With record low unemployment in the UK - just 3.8% in July - many businesses are finding it tough to attract the talent they need to operate effectively and grow.
Motivating and engaging employees to ensure good staff retention is therefore of paramount importance.
The uniqueness of motivation and engagement
A common challenge for business owners is recognising that different employees are motivated by different things at different times of their lives. For some, money is a key driver, while for others it’s the security of work, the working environment or simply being recognised for a job well done.
For younger generations, a clear career path is important, but so too are their employer’s corporate social responsibility (CSR) credentials. Much greater interest is being taken in organisations’ approaches to diversity and inclusion, environmental impact, well-being and mental health. No surprise then that a recent study found 70% of millennials want an employer with a good CSR track record.
By understanding different employee motivations, businesses can introduce measures that will foster engagement. This may not necessarily require paying the highest salary – with some business budgets this isn’t an option. Increasingly, initiatives such as training and investment in employees’ professional development, flexible working and things like dress-down days are gaining popularity.
Looking beyond simple job satisfaction
The Chartered Institute of Personnel and Development (CIPD) says that employee engagement goes beyond motivation and simple job satisfaction. It can be seen as a combination of commitment to the organisation and its values and a willingness to help colleagues.
The CIPD also says that when it comes to employee engagement, business strategies should pay attention to:
- fair treatment of employees and support for well-being
- empowering employees to shape their jobs
- having effective channels for employees to voice their views
- good people management skills
- performance management systems that motivate and give opportunities for professional development
- communications to reinforce purpose and vision and keep employees informed.
Motivating and engaging within your budget
Businesses obviously need to find ways of achieving these strategies within their finances. When it comes to staff training, the costs are usually deductible and can help to reduce company profit – and therefore corporation tax. Also, paying for an employee’s professional qualifications or membership of a professional body is not a benefit in kind and doesn’t have to appear on the P11D.
When it comes to motivating and rewarding with money, be mindful that bonuses and benefits packages bring tax and national insurance consequences for both the employee and employer. For the employee, more money might push them into a higher tax bracket (along with the potential loss of benefits like child benefit).
A highly tax-efficient remuneration method is to invest in an employee’s pension, as there is no tax on the contribution, or National Insurance for the employee or employer.
For salary sacrifice schemes, childcare vouchers and cycle-towork schemes remain popular. With the latter, remember the employee should be able to prove their cycle travel comprises at least 50% of qualifying journeys (which includes travelling to and from work).
Share options and ownership
Offering share options is another route businesses can take to motivate and retain employees. We look at one way of doing this, Employee Ownership Trust. For more information please read this article on Employee Ownership Trusts. There are, however, other types of share option routes, depending on the business and what it wants to achieve. Speak to your Shipleys contact if you’d like to discuss this.
Consider future skills needs in your plans for growth
Finally, as a business grows it’s important to recognise that different employee skill-sets and experience will be needed at different stages. For example, as a business expands to multiple sites with more staff, the experience and skills of the IT manager will need to reflect that.
So, when planning for growth, ensure your strategies include a map of the skills and talent needed for the journey. The more prepared you are, the greater your chances of having the right team in place to succeed.
If you would like to discuss any employee engagement and retention issues, contact our head of HR consulting Melody Port at email@example.com For business and employment tax-related questions, contact Dean Hardy at firstname.lastname@example.org or your usual Shipleys contact.
Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary, if you would like advice or further information, please speak to your usual Shipleys contact.
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