Over half of UK employers (53%) say that their wage costs have risen in the past 12 months. According to a new study by SD Worx, a leading European HR solution provider.
The research also shows that pay pressure is still prevalent in UK businesses, as nearly half (44%) list wage pressure as their top payroll challenge. This is despite ONS figures showing that total UK wage growth dropped to just 4.9 percent in the three-month period ending August.
The confidence of employers in communicating about money is also a concern. Businesses report challenges promoting financial well-being (32%) and managing transparency within their organisation (42%). The findings show that despite a record year for payroll, which saw significant changes in the National Minimum Wage both in the current and previous parliaments.
Shared Financial Pressure
Growing pressure on the cost of payroll highlights a bigger issue: While businesses are under increased financial stress to retain and attract talent, employees face their own cost of living realities.
According to a study released by SD Worx in September, the amount of money employees receive is the main reason for employee dissatisfaction. The study showed that only half (47%) of employees are satisfied with their pay. Only 49% believe that they receive a competitive salary in the labor market, and 52% think that they get paid fairly when compared to colleagues at the same level.
Overall, although workers are united in their concern about financial pressures, there is a significant disconnect between the amount of money they need to cover living expenses and the pay and benefits packages that employers can deliver.
The communication gap
Ineffective communication about pay packages leads to employee dissatisfaction and low engagement. Some employers have tried to address the issue by having one-on-one discussions (32%) or via official internal communication (22%), but these efforts may only reach a small portion of their employees. Only 50% of employees said they received enough communication about their salaries, and only 25% felt they had the freedom to tailor their reward packages according to their individual needs and interests.
Businesses are investing more in communication with their employees to address this problem and increase employee understanding of the benefits of rewards and pay packages. Sixty-seven percent (65,7%) of businesses plan to increase their budget and time to communicate rewards to employees in the near future. However, 38% of this figure will make long-term investment a priority.
Laura Miller, UK Country Leader for SD Worx commented on the results: “The study highlights the real impact financial strain has on businesses.” The strain is also felt by employees, who feel ignored, under-informed or simply not in control over their pay and benefits. It’s encouraging to see that employers are taking steps to improve their communication about pay. It is important to have a transparent and empathetic communication strategy that can reach the entire company. It is important to stress that these efforts should be consistent, strategic and as personalised as possible.
The combination of financial and non-financial perks can really boost employee satisfaction. Even the best benefits are worthless if employees don’t understand their value, or feel they aren’t in line with their career goals or interests. Employers must match benefits to what employees value and let them have a say in the decision making process. It builds trust and understanding, as well as a desire to remain with the company for the long term.
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