With pressure on the UK economy and businesses to grow, the need to increase workforce performance will be a top priority for employers in 2024. We recently asked 824 HR influencers what they see as the biggest challenges to employee performance next year. Here’s what they said.
Priority 1: Employee Financial Wellbeing
48% of employers say financial wellbeing is the biggest threat to employee performance
The cost-of-living crisis remains the dominant concern for 51% of UK employers who are worried about the negative impact it is having on organisational performance. To quantify this concern, almost half (48%) say it poses the single biggest threat to organisational performance.
Employers say that money worries are taking their toll on employees. As a result, employers have received a higher volume of requests for support from employees. One in four said they have received more requests this year for additional financial support. A third (33%) said they have staff working second jobs to make ends meet.
All this has impacted employee mental health and wellbeing and contributed to dips in organisational performance. The majority of employers (64%) have struggled to retain the people they need, and 62% say employee morale has fallen.
In response, employers increased their support for employee financial wellbeing with support focused on getting more money into people’s pockets. Seven in ten employees awarded staff a one-off payment to help with rising costs, while 60% increased wages, and 34% introduced a shopping discount scheme. Over half said they would like to do more to support employees through the cost-of-living crisis but feel compromised between the pay and benefits they would like to provide and affordability.
With this caveat in mind, 50% of employers think the financial wellbeing support they offered was moderately effective, and 35% judged the support to be slightly effective or not effective at all. Only 13% deemed support to be highly effective.
Despite these limitations, and concerns over cost, employers say they plan to provide employees with extra support to navigate another turbulent year in 2024. The number of employers that plan to either increase pay (47%) or award staff a one of payment (20%) has dropped but this still remains the most popular option. In terms of non-monetary options, 22% plan to launch an employee assistance programme, or EAP, and 17% will offer financial advice.
Similarly, employers plan to make additional investments over the next six months to improve employee performance. With 55% investing in learning and development, 43% in employee health and wellbeing and 36% in motivation and morale.
Priority 2: People with the right skills to support business change
64% of employers struggle to retain the people they need
Although the skills shortage that has plagued the UK economy for the last two years appears to be showing signs of easing, 64% employers anticipate this will continue to challenge business performance next year.
AI, new technology and business change are creating a need for new and different skills. In a tight recruitment economy 15% of employers say finding people with the right skills is the biggest challenge to performance.
As a result, one in six employers (58%) say they are planning to introduce recognition and reward initiatives to enhance employee retention. And 50% sat they will introduce initiatives to foster a positive company culture. Meanwhile half of employers are drawing up plans to address the skills and learning gap.
Priority 3: Support employee health and wellbeing
59% of employers plan to boost employee wellbeing
A cost-of-living crisis, following fast on the heels of a pandemic has depleted staff resilience. One in four (43%) employers believe a concerted efforted to boost wellbeing will improve employee performance. As a result, almost one in six employers have put a plan in place to support wellbeing next year.
Related to this point, 58% of employers plan to focus on improving work life balance with a third saying they believe this will improve employee performance.
Taking a step back to reflect on these priorities, it’s clear from the research that employee financial wellbeing will continue to dominate discussions around employee performance in 2024. Last year many employers awarded pay rises and one off payments but clearly this isn’t a sustainable solution over the longer term. Employee discount schemes and targeted support to pay for everyday costs such as energy bills and groceries have increased in popularity as a means to help staff with inflated costs outside of a pay increase.
Now is the time for employers to explore a wider range of options to retain, motivate and engage staff. We know that when employees feel valued they are more likely to feel motivated at work, show higher levels of performance and are less likely to seek alternative employment.
Kate Chidlow, Head of Marketing, Edenred UK