Attracting talent with a strong pay and benefits proposition

Article written by Cameron Main, Head of Growth at FastTrack Marketplace partner Flare

As we emerge from the COVID-19 pandemic, one thing that is clear is that the competition for talent is intense. With a skills shortage experienced across the globe, a change in the way we work, and a shift in the needs and expectations of employees, companies must look beyond traditional methods to attract and retain talent.

Recent research of 7,000 Australian workers conducted by Ernst & Young and Flare into the new pay economy showed that workers are now demanding greater control over their pay and benefits: 55% report COVID-19 lockdowns have changed what they expect from an employer.

In general, during COVID-19, Australian workers:

• Changed what they look for in a job or from an employer
• Started to feel more stressed about their finances
• Left their last employer because they did not meet their financial needs
• Realised that their pay package has materially impacted their social and mental health

A strong pay and benefits proposition has become critical in the race for talent. With the cost-of-living soaring and many Australians experiencing financial stress, along with a highly competitive labour market, employees are expecting additional financial benefits and ongoing financial wellbeing support from employers.

Despite this, Australian businesses are failing to offer these programs to their employees. This means that there is a large underserved, under-packaged market in the Australian workforce. For those businesses who act, there is a competitive opportunity to attract, retain and engage talent.

THE STATE OF PAY

4 in 10 Australians don’t think of super as part of their pay package. Significantly, our data also shows only a third of Australian workers have access to a benefits program, even though over three-quarters would use one if offered. Furthermore, casual and contract staff are losing out with permanent employees 15% more likely to have had access to perks and benefits in the past. But of those that do, most employees feel it meaningfully improves their pay package. Across the board, 4 in 10 workers are more likely to stay in a job because their employer offers a benefits program.

A 2021 report into the Future of Work by PWC supports this, highlighting the two top benefits employees wanted as part of an Employer Value Proposition were ‘Remuneration and Rewards’ (25%), and ‘Wellbeing’ (22%). This encompasses pay, salary packaging, discount incentives such as perks, mental health support, wellness and lifestyle benefits, and financial support and education.

It’s clear that employees’ expectations from employers have shifted, and they now actively seek out businesses with aligned values that will support their holistic wellbeing.

FINANCIAL STRESS IS WIDESPREAD

Many Australians are living with financial stress. According to a National Pulse Test, Australians are experiencing higher levels of financial stress and mental distress, which has risen to its highest level since the beginning of the COVID-19 pandemic despite Australia being somewhat on the road to economic recovery.

Our research uncovered that 7 in 10 Australians are living paycheck-to-paycheck, with less than $5,000 in savings and an inability to meet their financial needs in an emergency. Rather than asking for a pay advance, two in three Australians turn to potentially expensive credit products to fund important purchases between payruns – and are on average $3000 in debt.

This is compounded by a significant increase in the cost of living. Inflation is outpacing salary growth in Australia, which reduces an average household’s buying power significantly. The latest ABS data shows Consumer Price Index rose to 5.1% over the 12 months to the March 2022 quarter while wages didn’t keep up with a 2.3% rise in 2021.

OFFERING PAY AND BENEFITS PACKAGES MAKES EMPLOYERS MORE ATTRACTIVE

Financial wellbeing is an often overlooked opportunity for employers to offer a holistic wellbeing package in response to market conditions and attract talent.

Financial wellbeing is intrinsically linked to holistic wellbeing and should be considered as a critical component of any wellbeing strategy. It is proven that when we are experiencing financial stress or anxiety, it can impact both our mental and physical health, as well as our ability to perform at work.

Financial stress doesn’t discriminate and can affect all income brackets. However, job security plays a role with those in casual work, contracts, or self- employed, being particularly vulnerable to financial stress.

Financially stressed employees are less engaged in their job and are more likely to take time off or quit due to financial stress. Our research found that casual and contract staff were more than twice as likely as permanent employees to take days off work due to financial stress, despite in most situations going without pay for doing so. Even more staggering is that over half of resignations through COVID-19 were due to financial stress.

WHAT TALENT IS LOOKING FOR IN A PAY AND BENEFITS PACKAGE

Offering employees control and flexibility over access to their pay through On-Demand Pay (also known as earned wage access), without charging interest or fees, is one way employers can help provide impactful and immediate support to an employee’s financial wellbeing.

Our research found that 55% of surveyed respondents would take up On-Demand Pay if their employer offered it, as they feel it would reduce their financial stress. It can also help to set-apart an employer brand, offering something unique and tangible to promote to candidates.

Financial benefits span from salary packages including superannuation to financial incentives such as bonuses, profit-sharing schemes and pensions, and salary packaging Novated Leases. Equipping employees with knowledge on salary packaging, and offering these solutions may help them save money. For example, depending on personal circumstances, novated leases can give employees a way to save on GST and income tax.

76%  of employees wish to take up financial benefits

Our research found that over three quarters of Australian employees wish to take up key financial benefits like salary packaging. Promoting these value- adds to talent can give you an edge in recruiting.

With a high cost of living, employees’ wages go further with access to discounts and rewards with retailers and other well-known brands. Money off essentials like their weekly shop or great deals with wellbeing brands that help them save on healthy activities can make a difference.

According to the PWC report, ‘Remuneration and Rewards’ are the top benefits sought out by employees. Making candidates aware of these everyday perks can go far in demonstrating an employer’s commitment to their financial wellbeing

WIN THE RACE FOR TALENT

In a post-COVID landscape, the needs and expectations of employees have changed significantly, as have their expectations of employers.

Offering exciting pay features like On-Demand pay, financial benefits like salary packaging, alongside a suite of perks that save money, can help support employees’ financial wellbeing and strengthen your employee or candidate proposition.

The Flare App and Card are directly addressing these needs, giving business leaders a powerful new weapon to add value to every employee’s experience, and provide a real opportunity to differentiate an employer brand.

Flare are very excited to be partnering with FastTrack to bring these benefits to their client base and underlying employees.

This article was written by FastTrack Marketplace Partner Flare for our In the Fast Lane newsletter. For further information please contact marketing@marketplaces.fasttrack.com.au

To access the full Flare and EY whitepaper, Pay in the New Economy, click here.