Professor Anthony Klotz, a psychologist, and tutor at the Texas A&M University, was the first person to coin the term ‘The Great Resignation’, describing how the pandemic and current monetary hardships have made people reassess their lives and priorities, in particularly their finances and their careers. Record numbers of people are leaving their jobs since the pandemic. Resignation rates are highest in the healthcare and technology industries but are affecting employers right across the board. Professor Klotz expects the great resignation trend to continue at this high rate for at least a few more years, as people will continue to evaluate the importance of a healthy work/life balance.
Salaries v Inflation
Almost half of SMEs have not raised wages in line with inflation. The UK’s cost of living crisis is continuing to deepen, and a new survey shows that many employers have taken care of their own organisational needs relating to inflation but have not helped their employees with the same.
While the majority have ramped up their prices, few have increased salaries in-line with inflation. A recent study by NerdWallet found that of 402 UK small and medium enterprises, 57% of businesses raised the price of their goods in-line with inflation, but 46% of decision makers acknowledged they had not raised salaries by the same amount. As a direct result, employers are now seeing that it is becoming difficult to attract and retain talent. Around three-quarters of UK SMEs said they were finding it hard to retain staff, and 25% said this poses a major threat to their organisation. Many admitted to now struggling to acquire new staff, and 26% said this was a major problem also.
The salary expectation gap
As the cost of living continues to rise and is unlikely to slow down anytime soon. Employees who do want to stay in their current role are asking for pay rises. There’s no doubt that employers should expect and prepare for some challenging salary discussions.
For employers in organisations of all different sizes, who are keen to protect engagement and reduce turnover, it’s best to communicate sensitively with employees about salary increases. As budgets are tight for many employers, it’s important to carefully manage salary expectations as part of a robust retention and engagement strategy. Understandably in this current situation of rising prices, many skilled professionals are dissatisfied with their current salary. Employers should have honest and transparent conversations with employees about the organisation’s salary policy and try to build understanding with their staff by contextualising grounds for the salary increases they do set. If organisations take time to consult with employees about performance, budget, and the wider economic climate, then employees are more likely to accept their salary, as they will understand the context behind it.
Attractive employment benefits
The salary increase on offer to employees can be more attractive if seen as just one element within an overall package. Offering additional benefits is a way to help close the salary expectation gap. Employers should look to emphasise the overall features of a remuneration package, and could include benefits such as:
A fair and attractive annual leave package
Flexible work practices such as flexitime hours and flexible work locations including working from home options
Commission where appropriate
Modernisation to employee support packages such as the implementation of a menopause policy
Payment of professional membership fees
A company car or car allowance
Shares in the business
Mental and physical health and well-being programmes
Ongoing learning & development, including training courses
Career progression opportunities
Employees may stay for the chance of a promotion. If an employer doesn’t have salary increases forecast for staff in their next review, it’s a good time to instead consider the career progression opportunities the organisation can offer employees. Developing employee’s talent can help manage the salary expectation gap, giving employees opportunities to learn new skills on the job. When a person feels they are both valued and invested-in by their employer, they will take this into consideration when weighing up their current role and salary against other opportunities in the job market.
Retaining valuable employees
It’s crucial that employers find a solution that benefits both parties. It may appear that employers and employees could be at odds regarding salaries throughout this cost-of-living crisis, but forward-thinking organisations can be prepared for this. Employers need to put in the work now, to raise their benefits packages in line with their staff’s worth to the business. Modernising benefits to attract, reward, and retain staff can really make an employer stand-out above the crowd.