The COVID-19 pandemic has caused unprecedented disruption across the business landscape, with virtually every sector feeling the pinch financially.
As a result, we’ve seen numerous businesses cut back on employee rewards and benefits to save cash. For instance, last month, Wilko drastically cut sick pay terms for all employees without any prior consultation, and, earlier in the pandemic, the Construction Industry Training Board (CITB) froze all pay rises and bonuses for over a year.
These decisions may, in part, be fueled by the idea that the COVID-19 pandemic has slowed the pace of recruitment and, therefore, employees are more willing to accept cuts in benefits as they can’t look for a new job at the moment.
However, new research from recruitment firm REED found that this belief might be misplaced.
According to the research, the majority of UK workers are not put off looking for jobs this year and are generally optimistic about their prospects. Over half (59%) said they’d continued to seek new opportunities during the pandemic, with over two thirds (70%) willing to take a pay cut or work in a different sector to secure a job and over half (53%) open to moving to a different part of the country to find the right role.
Businesses that are cutting employee benefits during the pandemic may be driving talent out of the door.
The connection between employee benefits and business success
While Wilko and the CITB might sound like isolated instances, many businesses are not taking proactive steps to retain and attract talent.
Our recent whitepaper, which surveyed 2,000 employees across the UK, found that 22% of employees have never received a reward from their employer. No birthday gifts, no extra days off, no prosecco at Christmas or boxes of chocolates. Nothing.
This is despite a separate study finding that 66% of employees would resign if they felt unappreciated, rising to 76% among millennials.
These figures should set off alarm bells for businesses because a happy, stable workforce is key to business success and talent acquisition. A high staff turnover, driven by a lack of appreciation and employee benefits, could put off potential clients, stunt a company’s culture, and lead to larger outlay on recruitment and training.
Why a reward and recognition scheme will retain talent
A reward and recognition scheme is one option available to businesses who want to retain and attract talent through employee benefits.
Often reward and recognition schemes are solely thought to involve financial benefits, but this isn’t the case.
They can quickly become expensive. For example, if you awarded £200 one year as a one-off bonus, then your employees may expect the same or more next year in line with any promotions. This can make the scheme unsustainable, particularly if the business runs into any financial difficulties or faces a period of disruption such as a pandemic.
The benefits of non-cash rewards in reward and recognition schemes
Alternatively, non-cash rewards – such as the Virgin Experience Days Gift Card – offer employees a degree of flexibility and ensures that the bonus is spent on something meaningful. Gift cards also ensure the employee associates the purchase with the employer more clearly, helping to drive positive sentiment – unlike cash rewards which often get lost within a paycheck.
Additionally, non-cash rewards can also be used on team-building exercises which will boost morale, give employees a greater incentive to stay and position your business as an exciting place to work. This could include experiences to enjoy once lockdown restrictions are lifted – giving employees a much-needed event to look forward to – or even a virtual experiences could include virtual wine tasting or home baking classes, which will give employees a source of entertainment in the winter evenings.
The COVID-19 pandemic has negatively impacted the finances of thousands of businesses and some may be looking to cut employee benefits to compensate for the losses. However, these businesses may unintentionally be shooting themselves in the foot. Cutting benefits will drive talent out of the door and may limit your recruitment chances if your competitors are offering a better overall package. As we continue to emerge out of the pandemic, businesses should remember that they’ll need their best talent to help them grow post-COVID-19.