In the face of the ongoing cost-of-living crisis, staff retention has emerged as a pressing concern for businesses across Britain, as a staggering 72 percent of HR leaders fear losing crucial talent, according to a recent study.
The research, conducted among HR leaders from various-sized firms, ranging from SMEs to large corporate organisations, reveals that a whopping 90 percent of them are apprehensive about losing employees due to an inability to meet escalating pay demands.
Also, 88 percent have reported a surge in requests for pay rises since the onset of the cost-of-living crisis.
Wages in the UK are witnessing one of the most rapid growth rates ever recorded.
The latest data from the Office for National Statistics indicates that wages (excluding bonuses) between June and August 2023 rose by 7.8 percent compared to the previous year.
Pay rises in line with inflation
The study, which involved 500 HR directors or business owners, is part of an upcoming white paper by Nous.co, a household money-saving tool. This white paper is scheduled to be published in the new year and delves into the challenges faced by businesses in the current economic landscape.
The research also reveals that 78 percent of respondents believe the increasing requests for pay rises pose a risk to the performance and profitability of their companies. Alarmingly, only 38 percent of firms managed to provide pay rises in line with inflation during their last pay review, marking an 8 percentage point decline from the previous year. Meanwhile, 34 percent offered below-inflation raises, and one in eight firms provided no rise at all.
Three-quarters of HR leaders acknowledge the financial challenges their employees face due to the cost-of-living crisis, contributing to the surge in pay demands and dissatisfaction with what companies can afford to pay.
A senior HR professional, speaking anonymously, commented on the dilemma, 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.”
Rising bills
Greg Marsh, CEO and founder of Nous.co, emphasised the severity of the situation, stating, “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. At the same time, employers know how much people are suffering because of rising bills and genuinely want to help their teams.”
Marsh further advocated for creative solutions to address the rising cost-of-living crisis directly, citing Nous for Business as an example. He explained, “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 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.