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Despite current economic challenges, businesses are prioritising their workforce. The latest Business Outlook Tracker reveals that 35% of organisations are increasing investment in employee benefits and rewards, showing proactive response to talent market dynamics.
In this article
Our People Agenda forum emphasised the delicate balance of managing costs and developing people strategies for agility and resilience. Watch the discussion to gain practical strategies for navigating the talent landscape and building a future-ready workforce.
ARC – agility, resilience and cost in people agendas
Understanding the interplay between these elements is crucial for practical implementation and long-term success. Justin Rix, Partner, People Advisory at Grant Thornton UK, explores the concept of ARC (agility, resilience, and cost) in the context of people agendas.
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Agility: adapting the way we work
Recent years have emphasised the importance of workplace agility. 42% of People Forum attendees told us they prioritise agility over resilience and cost, with 79% doing so strategically rather than reactively to market demands.
Which of these, if any, are taking a higher preference in your organisation at present?
Adapting to employees' need for flexibility requires you to assess infrastructure, streamline processes, and empower your managers. Invest in the necessary tools to foster an agile culture and retain top talent.
Resilience: nurturing a solid workforce
Building resilience is vital amid inflation, wage pressures, and skills shortages. Think strategically when rewarding employees and address skills gaps to ensure competitiveness in the marketplace.
Cost: investing strategically
Organisations may incur short-term costs when making decisions to address future needs. It's a balancing act of optimising costs while preparing the business for future success. Align your people agenda with the wider business strategy, anticipate future trends, and invest strategically to achieve long-term success.
Building the foundations of your people strategy
Organisations face numerous challenges in attracting and retaining talent. As wage increases and flexible working demands shape the people agenda, businesses must find innovative ways to address these issues through their people strategy while optimising their HR function.
Navigating economic downturns, like recessions, can lead to a rise in negative employer brand due to cost-cutting measures and mass redundancies. The current landscape, with heightened focus on being a reputable and trustworthy employer, amplifies the impact. With the prevalence of social media sharing and extensive media coverage, the repercussions become even more significant.
Maddie Wollerton Blanks, Associate Director, People Advisory at Grant Thornton UK, discusses the role of the HR function and explores the elements contributing to a successful people strategy and HR's role in driving value, despite what is happening in the economy. Maddie also discusses the barriers hindering progress and the importance of validating HR strategies with data to align them with broader business objectives.
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Navigating wage increases and flexible working demands
Two key themes significantly impacting the people agenda are the expectation for wage increases and the trend of prioritising agility, answering the rising demand for flexible working arrangements.
An increase in wages means an increase in the wage bill for businesses and in some scenarios, offering a hybrid working model isn’t doable. So, while businesses understand the importance of addressing these concerns particularly during a cost-of-living crisis, they often need more support due to budget constraints.
This is when exploring alternative methods to mitigate the risk of employees voting with their feet and leaving the company becomes crucial.
Businesses can enhance employee satisfaction and loyalty even without substantial wage increases or flexible work options by focusing on non-monetary rewards and employee benefits, such as career development opportunities, work-life balance initiatives, and recognition programs.
Assessing the HR function's role
To effectively navigate the people agenda, businesses must assess the current state of their HR function and identify the desired future state. In many cases, teams find themselves primarily focused on operational delivery, getting caught up in day-to-day tasks, and needing help to move towards generating strategic value.
Recognising this gap and aligning HR priorities with broader organisational goals is crucial for long-term success. A people strategy scorecard can help evaluate HR's effectiveness in four key roles: operational delivery, talent acquisition and retention, employee development, and strategic value generation.
Overcoming barriers and driving change
Organisations that are taking a strategic and long-term approach are winning in terms of talent and cost.
58% of attendees said operational delivery took up most of their HR function's time, however 64% wanted to transition from an operational HR function to one that generates strategic value.
Which of these elements take up most of HR's time?
Which of these would you like to increase focus on going forwards?
Aligning HR strategies with the broader business strategy ensures that people-related initiatives directly contribute to success. By leveraging data analytics and insights, HR professionals can demonstrate the impact of their initiatives on business outcomes and gain support for strategic changes.
Validating the HR strategy with data
The need for data-driven decision-making and validation of HR strategies will only continue to grow. Data validation plays a vital role in establishing the credibility and effectiveness of HR strategies.
By leveraging data analytics, HR professionals can measure the impact of their initiatives on key performance indicators such as employee engagement, productivity, and retention rates.
This data-driven approach proves HR's value and strengthens the alignment between people strategies and overall business objectives.
Organisations prioritising data validation can make informed decisions, demonstrate the impact of HR initiatives, and gain executive buy-in for future strategic changes.
Employment tax regulations are constantly updated so it's crucial to stay vigilant and informed as an employer. Lee Stott, Associate Director, Tax at Grant Thornton UK, discusses why understanding these key considerations can help businesses ensure compliance and avoid potential penalties.
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Holiday pay
A significant ruling in 2022 has brought attention to the underpayment of holiday pay for variable paid workers, raising concerns for employers across various sectors. The ruling revealed that many businesses were inadvertently underpaying their employees during periods of annual leave due to the way holiday pay was calculated.
One key challenge is identifying different hourly rates for various aspects of work, such as overtime, shift differentials, or additional allowances. Employers were encouraged to assess their payroll systems' capabilities in accurately calculating holiday pay to ensure compliance.
This emphasises the need for employers to assess the current way they are calculating holiday pay for variable paid workers and to review how their payroll software handles complex holiday pay calculations.
National Minimum Wage
Recent years have seen significant increases in the national minimum wage, leading to cost impacts for businesses of all sizes. In response to these changes, HM Revenue and Customs (HMRC) has intensified its efforts in NMW investigations. Employers should know that HMRC now adopts a more targeted approach, currently based by geographical area and seeking additional information and data during their investigations.
A key takeaway from this development is the importance of diligently complying with NMW regulations. Considering recent changes, employers must ensure their pay practices align with the current minimum wage rates. Staying proactive and transparent in providing the requested information to HMRC can help businesses navigate these investigations more effectively.
Global mobility
Since Covid-19, hybrid or remote working has remained a key issue for employers looking to manage their tax risk. They face having to understand local country tax laws predominately around permanent establishments, payroll and social security. In addition, since Brexit the right to work in a particular country has become a critical consideration regarding remote working.
Employers need to ensure that their employees have the necessary permissions to work in each country to avoid legal complications and potential penalties. Adhering to the applicable tax, immigration and work permit regulations is essential in maintaining compliance in a post-Covid-19 and post-Brexit world.
Incentives update
In addition to the focus on NMW and holiday pay, employers should be aware of recent changes around Company Share Option Plans and Enterprise Management Incentives (EMI). The most recent Budget introduced key updates that affect these plans, potentially impacting employee incentives. Staying informed about these changes is crucial for businesses that utilise or may potentially utilise share options and plans as a part of their remuneration strategy.
