Employee engagement tips for organisations affected by a pay cap

by Jamie King, director of global rewards at Xexec

The public sector pay cap – a 1 per cent cent pay rise cap that has been in place since 2012, affecting five million workers across the UK – has been at the top of the political agenda again after the Labour Party used its first vote of the new Parliament to push for the cap to be lifted. The vote was ultimately defeated but there has been much debate about the topic, which ended up as one of the key talking points throughout the election. It’s a major challenge for employers affected by the cap to continue to attract, engage and motivate their staff. Here are our top employee engagement tips for any organisation affected by a pay cap.

Make salaries go further
There are various ways that employers can make their staff’s salaries go further, often at little cost. Whether it be supermarket vouchers that help with the weekly shop or discounted tickets to the latest music events, employee discount schemes (or voluntary benefits as they are often called) are a great place to start. They’re simple to implement and can easily be tailored or packaged in a bespoke way to encourage engagement and offer a range of money saving opportunities.

Salary sacrifice schemes still remain popular, despite the fact that from 5 April many schemes will no longer offer the income tax perks that they are known for. A number of initiatives (including pension contributions, childcare and cycle-to-work schemes) remain exempt from these changes, however, and can continue can make a big difference in helping employee pay go further.

Employee satisfaction isn’t just about money
Distinct from salary and employee benefits, employee recognition has an important role to play in motivating and engaging staff. Moreover, you don’t necessarily need any budget to recognise your employee’s achievements. From simply saying ‘thank you’ (a study by Glassdoor found that 70% of employees said they’d feel better about themselves and their efforts if their boss thanked them more regularly) to facilitating better peer-to-peer recognition (such as allowing staff to nominate each other for non-financial awards) there are many ways to achieve this. In terms of giving employee recognition, work-related awards and learning and developments awards are both cost effective ways of celebrating your staff’s achievements. For example, a survey by McKinsey found that praise from management, leadership attention and having the opportunity to lead projects are more effective motivators than cash, pay rises or stock. And much has been written about the fact that, for many, having the opportunity for learning and development is increasingly more important than financial incentives when it comes to job satisfaction.

Where possible offer flexible working
Research from Cass Business School and Cranfield School of Management recently endorsed the view that homeworkers and partial homeworkers are happier, more engaged and more likely to work in excess of their contracted hours. It’s becoming increasingly popular and is free to implement. There are also some interesting examples of government departments using flexible working to actually get around the pay cap. Back in 2016, for example, the Department for Work and Pensions saw a big rise in staff satisfaction with pay and benefits after it struck a deal with the Treasury to boost salaries in exchange for more flexibility on working hours, with the Civil Service People Survey showing that satisfaction with pay and benefits at DWP were well above the civil service average.

Support your staff’s financial well-being
Financial well-being is something of a buzz phrase among the HR and employee benefits community as more and more employers look to support their staff by equipping them with support and knowledge in financial planning. From training and support in areas such as budgeting and debt management to travel, money and wedding planning, this can make a real difference to employees’ lives.

Are you affected by the pay cap? Get in touch if you want to discuss how to motivate and engage your staff with employee benefits and employee recognition.