The UK is heading into its annual review season and over half of employers (53%) report an increase in wages over the last year.
The findings of HR solutions provider SD Worx show that 44 percent employers are most concerned about rising wage pressure. This highlights a significant challenge for the UK workforce. The Office for National Statistics’ (ONS) latest data shows that the UK wage growth has slowed down to just 4.9 percent over the last three months.
The study shows that employers struggle to maintain financial transparency and promote financial well-being. 32 percent of companies find it hard to promote employee financial wellbeing, and 42 percent have problems managing pay transparency.
Shared financial pressures
The increasing wage pressure is a reflection of a shared financial burden, as employers struggle to retain and attract talent while employees are faced with rising living costs. In September, SD Worx released a study that found salary to be the main reason for employee dissatisfaction. Only 49 percent of UK employees feel their salary is fair and 52 percent believe it to be competitive.
The disconnect between what employees need and what employers can afford suggests that, while employers are aware of the financial pressures they face, there is still a large gap between their needs and those of their organisations. The challenge for employers is to find a balance between realistic compensation packages and the need to support their workforce in terms of cost-of-living.
Laura Miller, UK People Leader at SD Worx, said: “The research highlights that financial strain has a very real impact on businesses. The strain is also felt by employees, who feel ignored, underpaid or simply not in control over their own benefit package.
“However it is a good sign that employers are taking active steps to improve their communication about pay. It is important to have a transparent and empathetic communication strategy that can reach the entire company. These efforts should be consistent, strategic and personalised as much as possible.
Communication Challenges
Employee dissatisfaction is a result of a growing communication gap about pay packages. Some employers have tried to close the gap by having one-on-one discussions (32%) or through internal communications (22%), but these efforts seem to be ineffective, as many employees feel uninformed. Only 50 percent of respondents to SD Worx’s survey said they received enough information regarding their pay. And only 25 percent reported having the freedom to customize their reward packages according to their personal preferences.
There is an effort among employers to close this gap. Nearly two thirds (65,7%) of companies are investing more in reward communications in the near term. For 38 percent of them, it is a long-term priority.
A good combination of financial and nonfinancial perks can really boost employee satisfaction and wellbeing. Miller said that even the most generous benefits are worthless if employees don’t understand their value, or feel they don’t align with their career or personal goals. “That’s the reason employers must align their benefits with what employees value and give them a say in the decision-making processes. This builds trust and understanding, as well as a desire to remain with the company for the long term.
