24 Aug 2018

Five ways to help employees make their pay go further

In 2010, there was a major change in the competitive cycling world, team Sky was launched and headed up with the appointment of Dave Brailsford as the new General Manager and Performance Director. Brailsford had a simple task – build a team that would win the Tour De France with a British rider within five years.

At that point no British cycling team, let alone British rider, had ever won the Tour de France and it was Brailsford’s job to radically overhaul the team’s approach and change history. No small task.

Brailsford believed in a concept which he referred to as the “aggregation of marginal gains”. He explained it as “the one per cent margin for improvement in everything you do”. Put simply, if you improve every area related to cycling by just one per cent, then those small gains would add up to remarkable improvements and results over time.

In 2012, Team Sky rider (the now Sir) Bradley Wiggins became the first British cyclist to win the Tour de France. That same year, Brailsford coached the British cycling team at the London 2012 Olympic Games. The team dominated the competition by winning 70 per cent of the gold medals available.

2013 brought more success with Team Sky winning the Tour de France with rider Chris Froome. Many have referred to the British cycling feats in the Olympics and the Tour de France as the most successful run in modern cycling history, and still it continues with three further wins for Froome and another first this July by Geraint Thomas. Mission accomplished Sir Brailsford.

When it comes to our pay and finances employees should adopt a similar strategy of looking for all the marginal gains or areas of improvement with our spending. A little goes a long way, for example saving just £2.50 per day on that morning coffee or £50 per month, can mean £55,000 more into your pension pot if you are currently age 25. How else might employers encourage employees to make those earnings go a little further?

Max ‘Power’ employer pension contributions

Want an immediate pay rise? Employees should be encouraged to check they are getting the maximum pension matching. For example, many employers will default to a contribution such as the employee pays three per cent of salary and the employer will match three per cent. What often gets lost in communication is that if they were to increase to six per cent the employer would also increase to six per cent. Employees should check what their options are or, if they have access to a digital adviser, make sure they use it as this will be highlighted.

‘Pedal’ (peddle) the high street wares – discount cards and employee offers

Engagement in voluntary reward programmes remains depressingly low. Given that many of these services offer discounts on high street retailers such as Sainsburys and Tesco of up to 10 per cent these are great ways to make pay go further. For ‘cash back’ sites, instead of using any money saved to load cards for extravagant purchases like restaurants or new tech, employees could be encouraged to transfer balances into an ISA or pension where tax rebates will make the money go even further.

‘Gear up’ to financial advice

Royal London’s the value of financial advice (2017) report found that advised individuals are on average £41,570 better off than those who aren’t advised. Digital financial advice is increasingly becoming a valued employee benefit and is delivered at a fraction of the cost of traditional face-to-face advice. Advice can help employees optimise spending, ensuring any pay that employees are receiving is invested in the correct place and any tax advantages are used to boost savings.

Sprint for home – analyse household expenses

The average person could save more than £1,000 per year by ensuring they have the best packages for their household bills. Research by Ofcom and the Citizens Advice Bureau shows that re-broking your mortgage could save you £400 per year, energy bills £290 and your mobile £132. Usually, all it takes to do this is a quick call to your provider. Broadband, banking, motor and home insurance are also big culprits when it comes to taking more of employees’ take home pay than needed. Introducing financial education can be a good way of informing employees of the potential savings they could be making.

Exercise

In the US average savings for people getting enough exercise versus not getting enough exercise totalled $2,500 (£1,960).

“The message to the patient is clear: there is no better pill in reducing the risk of disease and healthcare costs than optimising physical activity,” said Dr. Khurram Nasir, senior author and director of the Centre for Healthcare Advancement & Outcomes in South Florida.

In the UK, we benefit from free healthcare, however, the same health benefits can ensure employees turn up to work more relaxed, productive and need less time off work, which will only have a positive impact on long-term performance and pay.

These five simple ways to make employees’ pay go further should not come as a surprise. What will remain a challenge is how we change employee behaviour and actually take the positive steps to encourage them to adopt some of these habits. Like Brailsford, don’t try and boil the ocean in one go, start small and just do something that improves their life by one per cent, it will quickly lead to amazing long term changes.

This article was provided by Wealth Wizards.