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Business pressures – a case study

We all know that UK businesses face some very real challenges in 2022. But the extent of those pressures is perhaps not yet fully appreciated by the national media and general public.

An interview this morning on Radio 4’s Today programme really highlights just how challenging the economic and employment issues are for at least some employers right now.

The employer interviewed was a well-known family baking business, Greenhalghs, in the North of England. The business employs around seven hundred people, and it was clear that they are paternalistic in approach to their workers too.

Yet they are facing some real issues. A few key facts were very striking indeed:

Supply costs

A bakery, by definition, is very much at the mercy of ingredient costs. And the interview highlighted that many of the routine ingredients for their well-known brand of pies have doubled in cost – some literately overnight.

The other area of supply exposure for this (and many other businesses) is fuel cost. One of the interviewees suggested that the site’s electricity cost in January 2022 was almost exactly equal to four months’ electricity usage in 2021. He suggested the cost increase to the business was in the region of 350%.

Workforce challenges

The problems do not end there.

The employer is short of around forty people to reach their minimum staffing levels, and finding and placing potential candidates is a very real struggle. The interviewee said:

  • 50% of the people that respond to an advert fail to turn up for interview
  • 50% of those that turn up for interview fail to attend the induction day
  • 50% of those that attend an induction day don’t turn up for the first day’s work
  • 50% of those who do attend leave after the first day
  • 50% of the remainder might still be there at the end of the week

The situation was described as “heart-breaking” by the interviewee, who also highlighted all the wasted effort and fiscal expense in administration, training, and costs. And what was really striking is that this employer is trying to pay a generous level of salary to workers too.

Where does this leave employers?

Whilst the above might be an extreme set of circumstances, it nevertheless highlights the real pressures that employers in so many sectors are now facing.

It does also suggest that in the current – extremely difficult – recruitment market, retention might well be a much more cost-effective option than recruitment for employers.

So, we would strongly encourage employers to revisit their retention policies, including:

  • Introduce (or re-launch) Total Reward Statements to really drive home the value of the remuneration package on offer
  • Introduce regular employee communication sessions to highlight the hidden or under-appreciated value of some elements of the employee benefits offering
  • Highlight retail discount schemes and other cost savings (for instance free car parking) to employees to ensure usage and appreciation
  • Introduce financial wellbeing sessions to help employees navigate the challenges of the cost-of-living crisis
  • Speak to your adviser to establish whether there are any other reward benefits you could offer at minimal cost

We would also encourage employers to revisit their benefits offering to ensure that it is comprehensive, cost-effective, and well communicated.

For more information on any of the above, please contact the Partners& Wellbeing Health and Protection team on 03300 940177 or