20 September 2019

This was a topic we discussed in depth and with passion (!) at our September Godalming Business Club.  Indeed, done well, motivating and engaging employees makes commercial sense as these statistics demonstrate:

1. Jacob Morgan with American University, Cisco and Lever analysed various metrics of companies investing in employee engagement.  He found these organisations had 4 times the average profit, and more than two times the average revenue than those who didn’t.
2. In their own survey, Gallup also found highly engaged teams showed 21% greater profitability
3. Conversely The Engagement Institute — a collaboration of The Conference Board, Sirota-Mercer, Deloitte, ROI, The Culture Works and Consulting LLP — released a study of 1,500 respondents that showed that disengaged employees cost companies between $450 and $550 billion a year.

So what is employee engagement?

The Chartered Institute of Personnel and Development gives this definition:

Employee engagement goes beyond motivation and simple job satisfaction. It can be seen as a combination of commitment to the organisation and its values and a willingness to help colleagues.

It adds when it comes to employee engagement, business strategies should pay attention to:

• Fair treatment of employees and support for well-being
• Empowering employees to shape their jobs
• Having effective channels for employee voice
• Good people management skills
• Performance management systems that motivate and give opportunities for professional development
• Communications to reinforce purpose and vision and keep employees informed

Practical ways of engaging and motivating employees

In the Business Club’s groups we discussed the fictitious case study of Kim – Deputy Creative Director at a London advertising agency.  Kim was at cross-roads in their career and considering leaving the business.  At the same the business was looking to retain and promote Kim.

Drawing on their own experiences, The Business Club’s participants shared a wealth of ideas which could be used to retain and motivate Kim. These included:

• Easing Kim’s longer and more expensive commute through the use of agile working, flexi time, working from home, a season ticket loan, or financial help to buy an electric car.
• Exploring Kim’s career plan to see how the business can best support it with training, and professional development.
• Enhancing the working environment and social engagement of the team.
• Offering investment in the business and a more senior role, for example through employee share options.
• Involving Kim in the strategic planning and direction of the business.
• Checking Kim’s attitudes and needs when it comes to recognition and reward.
• Giving Kim a pay rise.

One of the key points that came out of the discussion was that it is important to recognise that different employees are motivated by different things at different points in their lives.

Financing employee engagement and motivation

So how can businesses realistically finance different employee motivations? This isn’t as much as a challenge as some businesses think, for example:

• Utilise capital allowances for tax-efficient upgrades to equipment that people need to do their job efficiently and effectively. 
• Remember staff training costs are usually deductible and can help to reduce company profit – and as a result the corporation tax bill.   Also, paying for an employee’s professional qualifications or membership of a professional body is not a Benefit in Kind and doesn’t have to appear on the P11D.
• Invest in employees’ pensions for a highly tax efficient remuneration method.
• Consider salary sacrifice schemes – childcare vouchers and the cycle to work scheme remain popular.
• Make the most of annual allowances for employee events and socials (currently £150 per person per year).
• Explore employee share schemes to retain and motivate key employees long term and succession.

Do, however, be mindful that bonuses and benefits packages bring tax and national insurance consequences for both the employee and employer.  With the employee it is important to check if this investment pushes them over a tax bracket and into a higher tax regime (along with the potential loss of benefits like child benefit).

What employees care about work.

Our September session wrapped up with a look at the 2014 a study by the Boston Consulting Group Matrix. It surveyed over 200,000 people around the world to find out what employees cared about at work.  The top 5 issues were:

• Appreciation for your work
• Good relationships with colleagues
• Good work-life balance
• Good relationships with superiors
• Company’s financial stability

Interestingly in their study Gallup found 89% of employers think employees leave for more money but in reality, only 12% did.

Once again the Godalming Business Club session featured many great ideas, tips and anecdotes from the Group. If you would like to further discuss:

• financing and tax planning issues around employee engagement, motivation and retention
• HR and people development issues in this important area
• attending a Business Club session

… do contact the Shipleys’ Godalming team for more information.

Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary, if you would like advice or further information, please speak to your usual Shipleys contact.

Copyright © Shipleys LLP 2019