Tag: employee turnover

A proactive approach to avoiding bad press in the Gig Economy

Gig economy work provides choice and flexibility. In theory, that is what self-employed workers want. But it doesn’t stop there.

Companies such as Uber, Deliveroo, TaskRabbit, and many others are responsible for providing over 1.3 million people with an income in the UK. Although we love the convenience and often cheaper prices these services provide, it is concerning to read the negative press around gig economy workers rights.

Several tribunals and court cases have demonstrated that gig economy workers aren’t self-employed, in the traditional sense. Under UK law, they are limb (b) workers, entitled to many of the same rights as employees, such as such as paid holidays, minimum wage and protection from discrimination. However, judges, the government, trade unions and the Taylor review all support the further strengthening of gig economy workers rights.

What can gig economy employers do?

Take action. As we have seen with Uber, local authorities can take action to shut down operations (in London and York, so far). Judges can also fine companies that fail to respect workers rights. Is a change in the law far away? One cannot be certain, which is why taking a proactive approach is the most sensible way forward.

For companies in this sector, now is the perfect time to take on these challenges proactively before it’s too late. Offer something new. Give freelancers another reason to use your platform and keep working with you, thereby solving another problem: high turnover amongst partners.

One of the main reasons people provide services through gig economy platforms is to boost income. Or get out of debt. Or start saving. Help them achieve these goals. We can help you do that, at no charge to you.

Increase savings, reduce debts: Support your teams

With a FairQuid Save As You Borrow loan, we use the point of borrowing to nudge people to save. Together with not-for-profit, member-owned partners, Credit Unions, we provide fair access to credit and help people get financially fit. Repayments and pre-determined savings amounts are deducted straight from salaries. Eligibility is based on length of service and performance with the employer thus rewarding loyalty to be used as a credit currency.

Our partner employers that are already offering these to their people have found that productivity and engagement are up, and turnover down. For those in the gig economy, this makes a huge difference for customers, since they will receive a better quality of service by highly valued workers. Everyone wins. And with a benefit rooted in the strong commitment to your people’s financial wellbeing, this should go a long way towards demonstrating which side of the employee rights debate your company is on. Contact us to learn more, today.

Living Wage & Downsizing: Fears That Keep Employees Awake At Night

In some sectors – retail, hospitality, admin and support (customer service roles) – employees often live with a fear they aren’t as valuable as more skilled workers. Changes, such as the National Living Wage – now at £7.50 for those over 25 – can cause stress and uncertainty.

As much as a pay rise is welcomed, there is always a justifiable fear that companies will need to reduce staff levels to pay more to those they can afford.

The John Lewis Partnership (JLP), owners of the upmarket supermarket chain, Waitrose, and department store, John Lewis, was one of the first companies to report a 17.4% pre-tax drop in profits as a result of a higher wage bill. The Telegraph reported that this wage bill could lead to them “employ[ing] fewer staff over time.”

The Real Risks of Downsizing

National Living Wage requirements mean that it cost JLP an extra £3 million in wages. It could cost more in the next tax year (2017-18), with the government aiming for National Living Wage to hit £9 for those over 25 in 2020.

Other retailers, pub and restaurant chains, coffee shops and hospitality groups also face rising wage costs, which are forcing some to reconsider how many staff they employ. “The British Retail Consortium has estimated that the additional cost to retailers will be between 1-3 billion pounds annually by 2020”, according to a Reuters report on this issue.

Analysts expect certain retailers, including Next, Sports Direct and Poundland – all subject to higher margin pressures than competitors – “could be hit particularly hard.” Store closures are expected, especially with 60% of retail leases coming up for renewal in the next five years. More customers are buying online, which could encourage retailers to downsize store footprints across the country.

Argos (now owned by Sainsbury’s), Debenhams and Tesco are also contemplating downsizing, partly in response to higher wage bills and other costs, which inevitably will result in some staff – potentially thousands – losing their jobs over the next few years.

The hospitality sector is set to experience the largest National Living-induced wage bill increase, of 3.4%. Companies with low prices and low margins will suffer the most, which includes JD Wetherspoon, Costa (and other Whitbread PLC brands), and other pub groups, including Mitchells & Butler, Adnams and Punch Taverns. Wetherspoon’s is expected to reduce earnings before interest and tax (EBIT) 38%, as a consequence of wages rising 10% across the chain.

Good news for employees that receive higher paychecks. Bad news for those companies can no longer afford to employ.

What Can Businesses Do?

Assuming you are affected in some way – that you also need to pay staff more since National Living Wage was implemented – you will probably already know how much more higher wages are going to cost your business. Hopefully, you can absorb these extra costs over the next few years without reducing headcount.

Sustainable growth is the only long-term way to ensure you can employ everyone and pay competitive wages that ensure you can recruit the best talent for your business. Periodically review business operations, to make sure everyone is working in a role that generates maximum value.

When employees are worried about losing their jobs, they look elsewhere, and top performers can jump ship more easily. They have skills your competitors want and need. Consequently, companies are left with mid-level and poor performers, thereby dragging down performance and productivity, or forcing managers to let them go and start hiring again for people capable of hitting KPIs. No one comes out a winner in this scenario. Hiring new staff costs more money than reassuring those who were performing well, but decided to leave as a result of a fear of downsizing.

Providing reassurance in the form of a positive action, such as employee benefit loans and savings accounts, is far cheaper – free for businesses, in the case of FairQuid – than watching your best staff leave and trying to replace them.

With heightened fears of redundancies across sectors where people aren’t paid high salaries, carrying debts around and not having any savings only makes these stresses worse. As an employer, you can do something about these issues (whilst also ensuring your staff are more productive and engaged) – thanks to employee benefit loans. Best of all, these won’t cost your business a penny. Find out more today.

Sources:

National Minimum & Living Wages: https://www.gov.uk/national-minimum-wage-rates
http://uk.reuters.com/article/uk-britain-wages-stocks-idUKKCN0WY4UE
http://www.telegraph.co.uk/business/2016/09/15/john-lewis-partnership-profits-slide-on-higher-wage-bill/

Do Employees Care About Workplace Perks?

With growth at 2% and unemployment at 4.8% in the UK, we might be forgiven for thinking the recession is receding into memory. And it is, for the most part. Except for the impact recent economic history is still having in the workplace.

In the years immediately after the recession – when Europe was wobbling on the brink of another – employees were under pressure to do more with less. Everyone was being asked to do more. Work longer. Work harder. But without annual pay rises and other financial incentives. For several years, belts were tight everywhere, in every sector.

Consequently, many hardworking employees felt undervalued and poorly rewarded. Business owners and HR managers needed to do something to reward them for working so hard, without resorting to pay rises or bonuses. Around the same time, ideas started filtering through from venture capital-backed startups in California. Startups are competing against the likes of Facebook and Google for staff, which is why many started offering perks and benefits that helped them recruit the talent they need and win some free publicity.

What Kind of Office Perks?

Perks in the office can range from free breakfasts to early finishes on Friday, to an employee bar, drinks fridge, or beer or Prosecco on tap. Pet dogs are becoming a popular choice, for staff, and growing an audience on Instagram. Other offices have beanbags, hammocks, slides, nap rooms, pool tables and Yoga classes.

Unlimited holidays, flexitime and the option to work remotely are also popular choices, especially for fast-growing companies and SMEs.

Employers argue that perks aren’t just useful team incentive and recruitment tools. Perks are also useful for promoting a stronger work/life balance, reducing staff turnover and increasing engagement at work. Free food and drink is one of the easiest to implement, and most popular choices, since it encourages staff to interact more in-person, whilst saving them time and money going out for lunch. We can’t deny that some form of employee incentives – such as pizza or an early finish on Friday – is useful for morale and team communication.

Get the Basics Right

However, it can be easy for an employer to use perks as a way to forget what employees really need to feel valued and stay productive. Long-term loyalty does not come from perks. Salary and financial benefits are vital. Communication – such as feedback and praise – is invaluable. Honestly is essential. Employees don’t like to feel they are at the receiving end of a lie.

Google, known for perks and incentives, investigated their impact in 2012. Oddly enough, “it found that employee morale wasn’t directly linked to Google’s benefits”, according to Reed.

CV Library found that 85% would prefer some form of financial reward, instead of a workplace perk or benefit. With the average household debt in the UK around £13,000, there has never been a better time to offer your team benefits that really matter, which could be anything from a pay rise, to bonuses, to something financial, but cost efficient, such as employee benefit loans and savings accounts.

Giving employees the ability to reduce debts and increase savings, without adding to your payroll costs is a win-win for everyone, especially if you are keen to offer practical support, but need to consider economic factors now that Article 50 has been triggered. Clearly, employees value financial incentives more than gimmicks and “perks”, which means an employer should consider a range of options to deliver these solutions for their team.

We work with ethical financial providers to deliver these solutions to organisations across the UK, costing the employer nothing, whilst ensuring their staff can consolidate debts and start saving. Loans and savings: Reducing one and increasing the other at the same time. Find out more today.

Sources:

Reed: http://news.reed.co.uk/office-perks-have-they-lost-their-pulling-power/
CV Library research: https://www.employeebenefits.co.uk/issues/january-online-2016/85-would-opt-for-a-pay-rise-or-bonus-over-workplace-perks/

Debt and Economy Damaging Careers and Earnings of Millennials

Our economy is growing, but that doesn’t mean we have seen the last of the recession. It continues to exert an influence on the prospects and earnings of professionals who started their careers during the recession.

Millennials – those born between 1984 and 2001 (also known as Generation Y) – in the UK ended up with the short end of the financial straw. Around the same time – the early 2000’s – the economy was ballooning into a bubble; Generation Y was being sold the dream of earning a degree and walking into a high-flying graduate job, with signing bonuses, cars, and benefits. Then, in 2008, the recession hit.

Dream jobs for graduates became scarce. Young people, used to their own freedom, were forced to return home. A bleak reality sunk in, with dreams put on hold and a younger generation taking any job they could get, from zero hour retail contracts to low-paying freelance gigs. No one expects to graduate from three years of study with a first or 2:1 only to return home and work at Burger King, but for some, especially those who aren’t from privileged families, that is what happened.

Although the recession is over, it takes millennials even longer to get on the housing ladder. Savings are frighteningly low amongst this generation. And debt is high, thanks to student loans, overdrafts and credit cards. But the recession has had a more subtle, yet ultimately more damaging impact on the career prospects of millennials.

Lower Career Confidence

Millennials are – incorrectly – considered fickle and loyal only to themselves. Partly thanks to social media, the “oversharing” generation appear quick to change partners, university courses and jobs. However, a recent study by the Resolution Foundation has found that workers born in the mid-1980s are half as likely to switch jobs as those born in the previous decade. Only 25 percent of millennial professionals regularly job hop, in stark contrast to one of the career stereotypes of that generation.

Wages are also stagnant for younger generations, making it harder to pay off debts or save for a deposit. Perhaps unsurprisingly, many who weren’t able to find work after graduating went self-employed, which comes with other risks and rewards.

For those in employment, “One of the most striking shifts in the labour market has been young people prioritising job security and opting to stick with their employer rather than move jobs,” said Laura Gardiner, a senior policy analyst at the Resolution Foundation.

Can Employers Support Millennials More?

Through no fault of their own, Gen Y employees entered the labour market at the worst possible moment. For many, this slowed down, derailed or resulted in entirely new career plans and pathways. It also made this generation of professionals more cautious. Consequently, they don’t take as many risks, which is why they place a higher value in job security, skills development and reassurance, in the form of praise and feedback, more than previous generations.

However, with unemployment lower than ever – at 4.8% – we know this situation is already starting to change. Younger workers are eager to get on the property ladder. Perks and benefits are great, but millennials prefer salary increases, bonuses, commission or another form of financial reward. Employers should not depend on loyalty when they are only handing out “soft” incentives, such as training, flexitime and Friday treats, like pizza and cake.

One of the biggest financial challenges for younger workers is debts and savings. Too much of one, not enough of the other. Pizza and cake will not keep staff loyal forever when they need to clear debts and pay deposits. However, you don’t always need to give millennials a raise to solve these issues.

Instead, we can provide long-term debt consolidation and savings accounts from ethical lenders through our platform, making it easy for you to help them repay debt responsibly and save for a brighter future, without costing employers anything. Now that is an employee benefit your staff can take to the bank. Find out more today.

Sources:
CIPD: http://www2.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2017/02/23/job-loyalty-denting-millennials-pay-and-careers-report-finds
CV Library research: https://www.employeebenefits.co.uk/issues/january-online-2016/85-would-opt-for-a-pay-rise-or-bonus-over-workplace-perks/

Impact of Employee Financial Stress on your Bottomline


Employee Stress

Recently came across a well-researched post in America about the impact of employee financial stress and its impact on company’s bottom line in real dollars and cents. You can read the whole post and the sources of data they have researched against these, at the bottom of our post.

The main theme was around an acronym they had created – DEFACE and how it adds real costs to a company’s bottom line. We thought we will follow their lead and see how some of this adds up to a company in the UK of 500 employees and paying (for this post’s sake) a minimum wage of £7.20 an hour.

First, the acronym itself relates to Days available (attendance or lack thereof), Engagement (productive hours at work), Fatigue, Alertness (workplace accidents), Commitment (Staff turnover) and lastly Ethics (correlation between stress and temptation to steal at work).

Days Available: on an average 10 hours per month is lost due to absenteeism, 70% of all job absenteeism is tied to stress-related illnesses, of which the leading cause is financial stress. So if we assumed 7 hours a month due to financial stress, the cost impact is £302,400 per year. This obviously does not look at the opportunity cost to business of missed deadlines on customer orders and production backlog

Engagement: On average, a financially stressed employee will spend 20 hours per month dealing with financial issues at work. 70% of UK workers talk about being affected by financial worries. So if we take that as the staff numbers impacted, the cost impact is £604,800 per year

Fatigue: ‘Present-eeism’ where a worker is physically present but absent due to distractions about financial concerns, steals 6 hours of productivity per month per stressed employee. Applying for the same numbers as Engagement, the cost impact is £181,440 per year

Alertness: About 70% of workplace accidents are stress-related due to the distractions of that stress. The US paper said, “As a result, companies with 1,000 employees see about 23 stress-related accidents per year, costing about $29,000 each.” We checked the UK government’s Health and Safety Executive (HSE) website and see that for the UK the figures are £1.6 million for fatal injury, £7,400 per non-fatal injury. If we only look at non-fatal injury then the cost is £85,100 per year

Commitment: Staff turnover is high amongst financially stressed workers as they are willing to switch for an even small increase in wages. If we looked at the UK average turnover of 19% and studies show that 40% of turnover is stress related, the cost of replacing such employees is £5,000 each. So again the overall cost would be £190,000 per year

Ethics: Financially stressed workers are more tempted to steal from their employer, and in the US 4.2% of employees have been caught doing just that. Since we could not find similar data for the UK and did see that most of these were limited to Retail and Logistics sector (as far as available data we could find), we decided to exclude this from our calculations.

So for the 500 staff company, the overall cost of employee financial distress can be as high as £1,363,740. Now that is a substantial sum of money to be left unplugged from your bottom line.

There is a lot of awareness and emphasis now on Financial Education and Employee Financial wellbeing within the HR practitioners across the UK and this segment of Benefits is growing the fastest by various industry estimates. Though education is a good objective but education alone will not bring about behavioural change.

Companies need to be part of the alternative instead of being on the sidelines. The obligatory saving contribution in addition to loan repayments, is one small feature of FairQuid partner Credit Union loans that not only help employees consolidate their existing high-interest debt (thus saving money in interest costs) but also bring about a behavioural change in savings habit in a way that they have a pool of money saved by the time their debt is paid off. So the next time they need money for an unexpected expense, they don’t think of borrowing as their first option.

For more information on how your company can become a part of the movement, contact us

American source article

Brexit: Implications for HR

Leaving the European Union is a substantial step for any member state to take. The decision is in many ways a social, cultural and political one, but it is also one which carries economic implications. The United Kingdom’s decision to leave the European Union, or ‘Brexit’, has consumed much debate. The magnitude of the economic costs and benefits of Brexit cannot be known with certainty before the event. The unexpected result of the vote and its ensuing fallout has created an atmosphere of instability and ambiguity, which never bodes well for the economic climate.

As per the data from Adzuna, a job-search website, their count of new job ads put up was 29,000 compared to 39,000 (This is week on week number), a worryingly large fall of 26%. The count of new ads over the past seven days is 570,000, compared to 615,000 the week before (a 6% fall). Employers, it seems, are already less keen on hiring. Many companies opt for stack ranking (also known as “20-70-10” system) of employees in this situation, which creates job insecurity and demotivation among the workers. The workers are divided into “A” (20%), “B” (70%) and “C” (10%) players, where A being the top performer, B the vital majority and C being the poor performers. The “C” workers are let go as management feels this way they can kill two birds with one stone – 1. Reduce workforce costs ahead of tough time, 2. Avoid letting go of the vital majority for some time. However as the workers are not told their ranking, it creates a sense of job insecurity among “A” and “B” players as well, since they feel they would be the ones in the next round.

As a result, “A” performers start leaving as they are in a position to secure alternative jobs even in a tough economy. So the business is in some ways stuck with “B” players as they do not find jobs as easily in the tough market but with the insecurity and de-motivation their productivity drops and can very quickly become “C” players. So very easily the companies can be left with “C” players that they were trying to reduce to begin with.

When you force employees to fit into a pre-determined ranking system, you do three things:

1) Incorrectly evaluate people’s performance, by forcing line managers to fit their teams in the 20-70-10 bell curve model

2) Make everyone feel like a number, and

3) Create insecurity and dissatisfaction when performing employees fear that they’ll be fired due to the forced system.

This flux and uncertainty of Brexit is an opportunity for the HR professionals to not be reactive but be proactive. As an HR professional if you are proactive then you not only prevent “A’s” from leaving but also motivate “B’s” to become “A” players. You should consider that people have responsibilities toward their families and they have bills to pay every month. The best reassurance and benefit one can provide in these tough times is the freedom from financial distress.

It is time for companies to start focusing some of their HR efforts on tackling financial stress. With the new breed of employee benefit offering money management tools; it’s now possible to do this effectively and in a targeted manner. Employers should tie up with financial employee benefit providers like FairQuid that provides access to savings and affordable loans through local Credit Union partners. The employees irrespective of their salary scale just have to fill in the loan application form online from the convenience of their office desktops. The saving contributions and repayments are automated through payroll deductions; therefore they don’t have to worry about missed repayments. Since Credit Unions are providing this facility based on their employment and length of service with the company, it encourages the employees to stay with the company till the loan is repaid and thus helps directly reduce the turnover rate in the short term. Thus FairQuid, through its Credit Union partners, provides financial freedom to one and all irrespective of their income.

Giving employees the tools for financial resilience can break the needless spiral of anxiety and stress. This is crucial as far as productivity is concerned, where the impact of financial stress on the workplace can be dramatic.