offered one-off cost of living payments to staff in some guise or another, particularly in the run up to the Christmas period when cash flow becomes a little tighter, and January for many is the start of the pay review process. Others are tying employees in to longer notice periods, applying across the board pay increases without considering individual performance which may (or may not) be pricing their employees out of the market, and therefore influencing a false market rate.
But should you match the cost of living as a pay increase? In doing so, are you exacerbating the recruitment crisis for others? Is it right to put unrealistic expectations in terms of earning capacity on employees, particularly younger employees, that cannot be sustained on a long term basis? Is it right to offer flexible benefits packages as a way of adding value to the employee but at the risk that they make choices in the short term to suit their current lifestyle that don’t help support them in the long term, or help them learn financial control?
Should you be actively retaining your staff through pay and conditions that does not reflect the true value of the role they are undertaking; their capability within that role; and the reality of future progression. Will the short-term gain of taking these knee jerk responses be sustainable and realistic on a long-term basis?
These are a lot of questions, and ones we don’t have a definitive answer to, but they are equally vital to consider when making decisions that are designed to benefit the business in the short term but may have impact in the longer term that may be detrimental to both businesses and individual employees. Imagine maxing out on your earning capacity as you hit your 30th birthday, living a lifestyle commensurate to your earnings, and then for no reason you lose your job in a market that has now changed. You can no longer sustain that lifestyle or find work of equal pay and now you have a family to support. The consequences may be devastating.
Whilst there is without question the obligation to provide a fair and liveable wage at a minimum, there are other ways to support your employees during the crisis.
HR At Work can help you explore opportunities to support staff during a cost of living crisis, without impacting the recruitment market and your bottom line, whilst retaining a realistic and sustainable remuneration package for your staff.