How to manage pay in times of economical turmoil
In the UK, many businesses are facing unique challenges caused by the rapid rise of inflation seen over the last year. Prices have risen by more than 10% in the last 12 months and although the rate of inflation is slowing, it remains high. But it’s not just inflation, there’s also a labour shortage which impacts how businesses are able to deliver their services, not to mention the continuing challenges from Covid-19, which caused production shortages.
As a result businesses around the UK are struggling to cater to pressure from employees and unions to raise salaries. HR and Reward professionals have no easy task as they need to counter inflation, retain employees and ensure the company can keep their margins up.
Pay is the main driver for staff turnover in the UK
We recently surveyed over 160 large organisations from various industries to understand the problems they’re experiencing and how they’re navigating current challenges caused by rising inflation levels.
We asked them to tell us and rank the reasons why employees are leaving.
Given the current economic environment, it’s not surprising that pay is the main driver for staff turnover.
What UK organisations plan to do to keep their people
Businesses in the UK are currently addressing inflation issues in several ways. We can group them into three categories:
1. 56% of organisations are considering (or have implemented) one-off payments. 17% have implemented one-off payments to address inflation pressures to help keep employees, with another 39% considering implementing them.
It’s also interesting to note that the majority of organisations already giving out bonuses are not considering enhancing them (70%).
2. 51% of organisations are considering (or have implemented) exceptional pay review. 15% are currently implementing a exceptional pay review, with another 36% considering doing so.
3. 67 % of organisations are considering (or have implemented) new core benefits. 22% have introduced new core employee benefits, with further 45% considering introducing these.
How to make better pay decisions in the middle of an inflation crisis?
One-off salary reports can only tell so much. During an inflation crisis, visibility is more critical than ever.
Reward professionals need to be able to get a real sense of the market so they can provide adequate direction for salaries internally. There are now tools available, such as our Pay Tracker Live, which provide in-the-moment pay market data. Only by having up-to-date visibility of current market conditions can employers make timely decisions to retain and attract the right staff for their business.
In partnership with HR DataHub
HR DataHub is your go to tool to make sure all your reward decisions are data backed.