It’s been a tricky year for UK plc so far. The threat of a recession and a wage-price spiral that’s been looming since late 2022 has done nothing to boost confidence, while employers have had to adapt to new cultural expectations about the world of work.
As the environmental, social and governance (ESG) credentials of businesses become an increasingly important consideration for employees, consumers and investors alike, companies have realised that being seen to be a ‘progressive’ employer will benefit the bottom line – and vice versa.
Here, senior business decision-makers reflect on how 2023 has gone so far and consider what further challenges could arise in H2 and beyond.
Non-cash benefits come into their own as retention tools
Chris Ronald is EMEA vice-president at Blackhawk Network, a digital payments company based in California. He believes that the UK’s ongoing cost-of-living crisis may have played a part in making people less patient with their employers, many of whom are struggling to pay their own bills.
If the salary increases on offer to them equate to real-terms pay cuts, given the high rate of inflation, employees are highly likely to quit, he warns, adding that it would be naïve for any firm to assume that even a long-serving member of staff will remain loyal unless it shows that it truly values them.
While he accepts that many firms simply cannot afford inflation-busting pay rises, Ronald stresses that recruitment is “a risky and expensive process”. He suggests that firms could improve staff retention by investing in company-wide benefits packages, which may include some practical assistance with the cost of living, such as childcare or technology allowances, or vouchers offering discounts at selected shops.
“It’s a balancing act: while you’re supporting and retaining the right staff members, you must also ensure that your business remains viable,” Ronald says. “Companies that have a better shot at retaining employees have been using support options such as mental health days, personal development campaigns and salary-sacrifice schemes.”
A salary-sacrifice scheme is an increasingly popular arrangement under which employees exchange a proportion of their pay for non-cash benefits, some of which are tax-exempt.
Tom Leathes, founder and CEO of used-car market Motorway, recommends that employers should put a “huge focus” on benefits and perks relating to health and wellbeing. “We know that our team members will be more productive if they have a strong work/life balance and are healthy and happy,” he says. To this end, the firm offers “discounted memberships to [guided meditation services] Calm and Headspace, as well as resources provided through Bupa”.
For roles that lend themselves to remote or hybrid working, employers need to continue offering such flexibility in 2023. That’s the view of Michael Erisman, chief people officer at Reputation, a developer of software for handling consumer feedback. “Flexibility in how and where people work is one of the most valued currencies. It’s on a par with factors such as compensation and career growth – and it will continue to be in the foreseeable future,” he predicts.
Why businesses must display more ‘social consciousness’
Reece Tomlinson, founder and CEO of private equity house Saône Capital, reports that ESG credentials have become “highly relevant” to consumers, investors and employees. While the environmental aspect of ESG is arguably the most prominent, companies that neglect their “social consciousness” do so at their peril, she warns.
Being seen as an inclusive employer makes the firm’s offerings appealing to a more diverse array of consumers and also broadens its range of potential recruits, Tomlinson adds.
Erisman says that employees have become “more interested in how they fit into the broader impact the company is having [on society], including the idea of being part of something bigger than yourself.”
Erin Dieterich, senior director of social impact and ESG at software firm New Relic, agrees. She has observed a growing awareness among employers of the need to develop their diversity and inclusivity initiatives beyond standard calendar events such as Black History Month and Pride Month. Celebrating different cultures at work should be an “all-year-round” commitment, she stresses.
Dieterich believes that establishing “employee resource groups” to better support various minorities can promote deeper discussions about people’s similarities and differences, helping participants to better understand where they might need more support from their managers.
She adds that companies are becoming more open to making diverse non-executive board appointments to gain a wider range of perspectives at the highest level.
Environmental sustainability is a sound investment
Tomlinson’s experiences so far this year have confirmed to her that “the old way of doing things, where corporations really only focus on making returns for shareholders”, is no longer viable. Because people are more aware of the climate crisis and social inequality, she says, companies have been compelled to “verify that they’re acting in an environmentally friendly and ethical manner”. Those that fail to do so simply won’t succeed.
A company’s carbon footprint is something that young people in particular care about. A recent survey by YouGov found that 69% of gen-Z consumers in the UK would be willing to pay more for sustainably produced food and drink, compared with 53% of baby boomers.
For Tomlinson, a company’s sustainability credentials can no longer be dismissed as part of a mere marketing gimmick. Against the backdrop of rising energy costs and the public’s heightened awareness of the climate crisis, they have truly become a commercial necessity in 2023.
It’s been a tricky year for UK plc so far. The threat of a recession and a wage-price spiral that’s been looming since late 2022 has done nothing to boost confidence, while employers have had to adapt to new cultural expectations about the world of work.
As the environmental, social and governance (ESG) credentials of businesses become an increasingly important consideration for employees, consumers and investors alike, companies have realised that being seen to be a ‘progressive’ employer will benefit the bottom line – and vice versa.
Here, senior business decision-makers reflect on how 2023 has gone so far and consider what further challenges could arise in H2 and beyond.
