The ongoing uncertainty of Brexit is also leaving a worrying mark on the country’s prosperity; with many commentators declaring Britain to be in the worst economic state since the Great Depression.
The impact of all these financial hits upon the UK’s employers and employees has been serious, too.
Wages have only just started to rise since flat-lining throughout the past decade and this has made the job market an increasingly competitive place for employers to attract the best talent.
As a result, the importance of retaining top talent has become increasingly clear for UK employers.
But, with the spectre of Brexit still looming large on the horizon, budgets will inevitably become tighter and pay rises or cash bonuses become harder to justify when there is so much economic uncertainty.
So, how can you continue to recognise the efforts of your staff by rewarding employees, retain your talent and keep costs down all at the same time?
By understanding the impacts of the economic climate on workers, and what they value from an employer, it’s possible to motivate, nurture and reward your employees without breaking the bank or adding extra numbers to their payslips each month…
One of the biggest impacts of the recent economic downturn had been rising unemployment. Thankfully, as the global economy began to slowly recover, so did the numbers of people in work – but there are also a couple of important caveats attached to this statement.
Whilst unemployment rates are currently at their lowest since 1975, a great deal of this has been attributed to a rise in self-employment and zero-hour contracts to fill the gaps where permanent jobs aren’t available.
Indeed, with hundreds of thousands of public sector jobs destroyed by cuts over the past few years, competition in the private sector has arguably become even greater.
Goldman Sachs, for example, saw a 40% jump in application numbers since 2012, receiving 250,000 applications for graduate positions in a year when the bank hired less than 10,000 people across the entire company.
But it’s not just the unemployed feeling the squeeze of slow economic growth - those in work have also suffered from the financial crisis, Brexit and austerity.
In order to address these issues and encourage greater recognition and engagement in the workplace, it’s essential to understand the challenges facing your people and how their employers can help.
Despite having the fifth-largest economy in the world, wages in the UK fell by 10.4% between 2007 and 2015 – the peak of the world financial crash, or 'credit crunch'.
As we enter the first quarter of 2019, they have begun to climb again and are showing signs of continued growth as job markets improve, but this doesn’t tell the whole story.
Whilst the numbers in people’s bank accounts are higher than 10 years ago, people are comparatively able to buy less with their cash.
The post-Brexit fall in the value of the pound will likely see food, holidays, petrol and more essentials rise in price, with the shock to the UK’s currency likely to cause a rise in inflation too.
The poorest 8.3 million families in the UK are predicted to lose an average of £470 a year by 2020 – writing in the Telegraph, International Business Editor Ambrose Evans-Pritchard calls the situation a “ticking time bomb”.
Whilst the minimum wage has risen to £7.83 for over 25s and will rise again in April 2019, wages have stayed lower for younger workers.
Also, despite being re-branded as the ‘Living Wage’, rates are still far below what living wage campaigners have calculated as a real living wage – currently £9.00, or £10.55 if you live in London.
There is some good news however; and that is the prediction that UK wages are continued to rise throughout 2019 at over double the increase UK workers saw in 2018. However (and it’s a biggie), this is all dependent on the UK’s withdrawal from the EU which, at the time of writing, is as uncertain as ever.
One thing is certain, though: any uncertainty in the economic stability of the UK or its financial growth will undoubtedly have a negative effect of the finances of private and public sectors. This could mean wages enter a period of stagnation or, at worst, decline.
The impacts of low or stagnant wages are felt in more than just an employee’s buying power.
Guidance from Oxfam suggests that workers on low wages experience increased stress, low self-esteem, an increased tendency toward unhealthy behaviours (such as smoking) and worse health overall.
They are also less likely to get married, and more likely to get divorced.
These issues also affect employees’ children – longer or inflexible hours, a lack of paid sick days, less holiday time and less access to childcare means parents are less able to support their child at home and school.
It’s evident that whilst many of the recent headlines have been focusing on the monetary effects of Brexit and the wider economy, the truth of the matter is that the implications are felt far more deeply.
Many people in work rely on benefits to support their wages – whether high rents mean they need housing benefits, low wages mean they need working tax credits, or whether child tax credits or child benefit helps to support their children.
In-work benefits have been slashed under government austerity policies, and whilst the Chancellor stated in October 2018 that the age austerity ‘was coming to an end’, the effects of these deep cuts to the benefits system are still being felt by many.
For example, people under 35 are no longer able to claim housing benefit if they live alone, unless they live in a bedsit or in shared accommodation.
With younger people struggling to access affordable housing and the cost of renting expected to rise around 15% over the next five years, it’s clear that the slight wage rises we are seeing are simply not enough.
The effects of austerity and a poor or uncertain economy have negative effects on workers beyond the financial.
Research has found that something as simple as announcing cutbacks, let alone beginning to enforce them, causes “an immediate drop in employee job satisfaction, wellbeing and engagement”. As cuts began to come into play, remaining staff saw satisfaction drop even further.
The research was led by Professor Tina Kiefer of Warwick Business School, who summarised:
“Not many would have expected the actual announcement, rather than the subsequent changes, to affect public service employees in this way. But an announcement about cuts is an event with ‘real’ impact that signals potential changes to employees’ jobs and career prospects. It also hit home the scale of change, which may have confirmed - or been worse than - employees’ expectations.”
“Our results highlight the importance of understanding employee reactions to nationally instigated policies, rather than merely focusing on what happens within an organisation when organisational changes are implemented.”
Although this research primarily focused on public sector employees, whose jobs are impacted more directly by government policy and economic turmoil, it seems likely that a similar impact would be felt in private sector organisations that are facing cutbacks.
Uncertainty is a major cause of stress regardless of where people work, and the impact of losing colleagues or being forced to work with less resources in the event of cutbacks will surely be felt by any employee.
With concerns about the wider economy in mind, it would seem that the key to ensuring employee wellbeing in a difficult economic climate is through financial support – if staff are worried about money, then paying them more money should reduce their worries, right?
Of course, this is far from a practical solution, even when the economy is in better shape. Whilst wages are expected to continue rising throughout 2019 and beyond – Brexit uncertainty aside, some organisations will undoubtedly struggle to provide this across the board.
Fortunately, financial rewards are far from the only way to support and recognise the efforts of staff. In fact, research has repeatedly found that financial rewards are far from the most effective motivation and recognition tool.
In Non-Financial Recognition: The Most Effective of Rewards, Michael Silverman argues that the importance of financial rewards – i.e., more money – has been overemphasised, and that there are “a whole host of alternate motivators that can act to influence employee behaviour and enhance employee motivation”, including:
Being kind and simply saying ‘thank you’ can be great for business and it’s a little thing that can sometimes be forgotten in busy or large organisations.
Publicly highlighting the great work an individual brings to a business or the extra effort they’ve put in to a wider audience can pinpoint the positive behaviours a business wants to promote to your workforce. And the best bit? Kindness costs nothing!
Experiential rewards are brilliant for motivating and rewarding staff because they’re more personal than cash and give staff the opportunity to make great memories.
For example, the reward of a couple of cinema tickets can give the recipient the chance to have a night out doing something they love without the financial hit – building engagement with the employer and motivating the employee to perform at their best.
If employees are consistently staying later, arriving earlier or taking on extra work, the perk of working from home a couple of days a month or a duvet day can act as acknowledgement for their efforts.
If you’ve got an office of coffee lovers, why not invest in some decent Arabica beans instead of instant? It’s little things like this that can make the day-to-day that little bit more rewarding for everyone.
For example, research has found that well over a third of millennial and ‘Gen-Z’ employees (38%) in the UK favour perks and rewards that make them feel valued – and the symbolic value of a reward presented in the right way can far exceed the financial value it provides to an employee, as it is, as Silverman explains, “a visible sign that [their] individual contribution is being acknowledged”.
The fact that that perks and non-cash rewards appeal to both millennials and ‘Gen-Z’ is really important. By 2020, it’s expected that these two generations will make up 59% of the entire UK workforce and money is no longer their most effective motivator.
With this in mind, having an effective rewards and recognition platform and startegy will be crucial to not only retaining talent, but also attracting them to your business, too.
Whilst implementing a rewards and recognition programme is important, Silverman also points out that a non-financial recognition programme does have its risks:
“In a time of downsizing and restructuring,” he writes, “such schemes can appear to employees to be empty attempts to appease [them], and could potentially backfire”.
It’s therefore essential to plan your communication about any planned reward schemes to your employees well, particularly in difficult financial times for your organisation. “We’re laying off 50% of the staff, but the ones staying will get a £5 gift card for a very obscure retailer which must be used within 14 days” is far from a motivating message to send!
Timing and a tactful announcements are key, as are benefits or rewards that are legitimately useful to employees in a difficult economic climate, rather than something that could be seen as more frivolous or tokenistic.
Focusing on improving employee’s quality of life and showing staff that they truly are valued enough for the organisation to support them through difficult periods, is a far more preferable goal than providing a less thoughtful reward for hitting a sales target.
A sense that there is one rule for management and one rule for everyone else can have a serious impact upon staff morale and loyalty. Therefore, taking the right tone with staff is important.
Be less like David Brent who talked about his promotion in the same speech as announcing redundancies, and more like former Nintendo CEO Satoru Iwata, who cut his pay in half after a poor fiscal year.
Well, maybe nothing that drastic.
But if employees see senior staff carrying on with perks and bonuses as usual while they’re bearing the brunt of harder financial times, it’s sure to breed discontent. Of course, it’s important to retain top talent, but be sure to keep subtlety and fairness in mind.
It’s also essential to ensure that managers are not taking their frustrations out on staff. Tighter budgets and reduced workforces may make the jobs of managers harder, but passing this onto employees – who are not responsible – is unacceptable and a definite ‘no-no’ when it comes to the dos and don’ts of staff motivation.
Try and maintain an open-door policy and recognise the importance of clear and regular communications when motivating your workforce. Employees will need assurance, so spare time to talk to them! Be honest and avoid promises that you can’t keep. If there are things you can’t discuss, don’t be evasive – just tell them that that is the case.
Any good recognition or reward strategy starts with listening to your staff and lifting up the bonnet to find out exactly what’s going on in the engine room of your business.
Here are three ways you can involve and engage your workforce in a rewards and recognition strategy:
Pulse surveys are the natural successor to traditional annual surveys.
Anonymous or not, they enjoy high response rates, allow employers to monitor real-time employee feedback, and help to gauge key engagement KPIs such as advocacy. Meaning organisations can make better informed decisions and nurture a culture of transparency and continuous improvement.
Give employees a greater voice by creating a dedicated space where they can air their qualms, queries, suggestions and concerns.
Online feedback platforms or physical suggestion boxes can both prove effective in this sense. This may seem old school, but it lets people know their feedback is welcome at any time and encourages engagement with key subjects.
Simple, human and immediate. Employers can use employee performance reviews and team meetings as an opportunity to get honest, face-to-face feedback. Leavers should also have a say on the matter. Why are your employees leaving? How could the company have supported them better?
But ultimately, it’s up to managers to ensure employees feel comfortable and ready to share. If everyone sits there feeling a bit timid – scared to stick their head above the pulpit – you’re never going to get anywhere.
One of the biggest misconceptions we hear is that recognition and rewards are employed to acknowledge staff simply doing their job. To some extent, it’s a valid point – after all, staff are paid to do their work, so being paid and being employed should be enough?
Well, not quite.
According to research by Deloitte, “High recognition-culture organisations have 30% lower voluntary turnover than those who just ‘push people to perform’ without regular recognition. Social recognition and praise have a big role to play in employee engagement.”
Employers need to take time and care to observe each individual’s performance, ensure these motivational interactions take place on a daily basis, and give credit where credit’s due.
We also need to keep it human, as our own Director of Rewards and Recognition Iain Thomson explains:
“Don’t blanket email your teams all the time, asking how they are. Yes, it’s important to do that sometimes because it’s a nice ‘just thinking about you’ – but it’s impersonal. Pick up the phone, have a conversation with them. Better still, speak to them face-to-face...”
“Recognition should always be a personal thing. Employers who can’t encapture this in their messaging, making it as human as possible, will only alienate their team.” Thomson continues, “...it doesn’t have to be a formal one-to-one every time, and can often just be an informal conversation."
The danger is that contact between people can become far too automated. More regular, but less personal isn’t the way it should be. People will suddenly see that they’re no longer being treated as an individual, instead they’re being treated as a cog in the company.
One study from Dan Ariely found that “Ignoring the performance of people is almost as bad as shredding their effort before their eyes”.
However, our own research has revealed that 34% of employees do not feel recognised at all by their managers. “Organisations need to create that habit of saying thank you”, explains Iain Thomson. “If we fail to formalise it, those exceptional employee stories that go on in every company, everyday, get lost.
Recognition and recognition programmes can help boost productivity, enable us to find and celebrate the stories that define our company culture and influence others to change their behaviour.” From public praise to a private ‘well done’, these small, but significant, social nods can make all the difference
As discussed previously, there are many other ways to encourage recognition that are more focused on a growing a positive workplace culture and based on experiences, rather than financial support.
Combine this positive culture with benefits that promote employee wellbeing, and it will be possible to encourage staff recognition, engagement and motivation throughout periods of economic turmoil and financial uncertainty.
Talking to your staff about their long-term goals – what they want out of the company and their careers – is a simple way to assure them that you’re thinking about their future with the organisation in a positive way.
Encourage one-to-one catch-ups between managers and the members of their teams where possible, and set monthly and annual targets.
Recognising hard work can be done through a manager saying thank you, writing a more formal note of appreciation, or as we mentioned earlier, in a more public setting such as at a team meeting, or through an employee of the month scheme.
You may be surprised just how encouraging a simple word of thanks can be.
Appreciating your employees for a job well done drives positive behaviours, and ultimately helps with productivity. This is why recognising the signs of an employee who deserves recognition or reward are extremely important.
No one likes to feel unappreciated at work, so creating a culture where achievement and success are central is essential for becoming an employer people really want to work for and retain talent.
Whilst a cash reward will always be gratefully received, there are many more effective ways you can reward your staff without resorting to cash. From gift cards, to prizes, to certificates.
But remember, it’s not just about the flashy stuff – remember that a simple thank you for a job well done can be one of the most effective ways of recognising people, because it creates a company culture that cares, and that people will want to see succeed.
When an individual or team smashes their targets, it’s an obvious cause for celebration! Keep your staff motivated to keep hitting targets by recognising and rewarding their efforts.
A member of staff who goes above-and-beyond their call of duty and contributes in unexpected ways should be rewards and encouraged, to help them reach their full potential.
Large groups of people - especially in larger organisations - can become dysfunctional, therefore when team of people work timely and efficiently, it should be recognised.
Receiving a piece of work that’s of the highest quality is always a joy. Reinforce expectations by saying thank you.
In today’s world, job hopping is common. Celebrate the employees that choose to stay loyal to your organisation by recognising work year milestones such as 1 year, 5 years, 10 years, 15 years or longer.
Have you got employees that have never missed a day of work? Or maybe you've got team members who are first in and last to leave every day? Show your gratitude by showing you noticed with a thank you.
Some people are just leadership material. If you’ve got a team leader that proven themselves time and time again, why not recognise their skills and use them as an example of excellent leadership.
So, how do we do it? Well, our approach is completely collaborative. We work closely with our clients, and their employees, to develop the best approach to rewards and recognition - together.
There’s not a one-size-fits-all solution to building a rewards and recognition strategy. Each business is different, with different goals, and the people who work for them are different too. And it’s all about people, after all.
We work in partnership to understand an organisation and its people as best we can and create a blueprint of the culture required to get the best out of everyone.
Many services will focus on one tool or a platform to build an entire culture – but there’s then a big risk that if people don’t engage with the platform, then the whole programme fails.
Here at Sodexo, what we do is start to understand the organisation, what makes it tick, what drives its people. And we develop a range of ways to make things happen. It’s all about the engagement of hearts and minds.
We create the culture, and we enable people to feel and experience that culture, so they can truly be part of it.