The long-term effect of low pay – and how to mitigate its effects in your reward strategy

Fortunately, the provision of employee benefits can also encourage employees. They are often cheaper and thus, more viable, than an increase in pay. Here, we explain the long-term effects of low pay and how these can be mitigated in your reward strategy.

What are the main long-term effects of low pay?

• Reduced business attraction and retention: when employees and potential new recruits feel that they can receive better compensation from other businesses, it can be difficult to attract and retain employees.
• Reduced employee wellbeing: when employees are worried about their finances, their financial wellbeing will be severely impacted, which can cause many other health-related issues.
• Reduced employee engagement and productivity: financial concerns can impact productivity, as employees feel less engaged with their workplace. In fact, Gallup’s State of the Global Workforce (2017), found that disengaged employees are 45% less productive.

Employers can take steps to mitigate the long-term effects of low pay through the employee benefits package. Here are three ideas to get you started.

Personalised rewards

The provision of personalised employee benefits can increase engagement and productivity at work. Data about what benefits your employees want can be gathered through online platforms, which can help determine what rewards work best within your organisation. It allows businesses to get the best value for their budget, while driving higher productivity.

Offer employee savings

Salary sacrifice benefits, such as car leasing or cycle to work schemes, can save your employees money by bridging the gap in pay. These schemes allow employees access to new bicycles or cars in return for part of their salary each month. As these schemes are funded through salary sacrifice, both employees and businesses make savings with reduced tax and National Insurance contributions.

You can also provide your employees with savings by offering exclusive discount schemes, which make salaries go further. Through these benefit schemes, employees gain access to vouchers for various retail stores, travel outlets and restaurants.

Wellbeing benefits

Within your reward strategy, you can mitigate the effects of reduced financial wellbeing through the provision of employee benefits, such as employee assistance programmes and fairer finance schemes. These benefits provide your employees with information, support and knowledge to increase their financial wellbeing and reduce the long-term effects of low pay.

Ensuring your employees feel appreciated, engaged and happy at work is vital to increasing attraction and retention. However, even if pay rises are unavailable, these aims can still be achieved through personalised strategies, salary sacrifice schemes and specific employee benefits that focus on financial wellbeing.

Reward professionals must work out how to make budgets stretch as far as possible, while making sure the needs of all employees are being looked after and the benefits on offer are accessible.

This article is provided by Busy Bees Benefits.