When inflationary salary hikes just aren’t sustainable, there are other ways to support and engage employees

Let’s be honest, it’s been a tough and mixed-up 2023 so far.

Cost of living increases have seen a significant change in the way we spend and live our lives. Yet, at the same time, from the employer’s perspective, we’re still seeing skills shortages and retention struggles.

Even though the number of job vacancies fell in March, the jobs market is still at an all-time high. Combine this with the fact that there is a rapidly increasing need for specific soft and technical skills, as well as candidates with a deep understanding of the latest platforms or solutions designed to transform business.

These candidates are commanding high salaries and are more often than not, following the money. However, for some employers, such talent can be costly and, financially, this may not be the right direction for their business right now.

You can see how this mixed-up climate has had a knock-on effect on employers. In such a tough hiring market, the need to recalibrate and refocus on employee engagement and retention is key, whilst the need to balance the books and ensure employees are compensated fairly are paramount. This is has made company-wide benefits packages more important than ever.

Sometimes it’s the small things that make all the difference

Financial rewards, such as salary hikes, tend to be the go-to solution for employee retention, but this may not be the best option for your bottom line right now. Having said that, managing inflation against travel and living costs is also a management challenge right now.

Some businesses have been working on a half-yearly one-off payment to support inflation hikes, but others have used this as an opportunity to look at their benefits through a different lens to assess where day-to-day costs are hitting employees hard.

A great example can be seen with one of our clients. They looked at the incremental impact of ‘small ticket’ items, such as coffee and took steps to support the increasing costs of getting a take-out coffee every day. For them, the solution was to invest in a state-of-the-art coffee machine. That way, employees were still getting their barista-made coffee experience, but for free.

Simply looking at the economics of coffee, research has shown that an average cup of coffee costs around £3.14, which totals around £63 per month. For our client, thinking a little differently and making that upfront investment has immediately saved their employees money.

As we always say, it doesn’t always have to be grand gestures. Sometimes, it’s about re-framing your thinking.

Training or re-skilling

Giving employees the chance to up or re-skill is moving further up the boardroom agenda. It’s also a great benefit for employee retention. In large organisations, we’re seeing the growth of internal talent marketplaces where employees can see the latest opportunities within the business and can then apply or re-skill accordingly.

Talent Marketplace strategies are helping large organisations manage skills shortages and break out of siloed thinking, which can easily be replicated in SMEs. There are so many ways to train these days that don’t have to break the budget, which can also take the form of mentoring or on-the-job training.

Wellbeing

Post-COVID we’re seeing more and more employers focus on wellbeing programmes, which are still very much relevant in this climate, especially when it comes to financial wellbeing.

This is an area where HR Tech is thriving. This is a very dynamic and fast-growing space, with a wealth of employee engagement platforms that focus on financial or insurance benefits, as well as mindfulness and emotional wellbeing. These include Headspace, YuLife and Perkbox, to name but a few!

Hybrid working

Although it most definitely has its pros and cons, hybrid working can be a financially sound option during this time. One of the downsides of a hybrid approach, however, is the potential impact it can have on on-the-job-training, especially for more junior employees.

On the flip side, the cost of commuting can also have a significant effect on monthly salary – as we said, it’s a mixed-up 2023! – which makes hybrid an attractive solution to ensure employees have some money in their pockets at the end of the month. For employers, there are operational cost-savings to be had here too.

Taking this approach would mean more focus and preparation for the days when people are in the office, especially amongst junior employees to ensure they are given time to engage and learn.

At Cajun, I work with a range of growing businesses to help them with exactly these problems and challenges. As an extension of your HR function, I can look at how to ensure employees are being compensated fairly for their work without always having to focus on salary hikes.

I know this a very challenging time for businesses and why HR expertise could well be the HR lifeline your business needs.

Want to chat? Why not get in touch.