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Between Brexit, the pandemic, soaring inflation and interest rates, and the rise in energy prices, trying to maintain a fair and equitable approach to salaries without compromising on the performance of the business has been a delicate balance to maintain. In this climate, companies also have to maintain their competitive edge. While the cost-of-living crisis is hitting their employees, it is also having a sometimes devastating effect on their own operating costs. However, with sufficient forethought and planning, outside-the-box thinking and salary benchmarks, companies can use this time to refocus on operational costs and put in place initiatives that both help their workforce navigate the cost-of-living and sharpen up operations for an improved competitive edge.

Understanding Salary Benchmarking

Benchmarking salaries in the UK involves the comparison of salaries across peer groups, industry sectors and the general marketplace. It is a highly valuable HR tool for both the recruitment of good talent and the retention of existing employees. Its role during a cost-of-living crisis is crucial when established alongside a number of different initiatives, such as additional perks, flexibility in commuting options and one-off payments. We will explore these in more depth later in this article.

How to Benchmark Salaries in the UK

Gathering and comparing salary data across the UK is a complex and constantly changing process that needs to be constantly updated, making it a cumbersome and imprecise exercise for most employers. While some information can be drawn from job search websites and conversations within the industry, this still risks being a finger-in-the-wind comparison, which might do more harm than good. For this reason, employers prefer to turn to salary benchmarking companies such as Paydata that specialise in keeping accurate, up-to-date HR salary benchmarking data for use across a range of different industry sectors, roles, and departments to help guide salary decisions. Within a cost-of-living crisis, this information takes on extra resonance due to the often unpredictable and unstable economy in which everyone is working. The manner in which companies respond to the challenges caused by soaring inflation and interest in their employees is indicative of their attractiveness as a working environment. While the ability to pay household bills becomes more stressful as an individual employee’s disposable income shrinks, how a company deals with that stress is important. Salary is a crucial aspect of an employee’s sense of self-worth, but if salary benchmarks indicate that current levels are competitive, it does not make commercial sense to raise them further. Alternative options can then be put into place to ensure that individual employee’s distress is recognised and a solution put in place to protect them.

Alternative Ways of Supporting Staff During a Cost-of-living Crisis

We have outlined a number of different ways in which you can support your staff alongside salary considerations.

  • Subscribe to an employee perks scheme: There are a wide range of different employee perks schemes on the market that offer discounts on shopping, products, trips out and other essentials. Such schemes can add up to significant savings if used sufficiently. Many also have additional services, such as access to private medical care and dentists.
  • There are also similar schemes that can offer free financial and legal advice to help people get a better handle on their household budgets, including debt management.
  • Establish a hardship fund: you may want to establish a hardship fund that can allocate payments to individual employees who have fallen on particularly hard times or are going through unexpected challenges.
  • A lump sum payment to all employees will go a long way to keeping your workforce happy and even be a lifeline for many. In the autumn of 2022, many companies announced such payments for their employees, including Amazon (£500), Hastings Direct (£500), Co-op Bank (£1000), HSBC (£1500) and Virgin Money (£1000). Even King Charles III got in on the act with a £600 one-off cost-of-living payment to his staff.
  • For office-based staff, you might want to offer greater flexibility in terms of home-working, enabling them to cut back on commuting costs.
  • Encourage the pursuit of community activities, such as donating to food banks or homeless shelters. Often, giving people the time and space to give back to society during more challenging times helps to raise overall self-esteem and wellbeing. No matter how hard things get, when people pull together for the common good, it can lift the spirits.

Salary Benchmarking Tool Uk

Paydata has been refining its salary benchmarking tool for the UK for over twenty years, working with different industry sectors the length and breadth of the country to ensure a consistent and continuous bank of relevant data. If you are keen to work more closely with Paydata and understand salary levels in your industry, contact us for more information.

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