4 Ways To Offer More To Low Paid Employees

Ken Charman • Oct 06, 2021

Ken Charman, CEO of uFlexReward, explores how employers can improve employee engagement in a low pay environment. Paying more is not the only way forward; there are other imaginative, fair and supportive initiatives that can be taken to address employee financial wellbeing concerns and offer more to low paid employees.

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Every HR professional knows that when an employee is fully engaged with their job, they bring their whole self to work - their skills, creativity, energy, determination, and much, much more. It's beyond proven that engaged employees have a positive impact on a whole range of business outcomes.

So how does employee engagement correlate with low pay? Global companies face increasing pressure to do more with less, and the old-school methodology of squeezing wages at the bottom of the hierarchy - while inflating them at the top - serves only to drive down engagement levels. New-school methods of hiring gig workers as low paid units of skill on as-and-when contracts don't help.

A low-paid, undervalued, and zero-hours human being is focused on survival, not performance.

The impact of low pay on employee engagement

Even the most dedicated employee can't focus on work if they're not sure they can make rent that month. In the UK, research by Close Brothers found that financial worries are one of the single most significant causes of stress to workers, impacting their mental health and productivity at work. Neyber estimates that financial burden costs the UK economy £15.2 billion annually in absenteeism, reduced productivity, and turnover costs.

Is the answer to pay more?

To a certain extent, yes. Money is a motivator if you don't have enough to cover Maslow's basics like food, shelter, and safety for yourself and your family. A Chartered Institute of Personnel and Development (CIPD) survey found that the four most important aspects of financial wellbeing to workers are:

Earning a wage sufficient for a reasonable lifestyle
Being able to save for the future
Being rewarded for efforts fairly and consistently
Be prepared to pay off existing debts comfortably

These are not wild desires. Paying a liveable wage is not only the ethical thing to do, but it makes good business sense, too. In the UK, a broad range of employers has achieved Living Wage Foundation accreditation.

The Living Wage Foundation advocates for wages that people can live on. Accredited employers include a third of the FTSE 100 employers, and household names such as Unilever as well as traditionally low-pay businesses such as contract cleaning firms. Living Wage Foundation accredited employers have described an array of business benefits that include:

Increased employee motivation and retention rates
Improved business reputation
Increased differentiation within their sector
Improved staff-manager relations

Also worth noting that paying a living wage doesn't just center on the employee. Society is starting to reward companies who are perceived to do the right thing. 93% of university students prefer to work for living wage employers, and 60% of consumers agree that wages should reflect living costs. Global connectivity means it's not so easy to hide the lowest payments in the shadows. Paying a living wage is brand-enhancing.

But paying more isn't the only way forward. Here are four more ways to address employees' financial wellbeing concerns:

1. Ask what's important

Rather than assume what's important to staff, ask them, and document it. Using employees' feedback will help organizations to allocate reward better. Employees at different stages of their lives will have various financial stresses: paying off debt, saving up for a first home, health care issues for elderly parents, childcare struggles, or wondering how they can ever retire. You'll gather useful information about the mix of engagement approaches to use. Asking what's essential also starts the corporate conversation about financial wellbeing, and a bottom-up approach will gain more buy-in.

2. Investigate pay progression barriers

CIPD research also found that workers wanting to progress were often 'stuck' on the lowest levels of pay strongly correlated with working part-time and with lone parenthood. Also, the chances of escaping the small fee became less likely as the employee aged. It also found that workers felt it was easier to improve their pay by changing employers rather than by seeking promotion.

Help 'unstick' workers who want to progress by creating:

Meaningful, clear pathways to higher wages
Learning and development opportunities to improve earning potential
Job design that supports their growth

3. Offer financial education and support

Giving staff the opportunity, information, and tools to take action to improve their financial wellbeing help them feel more in control of their finances and reduces stress. Each employee is different, so a personalized approach is critical. Financial education and support can take many forms but could include:

Improving financial literacy skills such as planning and budgeting, understanding interest rates and credit scores
Offering access to independent debt counselors or financial advisors
Offering an Employee Assistance Programme
Helping staff manage tax efficiently
Encouraging take-up of existing corporate benefits

4. Offer personalized benefits

But the pay is only one aspect of reward. Reward includes bonuses, pensions, health insurance, incentives, benefits, share purchase schemes, and more. Vacation leave, flexible working, and skills development are also part of the reward, and so too is the broader employee experience - such as engagement-boosting feelings of autonomy and feel valued.

One area that employers need to be more attentive to is flexible benefits. On the surface, these schemes, with their menu list of options, seem generous and attractive. Still, they are expensive to source, and savvy employees suspect they can make a better deal with cash than the employer or broker can make with group purchases. Benefits that point employees to personalization within a captive choice list for items like: