Long gone are the days where employees think that they have to look for a job for life. It is easier than ever to transfer skills, move abroad to work and, with online recruitment platforms, employers have access to a much larger pool of candidates. Although, there are downsides for employers as certain sectors may prove more attractive than others.
In the current market, for many sectors, employees are in control and employers are having to look beyond market rate remuneration packages to recruit and retain staff. In this blog, Helen Griffiths from Plus Accounting explores some of the ways you can enhance the overall package offered to employees. Pam Loch from Loch Associates look at how to get the best from your recruitment and onboarding process to help you employ and retain the right people in your business.
Here are a few ideas to consider as part of the overall package offered to employees:
Pension contributions – as an employer you must comply with pension auto-enrolment rules, but you can pay additional pension contributions as a way of rewarding employees. If you want to pay an employee a bonus, it might be worth considering making a pension contribution into a registered pension scheme.
- The benefit for the employer is a tax deductible and national insurance (NI) free reward
- The employee receives a welcome boost to their pension pot.
Employee suggestion schemes – did you know that rewards resulting from a staff suggestion scheme can be paid tax free up to £5,000? Where the suggestions are not part of a planned suggestion meeting and not actually part of the employee’s job, there is scope to reward them under one of two categories:
- An Encouragement Reward which means you can pay an employee £25 for a good suggestion or to reward special effort without any tax or NI cost to you or the employee and;
- A Financial Reward which is for a suggestion that saves or makes the business money. The reward is exempt from tax and NI up to £5,000 and is based on the greater of:
- 50% of the amount the suggestion is expected to save or make a year after it is implemented and
- 10% of the money the suggestion is expected to make or save 5 years after it is first implemented
Staff events – you probably already know that paying for a Christmas Party is tax free as long as the annual total for events does not exceed £150 per head. If you are not utilising the whole £150 limit, it might be worth considering a summer event for your employees.
Alternatively, if social events work well as a way of bringing cohesion to your team, you could hold more events and if the £150 limit is breached you can arrange with HM Revenue & Customs (HMRC) to pay your employees’ tax on their behalf, along with NI. This is called a PAYE Settlement Agreement (PSA).
This does add an annual administrative task to your to-do list because you will have to report and calculate the tax and NI due, but HMRC have made this relatively easy to administer and your accountant can always help you with this.
Share schemes – if you are operating through a limited company and you would like to retain key staff then share schemes are a great option to encourage their buy-in. This usually involves the company granting them the option to buy shares at a future date when the company will hopefully be worth more, but at a price set today.
There are several types of share schemes, some of which come with tax advantages.
The key points to consider here are:
- Most tax advantaged schemes need a minimum commitment of three years from the employee to gain the income tax benefits of the share scheme
- Employees involved in a share scheme have an incentive to stay with the business and help it to grow because they will benefit from the increase in value
- It means those employees you have identified with the skills needed to help you grow your business are able to pass on their skills and expertise to other employees
There are some other tax and NI exempt benefits an employer can provide too which are listed below:
- Mobile phone – you can give an employee a mobile phone and pay for associated calls
- Workplace parking – this can be at the employer’s car park or to cover the cost of a season ticket at a nearby car park
- Provide spaces to park motorbikes and bicycles at the employer’s car park or at a nearby car park
- Work related training
- Eye tests
- First £500 of advice in connection with pension arrangements or use of pension funds, in a tax year. (There are some conditions attached to this including the accessibility of this advice to all employees).
It is important that you seek professional advice if you wish to implement any of these suggestions in your business. You should also ensure you understand the additional reporting requirements and deadlines required by some of the suggestions above, as well as understand the impact on your employees.
We spoke with Loch Associates about the HR issues they are seeing at the moment and what they think employers should be thinking about.
High staff turnover can be costly but it’s not all about the money
High staff turnover is a painful expense for any company and not just in terms of monetary investment; it also negatively impacts morale, behaviours and ultimately culture. Retaining staff is not all about the money either – it’s still important to ensure pay and remuneration packages compare well in the marketplace however it’s other aspects of the employee experience that can engage staff in the long-term.
As a result of the Covid-19 we have seen many younger team members make life changing decisions. It’s almost as if they feel that the last few years have given them time to think about what they really want out of life and make radical decisions to move on from the ‘normal’ safe world of employment. Other employees who have enjoyed working from home, doing the school run and spending more time with their family are now thinking about lifestyle changes – looking for more hybrid roles or reducing their hours. Some of these things can be more challenging for employers to deal with, for example continuing to work with an employee who has moved to a different country in a different time zone. However, in this current tight recruitment market it’s important to consider how flexible you can be and what you can do to become more attractive when hiring new people to your team.
Recruit for attitude
Replacing and attracting new staff is your opportunity to ‘get it right’. You can train staff for the skills they need, but it’s much harder to train for attitude. Think carefully about what your company values are and how this translates into the soft skills you need in your team. Is good communication, being a good team player and a can-do attitude must-haves? Involve several members of the team in the recruitment process to make sure the chemistry and fit is right. If the role requires working in isolation most of the time, make sure your candidate is comfortable with that arrangement (some people love it) and be clear about what the average workday looks like. Being transparent and clear about what you are looking for at recruitment stage can save you pain (and money) in the long run. Using psychometric testing aligned to your values can be a useful tool to help you assess this.
Onboarding is key to success – almost 25% of new hires don’t show up for work on day one
It’s essential that you engage your new recruits during the period between accepting the job offer and day one in the workplace. Include them in social events, send them some goodies in the post and some fun profiles of their new colleagues, so that they feel they are getting to know the team in advance. Make sure they have a programme of ‘getting to know you’ in their first few weeks as well as some interesting job tasks to complete, so they immediately feel like they are adding value to the business and are able to contribute.
Mapping out the employee journey
It’s worth spending time looking at the whole employee journey in your organisation. In doing this you may identify some patterns; some key moments when employees tend to resign. For example, if there’s a pattern of employees leaving after around three months, this could be down to a gap between their expectations of the role and the reality of it, when they’ve been doing it for a while. This goes back to transparency at the start of the journey and maybe something as simple as regular check ins in with them could prevent this happening.
Pay is only one aspect of why people do their job. For some people it is important that their work is meaningful and aligned to their personal values. For some people flexibility will be as valuable as pay and for others it will be investment in their professional development that matters most to them. Take time to identify what is creating deep engagement with each individual and respond the best you can.
Being clear about opportunities within your business and how you define success in a role helps employees to understand how they can progress and what they need to do to get there. It’s important that this progression includes both technical and behavioural skills, after all no one wants to promote someone who meets targets at the expense of others or delivers in their role without engaging the team or putting the business first. By ensuring this is in place you are also able to reiterate how important your values are to the success of the business. Lastly, always perform exit interviews and use the feedback to continually improve the employee experience.
If you would like to discuss any of this further or understand more about services such as Psychometric testing, please get in touch with at Loch Associates on 01273 311 855.
The information provided is correct at the date of posting but is subject to change.