A quick summary:
- Economic recession definition 🔎
- Is the UK heading for a recession? 📉
- Employee engagement during a recession 📊
- Advantages of fringe benefits ✅
Economic recession - a word that haunts countries, global leaders, businesses, consumers, and everything else in between. It’s a time of decline across the board, and one that marks the near future of struggle and hurdles that we all must climb.
As inflation rises to a shocking 9% in April (the highest for more than 40 years), it seems nearly everyone is feeling the pinch and wondering “is the UK heading for a recession?”.
Things like food, energy bills and transport costs have increased substantially in price. And on the corporate front, businesses in most industries are seeing their margins spiral to levels seen at the peak of COVID-19.
While the world attempts to get back to its feet financially in 2022, setbacks are beginning to appear. Now, leaders must evaluate their next move with caution. They must consider everything from employee benefits, financial wellbeing in the workplace and most importantly employee retention.
If you’re wondering if the UK is in a recession, or if we’re heading for one, let this be a vital read today! We’ve covered all bases leaders must think about when it comes to supporting staff.
Before we jump in, why not check out our employee financial wellbeing guide - a deep dive into why your team’s health and happiness aren’t for sale!
Economic recession definition 🔎
Every great guide or resource starts with an informative definition. Well, the economic recession isn’t an easy subject to understand. To give you, as a reader and leader, the best possible grasp going into the rest of our guide, we’re going to uncover the economic recession definition.
The economic recession definition, according to Wikipedia, refers to the business cycle in which widespread spending drops significantly. This results in less economic activity across the nation and is often the result of some financial crisis or event.
According to Forbes, the economic recession definition suggests a time when people buy less, lose work, and companies make fewer sales. Essentially, a country’s overall economic output declines.
What causes an economic recession? ❌
- Excessive national debt
- Technological shifts in the economy (job redundancies)
- A sudden financial crisis or economic shock
- Unmanageable inflation rates
Now that we’ve covered the economic recession definition, let’s take a closer look at whether the UK is heading for a recession in 2022. What can the figures really reveal about the near future?
Is the UK heading for a recession? 📉
So, the big question you may be wondering is, is the UK heading for a recession? While we cannot say for certain whether or not the UK is heading towards a recession, the safest answer appears to be that we are.
In the UK, energy bills have become the driving force of the economic recession. Both oil and gas are higher than they should be, partly due to the Ukraine invasion. As the price cap was lifted last month, average gas and electricity prices rose from 53.5% to 95.5% - an unmanageable climb in price difference.
But it isn’t just gas and electricity, and nor is it just the UK, with things like global food costs climbing beyond 6.5% last month alone. Outside of the basics, the UK public is seeing things like raw materials, restaurant prices and general household goods increasing in price.
This poses a threat to already strained consumers, who will need to cut back even further on spending habits - choosing from essential to essential. And as we know, the rising inflation cripples the cost of living, inflicting another crisis for millions of people.
For example, a buzzword that has swamped the news in recent years is “eat or heat”, with a lot of people now struggling to choose from one or the other. Energy Saving Trust suggests this affects around 4 million households.
During any economic recession, leaders must be prepared to support employees through the most challenging of times. Let’s next take a closer look at employee engagement during a recession, and what red flags leaders keep an eye on.
Similar read: 5 Signs employees are unhappy at work
Employee engagement during a recession
Employee engagement, recession or not, is the key to a successful team - and executives know this! According to Haiilo, 71% of executives say that employee engagement is critical to company success. That’s not all, companies with highly engaged employees are 21% more profitable.
Ultimately, employee engagement matters. Yet, as you can imagine, maintaining employee engagement during a recession isn’t always an easy task.
During a financial crisis or economic downturn, people are often burdened with uncertainty; uncertainty around their financial future. And we’ve learnt time and time again, that employees can drain their energy and performance levels worrying about finances.
Because of this, leaders should anticipate low employee morale and engagement. But what exactly are some of the telltale signs of low employee engagement during a recession?
Their job performance has suffered
In most scenarios where our emotional state isn’t where it should be, our performance can drop substantially. The truth is, however, it’s never necessarily a dislike for the task, or the intention to do and achieve less.
For most, our performance suffers as a result of a personal event, or crisis. And in the case of a recession, it’s likely a financial worry that has flooded an employee's headspace.
An “Us against them” workplace mentality
As the cost of living crisis further divides the nation, a lot of employees are left feeling like they aren’t properly valued or compensated for their work. And with no sign of wage increases, this can bring on an array of negative feelings toward leadership teams for many employees.
The financial strain of wages can reach boiling point, and while most employees don’t have the intention of leaving their roles, it can spur on feelings of resentment. This cost of living crisis, therefore, can sometimes drive an “us vs them” mentality towards the workplace, as seen in things like protests and strikes.
Poor communication between employees and managers
A surprisingly large percentage of issues in the workplace can be resolved when certain attributes are apparent:
- Open communication is established
- Honesty about mental health and wellbeing
- Trust is built among employees and managers
- Leaders actively listen and try to help
In many work environments around the globe, employee engagement is hindered by a lack of quality communication between employees. When we suffocate problems within and don’t open up to friends, colleagues or managers, issues only grow more damaging.
If you want to build better employee engagement during a recession, it’s important to actively listen, and then go about finding solutions. It is the role of an employer to ensure people are in the right frame of mind to work to their best potential.
An economic recession is very clearly not an ideal circumstance for employees to work at their best. Understanding the consequences of an economic recession on your employees is vital. Be empathetic and understanding - your employees may all be in a different positions financially and emotionally.
Other signs of low employee engagement during a recession:
- High absenteeism and presenteeism in your workplace
- Employees falling behind and missing deadlines
- Avoiding team-building and social gatherings
- A “good enough” approach to work ethic and quality
- Disengaged with company growth or achievements
Remember: just because these signs do pose a negative threat to the business, it doesn’t mean employers should shoot down staff. Instead, it’s better to work with employees and help them rebuild engagement levels - regardless of an economic recession.
So, how can leaders exactly support employees during an economic recession, exactly? Below, we’ve explored the advantages of fringe benefits; looking at exactly what a fringe benefit is, and why it’s a sensible option for employees in the thick of an economic recession.
Advantages of fringe benefits
Finally, what can fringe benefits do for your employees during an economic recession? How can leaders provide a robust wellbeing plan, a rewards system or a benefits package, despite economic turmoil?
Let’s begin with a simple definition of fringe benefits; according to Investopedia, fringe benefits are benefits given to employees in addition to compensation. Some fringe benefits are available to all employees, and others to a select few (think executives and senior employees).
Fringe benefits, like any other means of rewarding employees, are designed to motivate, inspire and build value in employees. It works, and it works well. Depending on the budget available, some businesses can provide everything from onsite gym facilities to campus clinics and sleeping pods. However, these kinds of fringe benefits are reserved for the giants in business.
That said, fringe benefits also don’t need to break the bank, and everything that’s added to the reason for working for an employer (that is also non-financial) is a fringe benefit.
So, the advantages of fringe benefits are clear, especially during an economic recession. Firstly, non-financial benefits don’t necessarily cost the business, as much as say a wage increase or tuition reimbursement. Yes, they’re not necessarily free of charge, but they also don’t cost an arm and a leg - because what business owner wants to lose those during a recession!
Now, let’s dig a little deeper into the advantages of fringe benefits for both employers and employees.
Similar read: The ultimate guide to employee benefits
The advantages of fringe benefits for employers
Firstly, why should employers care about fringe benefits? What exactly are the advantages of fringe benefits from a corporate perspective? Because believe it or not, this approach of incentives and rewards can be beneficial for everyone!
Improve employee retention (especially important during an economic recession)
Employee retention is the ability with which a business can retain its employees. It goes without saying, that a business without employees, is no business at all. Only by retaining the very best of talent can businesses grow and prosper. This is something every great business owner understands.
It’s also a worthy mention when looking at why fringe benefits are the answer for businesses during a recession. In financially difficult times, a lot of employees will look elsewhere for work. Not necessarily because they want to, but the rising costs of living may force them to.
Because of this, businesses should see the advantages of fringe benefits, and provide a range of (non-financial), support and education benefits, as a way to combat a drop in engagement and retention.
Don’t forget: Download our onboarding guide! ✅
Acquiring the very best of talent during a recession
It can get very hard trying to retain your best talent, but even harder to acquire more talented employees. In an economic recession, jumping ship and finding a new job can be extremely difficult. Unless required, many people aren’t actively looking for work. That said, if you’re looking for fresh talent, this poses a threat to your company.
Progress can only be made when you hire the right people - it’s a no brainer. Yet, if you are constantly losing out due to a lack of available talent, it’s going to hit hard. This is another way to make the most of fringe benefits. Non-financial benefits not only ensure your employees stay, but they can convince potential new joiners.
Look for a versatile list of fringe benefits, and ensure your job advertisements and website showcases all the great benefits you offer. This may be yoga classes, early finishes, longer lunch breaks, mentoring, stocks and shares and much more.
Revolutionise the employee experience at a highly disengaged time
Finally, let’s look at the employee experience. In a time of uncertainty, and low employee engagement during a recession, it’s important leaders get the employee experience (EX) right.
As we’ve talked about above, employee engagement is one of your company’s best opportunities to build profitable businesses and successful teams. Without employee engagement, work ethic, employee performance and the overall business performance drops.
Highly disengaged employees in a recession are rife, but an employee experience using great fringe benefits can solidify great engagement through the thick and thin.
Ultimately, fringe benefits enable an employer to support their workforce, without costing the business thousands of pounds.
The advantages of fringe benefits for employees
It isn’t just employers who can reap the advantages of fringe benefits. Below, we’ve explored three ways in which employees can make the most of fringe benefits during an economic recession.
Supports employee lifestyles, hobbies and goals
When we think about recessions, we see a lot of cutting back on the little things in life we enjoy. This generally applies to everyone, as many of us seek out more affordable alternatives to things like health memberships, retail therapy, means of travel and much more.
By offering a diverse range of fringe benefits, employees are able to sustain certain lifestyle choices, without the cutbacks and upset. For instance, gym memberships don’t come without a cost, but by offering subsidised memberships through your fringe benefits plan, your employees can stay fit and healthy - and likely happier not to lose their gym access!
Makes life a little more affordable
Closely following supporting employee lifestyles, fringe benefits also make general life more affordable. Whether it’s subsidised healthcare or high-street vouchers or work equipment budgets, we all require new purchases from time to time.
A wide-ranging fringe benefits package makes it easier for employees to obtain the things they need in life. This is especially true when it comes to things like dental care and health insurance.
Makes work more enjoyable for employees
Finally, not only do fringe benefits support employee lifestyles and make things much more affordable, but it creates a lot of satisfaction and enjoyment for employees! In most cases, employees must respect and value their employer, workplace and role to really perform at their best.
When we, as employees, are provided with a great range of fringe benefits, it can boost all things, including wellbeing, health, happiness and job satisfaction.
Ultimately, better fringe benefits mean happier employees, and that is exactly what all leaders want from their teams. We all want to enjoy work and be satisfied in our role, and fringe benefits can help achieve that.
Using Heka to support employees in a recession
Our employee wellbeing platform supports every employee in the workplace. Through more than a thousand wellbeing experiences, your team can really take control of their health and happiness.
Everything from life coaching, outdoor activities, language learning and more is available through our employee wellbeing platform. We take personal wellbeing seriously and understand a one-size-fits-all approach doesn’t work.