A quick summary:
- Benefits add more value than a pay rise
- Employee benefits encourage spending on things that would otherwise be cut
- The emotional strain of uncertainty during a recession
- Employees stick around when there are better opportunities
- Final thoughts on employee benefits during a recession
As a recession looms large for the UK economy, some employees are finding it increasingly difficult to stay afloat. The answer, you’ll be surprised to hear, isn’t a pay rise. In fact, employee benefits could be your retention, engagement and job satisfaction saviour all rolled into one.
With inflation soaring into double digits, questions are being asked in the workplace. Most notably, how do businesses attract and retain top talent moving forward? What support are employers able to provide employees with during hard times?
Asking these questions will help break down some of the fears and anxieties caused by the looming uncertainty. Now, it’s time for leaders to face the possibility of a recession head-on, and to help, we’re diving into the powerful potential of employee benefits.
Depending on how well your employee benefits are put together, employees could be much more convinced to stick around (through the thick and thin).
Take Heka users for example, they have access to more than three thousand wellbeing experiences, products and services. It might not be a pay rise technically, but means they can enjoy massages, spa days or gym sessions each month paid by their employer – allowing them to enjoy moments of happiness without worrying about the cost.. And if it fits their personal health and wellbeing needs, they are less likely to leave.
The role of employee benefits during a recession
Believe it or not, your employee benefits package has the ability to outshine a salary increase. A bold statement, we know, but let us explain…
Benefits add more value than a pay rise
If anything’s true, it’s that most pay rises simply increase our spending power. We are able to choose more expensive alternatives to everyday essentials or put additional cash aside for a rainy day.
But: it doesn’t always create financial stability, given the average salary increase in the UK is around 3 to 6 per cent. There’s often a misconception that more money will make us better off or provide us with the opportunity to create positive (healthy) change in our lives.
Some of us promise to sign up for the gym, others take on a new hobby like kayaking or bouldering. However, most of us inevitably spend more on the luxuries in life. Think fast food, meals out, or a new pair of shoes.
And if there’s anything these purchases have in common it's novelty. It’s only in the moment that we can enjoy making these purchases, and sooner or later the pay rise has run dry until next year.
Instead, leaders should turn to employee benefits. Businesses are able to, for example, strike deals with insurance companies and public transport providers to then offer to employees at a more affordable rate. A price that if purchased through a pay rise could have cost the employee much more.
Encourage spending on important things that may be cut
According to IDSMediaUK, 10.3 per cent of the UK population had an active gym membership in 2021. This equates to more than 15 per cent of the country’s population.
More interestingly, around 30 per cent of gym-goers are between the ages of 18 and 34. It’s clear that younger generations are driving the passion for healthier lifestyles in society – and it’s only a matter of time before workplace benefits must reflect this.
In 2017, millennials became the largest segment of the UK workforce, with older generations beginning to retire. This all points to one truth, modern-day employees - millennials and Gen Z - value health and wellbeing more than ever – but what does this mean for things like recessions and employee benefits?
To put it simply, a robust employee benefits package supports gym memberships, spa experiences and healthy lifestyles; ticking every box for both Gen Z and millennial workers.
During hardship, it’s important that leaders continue to boost morale and promote healthier, happier lifestyles. It can be so easy to slip into poor health and wellbeing, especially physically and mentally.
Access to things like life coaching, fitness classes and financial advice encourages employees to make positive changes in their lives. More so than a lump sum of cash may help them achieve.
Ultimately, it’s much easier to choose our favourite latte from the coffee shop near the office each day instead of healthy and nutritious meals.
The best employee benefits flip this choice completely, making it much easier for employees to prioritise health and wellbeing.
The emotional strain of uncertain times for employees
Less money, more problems. This is one of the major hurdles most people face during a recession. And although money doesn’t bring happiness, a lack of it often drives unhappiness.
It’s an employer’s moral duty to ensure employees are happy and feel supported with any problems in and outside the workplace. Unfortunately, financial matters remain taboo, and employees often do not come forward.
In a survey reported by HRZone, around 37 per cent of employees do not discuss their financial circumstances in an effort not to appear to be struggling. By bottling up emotions, we are more likely to increase the severity of poor mental health.
Uncertainty creates emotional turmoil for millions of people. Whether it’s the financial implications or the fear of the unknown, our mental health and wellbeing can be hindered by external factors.
Financial strain seeps into our careers, and thus creates greater stress, resulting in poor performance and productivity. Think back to a time when you were faced with an unrelated, distracting problem, all whilst trying to perform a task – it’s no easy feat.
Employee wellbeing platforms like Heka empower employees through access to some of the leading mental health support and therapy providers in the UK.
In difficult circumstances, it isn’t always easy to make the best decision. That often means that people make short-term decisions, and forego an expense that would benefit them in the long term, like a therapy session. With Heka, employees have access to support and guidance for things they wouldn’t have considered purchasing (given the financial pressure they may be under).
This could be as extreme as the inability to purchase financial support simply due to financial pressure – a prime example of where your employee benefits package (or Heka) steps in to help.
Employees are less likely to depart for better opportunities
Lastly, let’s discuss the idea of employees resigning. Given the economic circumstances in the UK, it should come as no surprise that employees are beginning to leave their jobs.
Unlike most cases where it’s due to poor management, lack of challenge, or lack of opportunity to progress, a recession makes it more likely that an employee leaves due to the financial difference a new job can make. This means even your happiest and most productive employees could be convinced to jump ship if the right opportunity arose.
For most organisations, losing a few of their best performers would have a bigger impact than the recession itself. Urgency calls for leaders to look at whatever levers can be pulled to keep your employees happy and engaged. Be it wellbeing and benefits, better holiday allowances, or even flexible working. Whatever it is, it’s likely that other employers are thinking about the same things. To avoid being left behind, it is time to take action.
It isn’t just employees who take a hit during a recession. Of course, an economic downturn sees businesses struggle to stay afloat. By losing employees due to poor employee benefits, it costs much more to attract, hire, onboard and train an entirely new member of the team.
According to CentricHR, it can cost on average around 6 to 9 months worth of salary to replace an employee. These costs just aren’t feasible for some businesses that face a recession.
For example, an employee of £45,000 per annum, could cost up to £22,896!
Final Thoughts on employee benefits during a recession
This guide to why employee benefits are even more important during a recession should be a sign for HR teams to take responsibility. It appears inflation shows no sign of slowing, and the possibility of a recession looms larger than ever.
As we enter the last quarter of 2022, businesses may be struck by poor performance, productivity and unhappy employees, and we could also see a war for the best talent like never before.
If your business hasn’t been hit with any major departures, this article should be a wake-up call to plan ahead for the near future. Here are a few questions to get the ball rolling on a plan of action:
- How can I prepare my business against financial losses involved in a recession?
- What kind of support can I offer to my employees to retain them longer?
- Does my existing benefits package include ample health and wellbeing perks?
- What is our retention rate, and what can I do to improve it in the coming months?
- Do my staff receive a competitive salary against industry standards?
Hopefully, now you can see the importance that employee benefits have during a recession. Why not speak to our wellbeing experts to find out more?