This week is Talk Money Week, an annual campaign to get the nation talking about money. There’s no getting away from the fact that this year’s event has taken on a unique significance: from the ongoing cost of living crisis, soaring energy bills and the ongoing threat of recession, more and more of us are finding our finances strained like never before.
Talk Money Week is more important than ever in light of this ongoing crisis. Financial worries are a deeply personal thing and this means that the natural tendency for many of us is to keep the stress and worry that comes with money struggles to ourselves.
From the perspective of HR and business leaders, this poses a particular problem as naturally, if nobody talks about how financial woes are impacting them, the more difficult it is to create policy and procedure to help.
This year, more than ever, organisations across all sectors should embrace Talk Money Week as a way of removing the stigma around talking about financial struggles and to take their first steps towards meaningful action.
At Advanced, we believe one of the key foundations of supporting your employee’s financial wellbeing begins with your benefits and rewards schemes. We wanted to take the time to see how those structures can evolve to meet the challenges of the ongoing cost of living crisis.
The importance of benefits and rewards
There is increasing evidence of the growing importance to have a clear structure around employee benefits and rewards in place within your organisation - a survey by Aviva found that 48% of people stated a desire for some form of wellness benefit when assessing an organisation.
Emerging into a post pandemic world, many people’s priorities will have shifted to place a greater emphasis on work-life balance and wellbeing. Your employee benefits structure is the perfect opportunity to demonstrate your organisation’s commitment to meeting these ideals.
Having a well embedded and widely communicated policy of employee rewards and benefits is one of the most vital tools in your arsenal for helping your employees remain engaged, motivated and ultimately, more inclined to stay with your organisation long term.
It is also important to understand the need for benefits packages and reward structures to not remain static and to appreciate how the priorities of your people may have shifted over the past couple of years.
Research shows that a demand for wellness allowances are foremost in employee’s minds with a focus on reward schemes that support mental and physical wellbeing such as gym memberships and mindfulness courses. 41% of people surveyed stated that wellbeing is a priority for them when determining the suitability of a workplace, ranking it evenly with salary. This is an important consideration for organisations, many of whom may operate under the assumption that financial incentives and rewards trump all.
Rethinking your rewards schemes.
Taking stock of the biggest challenges facing your people will offer the best foundation for restructuring your rewards programmes. Utilities are skyrocketing in price and it is likely that the hikes in energy bills represent one of the biggest outlays for your people and this suggests support will be most needed in helping soften the blow in this area.
Businesses have already begun to take steps to support their people, with many actively paying the energy bills on behalf of their employees or offering a substantial stipend to alleviate rising costs.
Rising inflation has compounded the strain on the finances of many organisations. From a rewards and benefit perspective, this means that resources can be greatly constrained, offering little scope to reward your people in the traditional financial means.
The cost of living crisis has hammered home the importance of creative thinking with rewards and benefits schemes and ensuring that you are taking a holistic approach to rewarding your people- one which reflects the current challenges facing them.
One of the chief responsibilities for businesses when focusing their rewards schemes will be to ensure they are communicating the support and opportunities available to their people effectively.
Your HR and payroll teams will have a huge role to play in ensuring effective communication is pushed out to your employees, as well as acting as more personal touchstones for employees who may be feeling self-conscious about financial struggles.
Concrete Steps you can take to support your Employees Financial Wellbeing
So what steps can you begin to take to begin crafting a policy of benefits and reward which not only reflects the challenges facing your people with the cost of living crisis but also helps ensure business continuity at a time of constrained finances?
Publish a financial wellbeing policy.
With the cost of living crisis an ongoing threat for employees across all sectors, it is absolutely beneficial for organisations to be as clear as possible from the outset with regards to their intent to safeguard and support their people.
A large part of this will be publishing a financial wellbeing policy. This can be a manifesto outlying a statement of intent from the organisation, setting out prospective measures they will take to support their people throughout the cost of living crisis.
It can also serve as the perfect way to help outline to your people exactly how they can maximise their earnings. This could mean raising awareness of third party organisations which can render further support or even just offering clear pathways for career advancement and a bigger pay packet.
Cost neutral solutions
The assumption is that for most organisations, you’d probably love to be able to wave a magic wand and unlock hitherto undiscovered cash flows with which you could reward your people throughout the cost of living crisis.
The reality of the matter however, is that the global movements which have contributed to the cost of living crisis are also linked directly with downturn of economic and business growth. This means that for many organisations, being able to reward their people in traditional, financial ways, simply isn’t viable.
This means that organisations across all sectors need to be agile and creative in assessing their rewards structures and thinking about ways to reward their people which not only remains appropriate and in tune with the struggles posed by the cost of living crisis but also agile enough to meet evolving challenges.
Greater workplace flexibility
As the cost of living crisis makes its presence known for more and more people, there is a sense that flexible working models have a further evolution to make, one where they pivot to becoming one of the most effective ways for organisations to safeguard the financial wellbeing of their people.
With the budgets of many organisations stretched thin, particularly after the prolonged disruption introduced by the pandemic, businesses are having to get creative in their thinking when it comes to rewarding their people. There may be very little scope for businesses to increase wages during these times so how can they effectively support their people as living costs increase?
Removing the need to be tied to an office location actually offers an unprecedented opportunity to help safeguard financial wellbeing. By having an effective remote setup in place, businesses can do away with the need for a costly daily commute for their people, which in the context of rising fuel costs in the UK, will go a long way towards softening the blow for many.
It also helps focus the efforts of businesses when it comes to structuring their own rewards schemes. Many organisations offer company cars or other travel stipends which can be deprioritised with the introduction of remote working models.
Childcare costs can also be greatly mitigated through a flexible working model as employees can choose to balance their working schedule in a way which allows them to handle childcare responsibilities without accruing extra costs.
Pay on demand
A cornerstone of emerging reward schemes, particularly in light of freezes on wages, will be the ability to offer flexibility in how you pay your people.
Pay on demand is a form of employee payment method which allows people to receive wages as they earn them. Rather than being tied to the traditional model of weekly, fortnightly or monthly pay, Pay on demand allows employees the ability to have their wages “streamed” to them as and when they work shifts- avoiding long stretches of time between pay periods where money might be tight.
Another element of pay on demand is allowing workers the possibility to have their wages still tied into a rigid cycle but to also offer them the flexibility to draw down early, a portion of their salary in order to help cover emergency expenses or simply to cover a period of unusual spend (such as Christmas time or an MOT period for a vehicle.)
As a service, the flexibility offered by Pay on demand often means it is associated with lower paid, shift pattern work such as within the manufacturing and distribution sector. Whilst there are undeniable benefits in being able to instantaneously incentivise overtime within these industries, there is an increasing indication that all sectors, regardless of their makeup, are looking to explore how introducing an element of flexibility into their pay cycle can help transform their organisations.
Internal mobility
This may not be the most obvious element of the cost of living crisis but a key reason which spurs people on to leave their place of work is a perceived lack of opportunities for advancement and the pay increases which promotions offer. Nobody likes feeling stuck in a rut and without a clear sense of a framework for progressio; it’s understandable that your employees will inevitably get itchy feet.
With finances stretched tight and little scope for increased salaries available, businesses need to consider how offering opportunities for growth and development can benefit both themselves and their employees.
Employees who have an understanding of their opportunities for advancement will undoubtedly feel more engaged with their workplaces and more inclined to stay. There is a strong appetite from employees to earn more and therefore it is vital that your people teams are communicating with your workforce and making them aware of just how they can advance their careers internally.
Internal mobility also offers a lifeline for businesses who may be feeling the impact of these leaner times. Promoting internally can offer a significant saving both in terms of time and money, compared with advertising to the wider market. There is also an argument to be made that retention rates from these promotions are higher than new hires as it is easier to get a measure of an existing employee than an external candidate.
What’s next?
This year, Talk Money Week is more important than ever. In order to effectively support their people through the cost of living crisis, organisations need to be confident in driving forward conversation around financial wellbeing and getting to grip with the challenges facing their employees. At a time when finances are constrained and traditional benefits packages may be less viable, businesses will need to get creative in their thinking when it comes to rewarding their people.
Fortunately, the measures businesses have begun to implement over the past few years, such as flexible working models, appear to offer the ideal platform to create a new way of rewarding your people for a job well done.
If you’d like to discover more about how to navigate through the cost of living crisis, our latest guide is focused on the cost of living crisis and in particularly, why HR and finance teams within organisations simply cannot afford to ignore the scope of the crisis.
Or alternatively, why not visit our cost of living hub where we have lots of resources for you and your organisation to use.