In the midst of the ongoing cost-of-living crisis, staff retention has emerged as a significant concern for businesses throughout the United Kingdom.
A recent study has unveiled that companies are grappling with escalating pay demands from their employees, putting them at risk of losing critical talent.
This research, which involved HR leaders from a diverse range of firms, revealed that an overwhelming 72 percent of HR leaders are anxious about their ability to retain valuable talent.
A staggering 90 percent expressed deep concern about employees leaving or planning to leave due to their inability to meet pay demands that match the rapidly rising inflation rates.
Also, 88 percent reported a noticeable uptick in requests for pay raises since the onset of the cost-of-living crisis.
Notably, wages in the UK have been surging at one of the fastest rates on record. According to the latest data from the Office for National Statistics, wages (excluding bonuses) between June and August 2023 increased by 7.8 percent compared to the previous year.
Pay demands to have detrimental effects on companies
This research, which encompassed the opinions of 500 HR directors and business owners, is part of a comprehensive white paper to be published in the upcoming year by the household money-saving tool, Nous.co.
What’s even more concerning is that 78 percent of those surveyed believe that the increasing demands for pay raises could have detrimental effects on their company’s performance and profitability.
The research unveiled that only 38 percent of firms managed to grant pay raises in line with inflation during their last pay review, marking an 8 percent drop from the previous year. Meanwhile, 34 percent provided below-inflation pay increases, and one in eight companies didn’t offer any pay raises at all.
Three-quarters of HR leaders recognised that their employees are struggling to make ends meet due to the cost-of-living crisis, which is, in turn, driving the surge in pay demands and dissatisfaction with the compensation their companies can afford to provide.
“Its’ a nightmare”
One senior HR professional, who wished to remain anonymous, expressed the challenges they face, stating, “It’s a nightmare. We understand our staff are struggling and need a decent pay rise, but we just can’t afford to give out huge increases without putting the business at risk. We are terrified of losing our best talent because of it, and that this haemorrhage of staff will severely impact our performance. Then there’s the huge cost of recruiting to replace people who leave, and the time and money involved in bringing new joiners up to speed. It’s a very worrying conundrum.”
Greg Marsh, CEO and founder of Nous.co, emphasised the urgency of addressing these issues, saying, “Our research shows just how challenging things are for many HR leaders at the moment. Businesses are losing their best people as they struggle to keep up with pay demands. Employers know how much people are suffering because of rising bills and genuinely want to help their teams.”
Marsh continued, “HR leaders need to look for creative ways to address the problem of higher bills directly. At Nous, we see just how much people are overpaying for essentials such as mobile, energy, and broadband, and just how much of a difference businesses can make by stepping in to help. That’s exactly what we had in mind when we designed Nous for Business. Businesses have told us they chose Nous because it puts money straight into people’s pockets, and employees who have signed up have said the time and stress they have saved is often as important as the money they’ve saved.”
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.