The cost of living is increasing and looks to continue to do so.
Coupled with the 'Great Resignation', this is a hard time for businesses and employees alike.
Learn the cost of not giving employees a pay rise - but not the hard way.
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Benefits and employee experience have become increasingly important during the pandemic. However in a world where the cost of living is spiking at a record rate, capital does directly translate to the quality of an employee’s life.
In this climate, employers have begun offering pay rises at an increasing rate. In fact, CIPD, an association for human resource management professionals, found that 46% of employers with retention difficulties have raised the pay of their workforce in the last six months. Additionally 40% plan to raise pay in the future.
The CIPD quarterly Labor Market Outlook spoke to 1,000 employers in January 2022 about their hiring, pay, and redundancy intentions for the first quarter of the year. Interestingly, employers intend to increase wages by 3% on average over the course of 2022. This is the highest increase the CIPD has seen in a decade.
Commenting on the current situation for employers and employees alike, Jonathan Boys, labor market economist for the CIPD, said: “Even though businesses anticipate making record pay awards to their employees this year, most people are set to see their real wages fall against the backdrop of high inflation.”
“What is encouraging is that more employers are looking beyond pay increases to help attract and retain staff by providing more flexible working opportunities and investing in more training and development, as well as taking steps to support employee health and wellbeing.
“Together these practices can broaden the range of candidates employers can attract and may also reduce the need to recruit more staff, which should reduce wage inflation pressure to a degree.”
Employee experience company Winningtemp has also researched the need for increased wages. In response to the CIPD report, Cecilia Holmblad, head of marketing relations, commented: “In the face of such a tough job market, it is no surprise to see organizations planning record pay rises in 2022.
“As it becomes more and more difficult to recruit new employees, staff retention will be more important than ever. But nowadays, you can’t run a successful company without more than the pay.
“You also need to be prioritizing a healthy employee experience. In a world where money is no longer the driving factor for employees, the experience of being at a company has become an increasingly important area for organizations to focus on.”
Looking inward, Holmblad said: “At Winningtemp, our data shows that employee energy is down across most sectors.” To battle this, Holmblad encourages companies to give employees more autonomy.
Addressing wages
The likes of Apple have already begun increasing wages, with some retail staff seeing a bump of up to 10%.
Bloomberg reported that this was done in an attempt to improve staff retention. The company has also increased benefits for store workers. Workers will now receive more paid sick leave, and part-time staff will be able to take paid vacation.
Starbucks also took a similar measure at the end of 2021, when it announced that by the summer of 2022, it wants the average wage for a Starbucks employee will be just under $17, and wages for service staff to range from $15 to $23.
Discussing this decision, Kevin Johnson, Starbucks president and CEO said: “This is how we continue to build a great and enduring company. One that is committed to the ideal that doing good for one another – and for society – is good for business over the long-term.”
Not investing in staff or raising their wages amidst unprecedented increases in the cost of living could lead to negative immediate consequences for companies. This is particularly as almost half of companies intend to improve their offering.
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