Cutting perks has zero long-term benefits for employers
By Jo Sellick, managing director, Sellick Partnership
This week, Waitrose became the latest company to hit the headlines for reducing employee benefits, with lower rates of pay now offered to new starters who work unsociable hours. This follows news that B&Q, Morrisons, Caffe Nero and Eat are also cutting staff perks. The companies’ reasons for doing so understandably vary, with Waitrose explaining that the move is purely to bring the brand more in line with its competitors and that the change has been in the pipeline for some time. Critics argue that employers are making these cuts in order to compensate for the shortfall that has resulted from the National Living Wage, which came into force on 1st April 2016. There was even a Commons debate on the issue this week, with Labour MP Joan Ryan saying “businesses should not be cutting staff pay via terms and conditions to offset the costs [of the National Living Wage]”.
Clearly, businesses need to make a profit in order to exist, so those looking at the short-term implications of a higher wage bill resulting from recent legislative changes may well think that the only solution is for them to reduce perks. But I would severely caution against this short-sighted approach, particularly when dealing with the Millennial generation of workers, who tend to evaluate job offers based not just on salary, but also on benefits packages including advantages such as flexibility in the workplace, private healthcare, pension schemes and career progression opportunities.
Our recent research into the habits of jobseekers has revealed a sea-change in what candidates view as important when deciding on their next career move. Steady economic growth and increased business confidence means there is more competition for the best people. This competition for desired skillsets is driving salaries up, but an impressive salary alone is no longer enough for companies looking to attract the best possible talent. Creative bonus and benefit packages that include professional development opportunities, flexible working programmes and clear career paths are now equally sought after.
When comparing various job offers, candidates tend to look beyond the headline salary and start to question what perks they will gain by accepting a particular role. And those companies hitting the headlines this week risk being rejected by the best talent if they are unable to match the benefits offered by their competitors. Equally, existing employees may well start to look elsewhere if they can move to a job offering a similar salary with more appealing perks, which is just as risky for companies keen to retain their best staff. An attractive benefits package can make all the difference in the ‘war for talent’ and I would urge all businesses not to forget this important fact in the face of an understandable temptation to make cuts for short-term gains.