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While the spiralling cost of living seems to be akin to a dog eating its own tail while spinning at 100 miles an hour at the moment, we are left with never-ending questions of how much responsibility a company should take on in terms of shouldering the burden for its own employees.

Protecting your workforce’s financial and emotional health

Businesses themselves are facing massive hikes in energy costs and the cost of supplies and raw materials. Balancing the financial health of an organisation with the financial health (and, additionally, the emotional health) of its workforce is going to be an increasing challenge as the 2022/23 winter of discontent unfolds with increasing inflation, energy, and interest rates.

Ultimately, companies cannot afford to react in a way that is over emotional – any proposals need to be thoroughly thought through. Every individual employee will have their own experience of dealing with the cost of living on a personal level and setting precedents to support those who may be in greater need could lead to inequalities and resentment in the long term.

Why salary benchmarking is important

In pursuit of a strategy that is going to benefit all with regards to the cost of living increases, we suggest that you step back and take an overall view going through a salary benchmarking process. This will give you valuable up-to-date information as to how you currently stand with your competitors, peer groups and industry sector partners.

Irrespective of where we are with regards to the cost of living (and it does seem to be changing almost daily at the moment), salary benchmarking will give a snapshot of your position in the marketplace as an employer.

Should we be obliged to implement a cost-of-living pay increase

Encouraging loyalty and retention

Weaving this into a structured pay review process, taking into account the pressures of inflation, will help you to set a strategy that is both achievable and fair whilst encouraging employee loyalty and retention.

Although it may seem above industry average pay increases will set you apart from your competitors, there are other strategies you can consider that are more sustainable for your business and still give your employees advantages to get through the leaner months. In fact, in a recent survey asking if organisations were considering paying a lump sum payment to address the cost of living crisis, 14 per cent confirmed said they were, whilst 24 per cent were considering it.

Thinking outside the box

There are, in fact, a number of additional perks and services that you can integrate into your workforce’s benefits bundle that can still be taken into account when going through the salary benchmark process, even though there is no specific cash value to it. By thinking outside the box, your organisation’s cost-of-living policy is founded on helping your workforce to grow in the long term and become more empowered over their own finances.

Some of these perks could include:

  • A series of workshops and seminars, and access to resources giving in-depth help and guidance around financial wellbeing.
  • Running a ‘Be Money Smart’ campaign, highlighting financial wellbeing tools and benefits.
  • Creating a discrete staff emergency or hardship fund.
  • Offering interest-free loans through the company.
  • Re-launching shopping discount schemes (such as Perkbox) and increasing communication to highlight potential savings on everyday items.
  • Re-instating occasional voluntary working from home to help employees who maybe live further away reduce fuel costs.
  • Re-inforcing the need for working healthily and looking after emotional wellbeing to help deal with the additional pressures imposed by the cost-of-living hikes through additional wellbeing resources.

These are unusual times

The last few years, probably since the initial lockdown in March of 2020, have thrown up no end of unexpected challenges for businesses, for which there has been minimal or no precedent in order to know how to respond.

While this may seem an initially bewildering position to be in – and certainly, many company owners have had to face some tough decisions – it has also been a time when creative thinking and the ability to pivot has unearthed previously undiscovered opportunities.

Don’t automatically fall into the trap of believing that a pay review strategy that supports the cost of living should automatically mean an increase in overall salaries. By taking a strategic and long-term approach based on effective salary benchmarking, and the implementation of high-value, low-cost employee benefits, an organisation can help to ease the burden on its workforce without adding to the burden on itself.

If you are interested in finding out how Paydata can help you implement a salary benchmarking process in line with your pay review strategy, submit our contact form, and we will call you back at a time convenient to you.

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