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National Living Wage
Seize The Opportunity

Adam Carter explores the impact the National Living Wage and how it’s an opportunity for the sector to adapt its recruitment practices.

It has been around four months since the Chancellor announced that the much-anticipated, new National Living Wage would come into effect in April. Since that time the media has been awash with commentaries overwhelmingly denouncing the new legislation as being the death knell for the care sector.

But what if its introduction is exactly what the sector needs right now?

This is not an attempt to cause controversy by going against the grain of what is, by and large, a piece of legislation that has garnered marginal support to date. Rather, whilst we all recognise the significant impact that the new living wage will, invariably, have on the way care organisations manage their existing workforces, there is a need for balance too.

Indeed, although many employers are still calculating the affordability of the National Living Wage, there is a shift in the way in which low pay is now being viewed. Many employers are beginning to see the introduction of the National Living Wage as an opportunity to review their recruitment practices. There is an increasing focus, by providers, on staff retention over the longer-term, rather than the short-termism approach that has been the mainstay of the sector since time immemorial. So, where are we now and what do we see happening over the coming months?

Situation Analysis

The care sector has been under the spotlight for a number of years and not always for the right reasons. From the Winterbourne View abuse and its much-publicised Panorama exposé to the alleged abuse of elderly residents at six care homes across South Wales – these and other high profile stories have left a stain on a care sector that is having to work harder than most to position itself as an employer of choice.

However, that’s just one side of the coin. Arguably, the greatest challenge the sector has faced is to secure a better deal for its workforce, both in terms of pay and conditions, and to stem the flow of workers leaving the profession.

Social care has long been flagged as a sector of concern when it comes to how much the average worker takes home each month. The make-up of the workforce is typical of what we associate with a low-pay industry – according to the Resolution Foundation a disproportionate number of workers are part-time, migrant workers and female.

For any industry observer from the outside looking in, these factors paint the picture of a sector that is either flat-lining or stagnating. However, nothing could be farther from the truth.

Indeed, according to official figures, Britain’s ageing population currently sees nearly one in five (18%) of the population of England and Wales being more than 65 years old, by 2065 this figure will have risen to more than 25%. This rising demand for care makes this one of the fastest growing sectors of the economy, with analysts predicting that it will need to add an additional one million jobs over the next 10 years.

However, with high staff turnover and many employers struggling to find the right talent they need, a factor compounded by the rising costs of paying their staff thanks to the new living wage, what can be done to ensure there is the workforce in place today, to meet the demand for tomorrow? Perhaps controversially, the new living wage could be a catalyst for positive change.

The Benefits of the National Living Wage

The principle of staff being paid a fair wage that is in accordance with the cost of living, is universally agreed upon. Practically speaking, however, the increases that come into effect in April, together with further increases to a statutory minimum of £9 per hour in 2020 pose several serious issues for care providers. Not least that the costs need to be offset ‘somewhere’.

Faced with this challenge of restrictive budgets and the need to attract and retain the staff they sorely need, care providers can lessen the impact of having a higher wage bill by becoming savvier in the way in which they recruit and retain staff.

Staff turnover rates within the care sector have consistently remained high – the shortage of skilled workers coming into the profession is one reason for this. This isn’t unique to the care sector, however, other sectors seem to be better at retaining the staff they already have. Much of this is down to the way employers engage with their workers.

Research from Towers Watson showed that those care employers who actively engaged their staff reported having a more committed workforce that was also more productive. This led to lower staff attrition levels compared to those employers with no such engagement policy in place, which by default, resulted in improved organisational and financial performance. These findings are supported by those of the MacLeod Review in 2009.

Of course, not even the most optimistic of industry observers would hang their hat on improving existing lines of communication as being the saviour of the care sector’s recruitment challenges. There’s also the way in which the sector promotes itself as an ‘employer of choice’ too.

Employer of Choice

The care sector is still largely misunderstood. Yes, the abuses mentioned above haven’t exactly shone a positive light on what it’s like to work in care. However, more needs to be done on the way in which care employers promote the benefits of having a career in the sector in the first place.

This starts at the recruitment stage itself. There is a plethora of diverse roles and specialist areas within the care sector, each offering varying degrees of opportunity for career development and progression, whether they are for graduates, supervisors or managers.

Yet this message doesn’t quite seem to be getting out there. The result is a huge, relatively untapped talent pool which employers need to get better at addressing with their recruitment advertising and candidate attraction strategy.

Looking internally, regular staff evaluation, ongoing staff training and continued professional development programmes can go a long way in ensuring that employees feel valued and employers hold on to the talent they already have. However, pressure from the Care Quality Commission and the implied urgency that comes from the regulator, sees many employers respond quickly to unfilled vacancies or tackle unexpected staff turnover by making rapid appointments.

This knee-jerk approach to recruitment can result in poor quality hires, which end up adding to the organisation’s recruitment costs. The sector really needs to push back against this, to ensure they take the time that is needed to get the right person on board.

Indeed, according to the Chartered Institute of Personnel and Development, the cost of hiring the wrong person is £8,200, rising to £12,000 for senior managers or directors. As such, improving staff retention rates is essential for the sector to both manage and anticipate future demand.

No employer deliberately sets out to hire the wrong people. Nor do they want high staff turnover rates coupled with the ongoing pressure to fill these vacancies quickly. That said, these things are still commonplace within the care sector.

For some, the necessity of balancing the needs of the business in the here and now often takes priority over putting in measures that could reduce recruitment costs over the long term.

Creating a positive working environment with fair pay and conditions is not some Utopian ideology, it is a right. The National Living Wage will, undoubtedly, have dramatic consequences for the entire care sector. However, while the increase to monthly wage bills will see many care organisations looking to make cuts in a bid to balance the books, significant savings can be made without the need for knee-jerk reactions.

Simply focus on ‘selling’ the benefits of a career in care. This will attract the best talent to want to work for you. Also extol those benefits through a range of internal engagement and staff development initiatives once they are on board. These approaches will go some way to ensure that staff costs are controlled and manageable whilst competitiveness is maintained.

Adam Carter is Managing Director of Carter Schwartz. Email: @CarterSchwartz

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