Faced with the challenges of rising inflation, rising interest rates and buoyant labour market, many employers are finding it difficult to attract and retain the right employees for their business.
The Consumer Prices Index with Housing index stood at 7.8% in April, a slight drop from the previous month, but food and non-alcoholic prices rose 19.1% over the previous year. Meanwhile, the Bank of England’s base rate of 4.5% is at a 15-year high.
These challenges are driving employees to leave their employer, with two in five thinking about changing jobs.
Our Mercer Inside Employees' Minds survey showed that lower income employees who earn less than £40,000 may be likely to leave their current employer as 69% of them cut their spending due to high inflation. Higher income earners have also reduced their expenditure in response to the challenges, by 58% on average.
There are real challenges around keeping and attracting junior employees in the business amid the war on talent.
Insufficient pay, burnout due to a demanding workload, and relationships with their boss or colleagues are the top three reasons for people wanting to move jobs.
So how can SMEs engage employees and make sure that they do not leave to a competitor, while keeping a lid on costs? Firms are under a lot of cost pressure at a time when recruitment is very expensive, and paying high salaries alone does not help gain loyalty from employees. A loyal employee is someone who feels genuinely valued at what they do and has a genuine interest in achieving the company's goals.
Setting the right culture
Key to this is setting the right culture in the business in the first place and keeping your employees engaged.
More than three-quarters of UK adults would consider a company’s culture before applying for a job, while 56% think it is more important than salary when it comes to job satisfaction, according to research by Glassdoor.1 More than 60% say their company’s culture is a key reason for staying in their job.
At Mercer Marsh Benefits, we think it is worth thinking about what really drives your culture and how it’s key to getting the right talent within your business in the first place.
So, how do you set the right culture in your business to get your employees to stay and feel engaged, and how do you prevent the more junior employees from leaving? If you really need talent but cannot afford to compete with the market in terms of the escalating costs of buying that talent in, there is another way.
For example, you could consider what makes employees feel wanted and engaged so they feel that you are genuinely looking after their best interests.
If you bring people into the company at ground level and engage them and they feel valued, you can develop them through the business. That is often cheaper for businesses than buying talent from elsewhere which is more expensive because you may have to pay higher salaries than what they’re receiving.
How to attract and retain talent
When you're looking to attract talent , retain employees and set the right culture, there are several ways to differentiate from your competitors. One way to improve your culture is to review your current employee benefits package to see what else you could be offering employees, and it doesn’t have to cost the earth.
Mercer Marsh Benefits offers a free, no-obligation audit of your benefits offering.
There are many benefits options to consider such as salary exchange or salary sacrifice where an employee gives up part of their basic earnings in return for a non-cash benefit such as childcare subsidy or buying an electric car. This also helps employers cut their own National Insurance costs.
Employers can help workers access the best mortgage rates by offering them free independent advice via an external mortgage company.
Another way to help employees is to offer them discount vouchers to help them save money on their food shopping, which could cost as little as £2.30 per employee each month.
Help with Healthcare
There are increasing pressures on the NHS with the waiting list for hospital treatment in England swelling to more than 7 million, and there is limited access to mental health services and physio appointments.
This has led more people to turn to their employer for help with healthcare including seeing a GP, prescriptions, going to the dentist, mental health support, and physio appointments.
More than a third of respondents in our Employee Minds survey said they are more likely to stay with an employer that has strong mental healthcare provisions.
Employers could offer their employees services such as Virtual GP and easier access to healthcare through some form of private medical insurance policy.
The power of internships
Another way to attract and engage the right talent is to cast your net wider to consider internships that might help to drive your culture and attract the right talent into your business without breaking the bank.
At Mercer Marsh Benefits, we work with a charity called Career Ready which builds relationships with employers to get internships for people from more socially diverse backgrounds.
Those from affluent backgrounds are 80% more likely to be in a professional job than their working-class peers, while only 16% of young people on free school meals attain at least two A-Levels by the age of 19, according to the Social Mobility Commission.
of all employees are concerned about their employer's environmental sustainability
of all employees place importance on social justice such as their company’s efforts to fight racism and inequity.
More and more employees now place a value on a company's environmental and social credentials, and not just the younger ones.
Our research shows that 67% of all employees are concerned about their employer’s environmental sustainability including reducing waste, limiting carbon emissions and supporting clean energy. This was slightly more important for high-income employees (73%) and less important for low-income workers (65%).
But employees are more concerned about the social aspect of ESG, with 70% of all employees placing importance on social justice such as their company’s efforts to fight racism and inequity. Again, this was slightly more important for high-income employees (74%) than those on lower incomes (68%).
As social sustainability takes centre stage, SMEs need to find ways to become more sustainable at their very core. One way forward is working with a partner which has ESG expertise like Mercer.
Action points for SMEs
As we see the rise again for the need for a paternal employer, it is crucial that employers understand their workforce to try and set the right culture to attract and retain talent.
First, get a picture of what your culture is like, then ask your employees what they think the culture is like. You could conduct a survey to ask them what they value about working for you and what challenges they are facing such as high food prices or rising mortgage rates.
You could also ask what they think of the leadership and direction of the company and where that disparity is between the culture you want and the culture you currently have or your employees’ perception of the culture you currently have.
All this will give you an idea of what you need to change - and the changes don’t need to be huge. A lot of it is about showing that you care now with higher prices inflation up for example, and thinking about how you can support your employees.
Mercer Marsh Benefits offers a free, no-obligation audit of your benefits, so you only pay for our services when you make changes. By reviewing and updating your benefits packages to better suit your workers and culture, you can improve your ability to attract and retain talent.