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Are Businesses Coping with The National Living Wage?
Posted by Neil Pickering, Industry and Customer Insight Manager at Kronos on 27 Jun 2016
The impact of The National Living Wage is by now well documented. Since its introduction on 1st April, UK businesses have acted in a number of very different ways to address the immediate issues they face.
While some businesses have focused on tightening up business practice and finding efficiencies to counter the financial effects, there are many taking an alternative route - reducing the hours of employees on flexible contracts or cutting staff benefits to offset the additional costs. There is of course no easy or right answer to handling the National Living Wage. But the clear issue is whether organisations should focus purely on balancing the books or is there a way of striking a balance between what is good for business and what employees want?
What does the workforce want?
Listening to employees and acting on their feedback is key to maintaining a positive and engaged workforce. But what exactly do they want?
Our latest research on The National Living Wage shows that 41 percent look for greater flexibility in their working hours, while nearly a third (30 percent) would choose a better work/life balance. Two very “modern” requests, for a generation of workers that expect more autonomy over their working lives than their predecessors.
More importantly we found that one in five employees want more work benefits, such as staff discounts, free meals or additional leave for good performance. So it is surprising, and potentially damaging for the economy, that the initial businesses response to the legislation is to cut these benefits in an attempt to save money. This is a valid and understandable approach that will deliver the immediate cost reductions demanded by the finance department. But what is the long-term impact and could this approach actually have the opposite effect?
It is only by understanding what makes a workforce tick, that truly informed decisions can be made.
Motivation, engagement and success
A motivated and happy workforce is a more productive workforce. They will go the extra mile to deliver better business performance because there is a close association between their success and well-being and the success of the organisation they work for. They are engaged with the vision, mission and values of an organisation.
Meanwhile, a demotivated workforce will have a very different impact. By removing the benefits they consider most valuable there is nothing to gain from investing the extra effort that is needed to deliver business excellence. But how can a business motivate and engage its workforce in a way that does not incur further costs, while at the same time addressing the new financial challenges that stem from the National Living Wage?
The Impact of Technology
If the ultimate aim is to foster an approach that both engages employees and increases productivity, then the use of technology can be a real enabler. Harnessing and mobilising it effectively can help to free up wasted time, empower staff and make them feel a more valued part of the organisation.
The right workforce management technology not only ensures employees are paid accurately and on time but can also help eliminate unnecessary costs. Once these basics are mastered - efficiently managing pay, time and work scheduling - a firm foundation will have been set and more ambitious plans can then be developed to deliver further benefits.
A more sophisticated application of this technology empowers employees by giving them a greater say. A self-service approach to shift and holiday scheduling is just one example of how employers can make their workforce feel more valued. They are in effect given greater insight and control over the hours they work, delivering the improvements in work/life balance they crave while also freeing up the HR department to focus on other business critical initiatives rather than filling their time with administrative tasks.
Using the latest technology in smart ways can create a more effective and efficient operating environment for your business, which will in turn have a major impact on the engagement of staff. This provides a realistic and deliverable strategy to offset the impact of the National Living Wage by cutting costs through eliminating inefficiencies while also maintaining a happy workforce. By approaching the issue in this way it is no longer a threat, but an opportunity to improve business.
Of course, no two businesses are the same, and they will all have different pressures from the new National Living Wage. Those that are cutting costs are reacting to the immediate impact and are understandably looking for a fast solution. But there are ways to look beyond the immediate challenge and take a proactive approach - providing greater insight, reliability and control to make the workforce more efficient in both the short, and arguably more importantly, the long term future of the business. Making cuts may seem like the easy solution, but there are alternatives that could see rewards that last.