STAFF retention in the throes of the cost-of-living crisis is one of the biggest problems facing businesses across Britain as companies struggle to keep up with rising pay demands, a new study has found.
Research among HR leaders of firms – from SMEs to large corporate organisations – found almost three-quarters are worried that they will lose vital talent.
A massive 90 per cent say they are concerned about staff leaving or planning to leave as they are unable to meet demands for pay rises that keep up with inflation, and 88 per cent say they have noticed increased requests for pay rises since the start of the cost-of-living crisis.
Wages in the UK are rising at one of the fastest rates ever recorded. Wages (excluding bonuses) between June and August 2023 were up 7.8% on the previous year, according to the latest data from the Office for National Statistics.
The study, involving 500 HR directors or business owners, is part of a wide-ranging white paper by household money-saving tool Nous.co, due to be published in the new year.
The research comes as Nous has partnered with several major employers to save their staff money by offering membership to teams via Nous for Business. When employees join, Nous is able to save them many hundreds of pounds by finding them fairer deals and handling the headache of switching providers.
The research found that 78 per cent of those questioned believe that rising requests for pay rises risks harming the performance and profitability of their company.
Only 38 per cent of firms were able to give pay rises in line with inflation in their last pay review, a fall of 8 percentage points on the previous year. Meanwhile, 34 per cent gave below-inflation rises and one in eight firms gave no rise at all.
Three-quarters of HR bosses say they are aware that their workers are struggling to make ends meet because of the cost-of-living crisis and most believe this is driving pay demands and the dissatisfaction with what companies can afford to pay.
One senior HR professional, who asked not to be named, said: “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, and that this haemorrhage of staff will severely impact our performance. Then there’s the huge cost of recruiting to replace people who leave, and the time and money involved in bringing new joiners up to speed. It’s a very worrying conundrum.”
Greg Marsh, CEO and founder of Nous.co, said: “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.
“HR leaders need to look for creative ways to address the problem of higher bills directly. At Nous, we see just how much people are overpaying for the essentials such as mobile, energy and broadband – and just how much of a difference businesses can make by stepping in to help.
“That’s exactly what we had in mind when we designed Nous for Business. 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.”
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