Poor financial wellbeing can negatively impact your employees but what can you do to correct it?
EOTs - silver bullets of handcuffs?
What are the benefits of Employee Ownership Trusts and should you consider offering them?
The economy is rife with uncertainty right now. BGF guide you on growth and resilience.
latest news and updates for the C-Suite
Ithought I’d write a quick note by way of an intro, then I realised there is a lot to talk about so I’ll try and keep it concise!
A lot have asked for information on how the recruitment industry is shaping up as we come towards the end of the year so I wanted to share an insight into what we’ve found. We keep a really close eye on all key metrics week by week and job numbers have fallen slightly as the year has progressed but vacancy levels are still way above pre-pandemic levels. I would love a crystal ball to predict what the next 12 months will look like, but I would expect to see vacancy numbers plateau and an increased number of people looking for work due to uncertainty and a need to meet increased living costs.
Businesses are still getting faced with the pressures of salary increases in an attempt to retain and attract the best talent. There’s no denying salaries are a key factor in deciding whether to take a role but it’s also not sustainable to keep increasing salaries. There is an opportunity for companies to look internally and ensure they’re prioritising the retention of current staff. I’m seeing a significant divide between the innovative, forward-thinking businesses that have really put their people first, and those that are stuck with traditional and outdated employee offerings.
The top two reasons cited for leaving a job in 2021 were not feeling valued and not having a sense of belonging. My advice is to really understand your people, what motivates them and to be clear as to what their role/ purpose is towards the overall vision, this way they will feel more connected. We are really
passionate about working with organisations who prioritise their people and their culture for this very reason. Our HR division gives us great insight as to how companies are doing this, key themes include focusing on employee financial wellbeing, investing in their L & D programmes specifically management development frameworks, reviewing rewards and benefits, making sure their wellbeing strategy is on the board agenda, and looking at how they can be attracting a diverse workforce by putting targets/objectives in place. Hopefully this gives you some food for thought on what you could be doing in your business.
A point I wanted to end on is the last three years have hardly been a walk in the park and I think we all know the next couple are unlikely to be. Most business leaders I am meeting at the moment are a little apprehensive and also a little burnt out. I am a big advocate of surrounding yourself with coaches/mentors whether that be an informal or more formal capacity. It’s unsurprising that when you start to show a little vulnerability others really share their experiences. By working on ourselves and sharpening our own axe we’ll be in a better place to navigate the next storm!
Claire Sofield, is on a mission to showcase the companies that are doing things the right way. In each episode she finds out what it means to build a s%*t hot business from the leaders who created them. This podcast delivers an honest take on the struggles, triumphs and aspirations of the business leaders that sit at the forefront of some of North West’s most successful businesses.
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We created our supply chain division back in 2021 as we recognised the demand for logistics and distribution had accelerated considerably in response to the covid pandemic.
Fast forward almost three years and it’s still going strong with a new senior appointment of Danielle Nixon as Head of Supply Chain. Danielle has over ten years of recruitment experience and is well-versed in the supply chain industry understanding what it takes to place successful supply chain, procurement and purchasing professionals.
Danielle explains “Having been in recruitment for the past ten years I have resourced across various sectors and within different industries. However, Finance and Supply Chain have always been the constant. They sit hand in hand with one another in a business and it’s great to be able to work directly with the decision makers within those companies.
Supply chain has evolved so much over the past few years and it’s such an exciting time in the field – with so many great businesses hiring right now, why wouldn’t I want to get involved in helping them find the right talent – Supply chain professionals are in demand”
Despite uncertainty and rapid change in the
market we’ve seen huge growth in the supply chain sector over recent years and its ability to remain stead-fast during turbulent times has demonstrated its cruciality to business survival. Supply chain touches every step from growing, mining or creating a material to responsibly managing its end of life and all of the strategic pieces in between, such as sales, operations planning, new product development, engineering, risk management, corporate social responsibility, in addition to a huge growth in technology to support all of the above. Supply Chain is the only area of a business that directly influences how each department operates and more importantly the overall outcome both financially and in terms of overall growth.
Danielle will be recruiting for all roles within the supply chain across managerial and operational positions for the whole of the North West. Since it’s inception in 2019 we have helped many businesses to build and grow their Supply Chain networks and with Danielle now leading this side of the business we hope to support many more.
On the 22nd September we challenged 16 businesses to a 5-a-side football tournament to fundraise for The Christie Foundation. It was a fantastic turn out and the night finished in a tense battle between Faith Furniture and Safran with Safran coming out 4-3 on top. Thanks to everyone involved and all those who donated.
Darren has spent 30 years in the financial services industry in a range of roles, from direct sales to IFA to Employee Benefits Consultant and Sales and Marketing Director. Darren has finally found what he enjoys the most which is to use all of his experience and knowledge to enhance financial wellbeing in the workplace where he feels there is no better place to make a difference. Darren has written the financial education book ‘Make Their Money Count’ and founded the ‘Workplace Financial Wellbeing Group’ on Linked In.
most employers will face for the foreseeable future. The negative impact for employers is evidenced by the recent rise in industrial action, the labour shortage, employee turnover, increased stress levels and poor employee engagement.
When an employee feels stressed about money, they are less productive, communicative and innovative. The pain they feel is eventually often attributed to their employment and they can react by being less engaged, asking for more money and/or resigning to seek higher pay elsewhere. Ignoring this problem is a false economy, the fees to an employment agency plus the productivity downtime costs are often a lot more than the budget required to help fix
their financial wellbeing.
The limited time and budget that employers are applying to support the financial wellbeing of their people is often fruitless or a complete waste of time. But why?
It is because many employers are focused on the wrong things. Many are scanning the market for the ‘silver bullet’ that will solve the problem. Then they enthusiastically introduce this new intervention to their workforce full of high hopes, but they all too often come away feeling disheartened and dejected at the sheer lack of employee engagement experienced. To fix this problem, employers need to look at financial wellbeing from a completely different perspective.
The traditional way of looking at financial wellbeing, such as offering financial services products, delivering some traditional financial education, introducing a new app/software solution may well be required at some stage, however, they represent only 20% of the solution – I call it the mechanics.
The other 80% is generally unnoticed or overlooked. For many very intelligent and wellmeaning financial services professionals, it is totally invisible. They are left trying to squeeze every tiny bit of value out of the 20% they are working with, to little or no effect.
What is this invisible aspect of financial wellbeing? This other 80% is the psychologythe mindset of employees, their relationship to money, their goals/aspirations/objectives, their habits & behaviours, their sense of control, their confidence…. I could go on.
Basically, it is their WHY? A sufficiently motivated employee does not actually need the mechanics that an employer offers as they will often find the answers themselves on the
internet if required. In saying that, we should always offer the 20%, but the right 20% not just throwing mud at the wall hoping some sticks.
resilient. If they have clearly defined future financial goals, these goals can appear larger in their mind than the problems that life may present along the way and thus have more mental strength to tackle these problems. Nothing mechanically has changed, but they are better prepared psychologically to tackle their financial challenges.
The media is constantly focussing people on current world and UK economic problems and causing much fear and totally unnecessarily I believe. The answer is to get people to focus on what they ‘want’ and not what they ‘fear’. Focus = feelings. Numerous mental health problems are triggered by money worries, many of which are not real!
Employee benefits packages can play a large part in building solid foundations for employee financial wellbeing, but most of the time they don’t often due to lack of communication or understanding of what’s available. They then become a list of products but have little meaning and context in the life of a typical employee. The traditional education/comms around employee benefits are often too focussed on the mechanics and not the direct practical benefit to an employee and his/her family. Employee benefits can cost as much as 20% or more of payroll but rarely deliver the high degree of financial wellbeing that they are capable of. For a fraction of that cost, psychology can be introduced to bring through their true value. This is a good place to start on a workplace financial wellbeing journey, to get more value from what you already have in place. Most employee benefits packages were designed 10, 15 or 20 years ago, most require a review to ensure they are appropriate for the current financial wellbeing needs of a workforce in 2022.
It is very possible and quite straight forward to improve someone’s financial wellbeing without altering their financial situation. If an individual can focus on what they ‘want’ in life and not on what they ‘fear’, they will feel much more
If an employee has clearly defined, well thought through financial goals & objectives, then executes a realistic plan to achieve them, their stress goes into the plan and away from themselves. These goals and plans can even work for those who are in debt and struggling - it’s important to see light at the end of the tunnel to stay motivated and moving forward.
It is also important when building a workplace financial wellbeing strategy that employers be wary of anything that is ‘free to employer’. Whilst the free element can be very attractive these days, there is no such thing as a free lunch! Many of these ‘free’ offerings are a financial services company using financial wellbeing as a tool to attract employees to their proposition which is often a loan or an investment product or service. At the end of the day, you get what you pay for.
Best of luck out there on your financial wellbeing journey.
I have a webpage with some useful resources you may wish to take advantage of, one being a financial wellbeing assessment tool. It can help you measure the financial wellbeing of your people, and it can help you strategically identify where the highest level of financial stress sits within your organisation. A big help to ensure you get pointed in the right direction. www.second-sight.com/darren You can also see the regular financial wellbeing training sessions that I run.
Claritas Tax are a team of over 50 tax professionals, operating across Manchester, Birmingham and London, advising individuals, businesses and institutions on every aspect of UK taxation. claritastax.co.uk
Whilst the legislation governing EOTs was first introduced back in 2014, I’d say the term has only established itself in the modern M&A adviser’s lexicon over the last few years as EOTs have gained popularity, partly due to the significant reduction in the 10% Entrepreneur’s Relief lifetime limit from £10m to £1m back in March 2020.
They’ve become so popular as a means of exiting a business that specialist lenders are even advertising EOTs as a specific funding line.
We’ve advised on our fair share of sales of businesses to EOTs over the last few years and my key learning is that whilst they should definitely be part of the ‘exit’ conversation, alongside typical leveraged buyouts (MBOs and MBIs), Private Equity and trade sales, the tax savings arising from a sale to an EOT should not be the sole motivation.
The two obvious benefits of pursuing a sale to an EOT are a complete exemption from Capital Gains Tax (CGT) by the exiting shareholder(s) and the transition of ownership, in an equitable (and also tax efficient) manner, to the business’ employees.
that’s introduced, it seems to become a matter of time before an ‘industrialised’ approach is taken to mass-marketing them – just look at the R&D tax credit industry that’s exploded as a prime example.
On a similar note, I’ve repeatedly been approached both by clients and prospective sellers, saying they’ve been approached by another firm (typically Corporate Finance) doing the hard-sell on EOTs.
Like any tax relief, the EOT legislation is riddled with complexity and conditionality, so ensuring that every box is ticked from a tax (and legal) perspective is absolutely critical and sometimes a deal-breaker. You’ll thank me for not running through these conditions in detail, but joking aside, an upfront feasibility exercise, considering the pros and cons of pursuing a sale to an EOT is highly recommended before signing on the dotted line.
Outside of tax, the two questions I often get asked are “Is this the right move for my employees?” and “Could this be an intermediary step towards a full exit”?
Two quite different questions and not often asked in the same breath!
On the first, my answer would typically be that there would often have been a prior motivation towards transferring the ownership of the business to its employees, so an EOT can be a very tax-efficient way to facilitate it. The employee ownership model is much more prevalent on the European continent and collective ownership can work extremely well, dependant in the facts and circumstances. Equality across the employee base though is fundamental, so it’s difficult to discriminate in terms of ownership and reward, solely based on an owner’s choice of who should benefit.
So, what’s not to like I hear you say?
Unfortunately, like any tax incentive or relief
On the latter question, my answer hedges towards a “No” on the basis that the spirit of the legislation is very much centred around
long-term employee ownership as opposed to short-term gain. That said, I’m starting to see the first few employee-owned businesses (those that have previously been transferred / sold to an EOT) being taken to market. Whilst a subsequent sale is possible, any sale would need the approval of the trustees acting in the interest of the employees, who will ultimately benefit from any sale. This dynamic will inevitably make things more complicated than one or two founder shareholders deciding to sell, but it’s not insurmountable .
So, whilst I’m not intentionally a doom monger when it comes to EOTs as an exit option, I would always advocate ‘more haste’ less speed’ when making such a decision – it’s not one that can easily be reversed.
Bringing together FD’s and CFO’s from some of the biggest North West businesses to share their personal and professional experiences as women in finance.
Hear from leading players in the energy industry to understand what’s led us to the current situation, what impact this will have on businesses and what government and regulators are doing about it.
Sarah is the Owner of the Leader Centre and will be sharing her insight to help you deliver results for your team and shape your leadership style.
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With the economy facing more varied and intense challenges than we could have anticipated, even at the start of 2022, one of the most common questions investors are currently being asked is –what’s the appetite for investment and what is it going to take for businesses to continue to scale successfully?
As the most active growth capital investor in the UK and Ireland, BGF’s ambition is to maintain the strong momentum of the last 12 months which has seen record levels of investment, and multiple successful exits across the North West region.
There’s no doubt that with rising costs and a dip in consumer confidence, we can likely expect more uncertainty. However, in challenging times, innovative businesses will continue to be highly sought after by investors, and the appetite to invest certainly won’t go away. We’re continuing to see significant interest in our portfolio from trade buyers and other private equity firms looking for quality, well-run businesses with a record of strong financial performance and a scalable model.
In the context of the current climate, when it comes to investment and growth plans, we must take a slightly longer-term view. As a minority investor, this is where BGF is well-placed to support businesses with sustainable growth plans. For example, when a business tells us where they want to get to in two-, three- or fiveyears’ time, we must acknowledge that growth in an uncertain economy is not likely to be linear. Instead, we look at where growth capital can be put to work to ensure that when opportunities arise, businesses are positioned to move quickly and fuel growth – this might be through strategic recruitment or investing in R&D to identify value-add products or services for their customers. This positions businesses well to gain a competitive advantage in their sector or market when others may be slowing investment or pausing expansion plans.
When we’re considering whether a business is ready for investment, we’ll always look at the business owner’s ambitions and personal circumstances, the level of opportunity in the market, and their existing growth plans.
Growth ambition takes many forms: it might be product development, international market expansion, investment in tech and talent, or strategic mergers and acquisitions. Particularly in challenging times, we’re more likely to see examples of how businesses want to disrupt an existing market to find new or more efficient ways of working. Whatever the plan, in order to successfully attract outside investment, businesses need to be clear on the destination, the ‘vision,’ and how they plan to get there – as well as what happens if reality is different to expectations – for both positive and negative reasons. This level of pragmatism is even more important given the degree of uncertainty companies are facing right now.
We have confidence in the resilience of the entrepreneurs in the region and those in our portfolio because of the relationships we have built, and our understanding of how we can help them realise the full extent of their ambition.
Part of this comes from quickly building working relationships based on mutual trust, and identifying skills gaps where BGF can add value, or where the business needs to recruit for the next stage of growth.
This goes beyond the leadership team – growth companies will only remain so if they attract, develop and retain the best people at every level. Investing in skills and training is an effective approach during times of downturn – not only demonstrating your commitment to employees’ development, but it can also help develop new revenue streams for businesses with upskilled employees ready to deliver in these growth areas.
For investors, backing businesses isn’t stop-start, it’s a continuously evolving process and we must always be open to the ways in which we can support businesses to achieve good growth.
A combination of the UK’s post pandemic comeback, the costof-living crisis and a highly competitive employment market has led to wage inflation across all sectors in 2022. However, finance salaries seem to be in a league of their own as the average pay across finance roles in February 2022 was 31% higher than in December 2019, whilst average pay across all sectors was only 14% higher. This shift has generated positive change and we’ve seen the base salaries of finance roles increase to levels that reflect the ability of these individuals.
As the Head of Four Financial I have witnessed spiralling salaries myself with a number of candidates. A couple of years back a newly qualified Accountant would be looking for £4045k salary, we are now seeing these candidates already on £50k looking for £50-55k, a 22.2% increase.
I have also dealt with several clients who have lost out on talent purely because they aren’t able to compete on salary. Although it’s not always possible to keep reaching into the business’ pockets you will undoubtedly lose out in this war for talent if you attempt to recruit at the same salary as three years ago.
In this article I will highlight the trends that we’re seeing in the finance industry, what candidates are expecting from finance and accounting roles and how you can tackle your recruitment and retention challenges.
Like many industries, finance is influenced by the big players sitting at the top. The ‘Big Four’ accounting networks: Deloitte, Ernst & Young, KPMG and PwC can be huge drivers for salaries. It was recently reported that the average pay for PwC partners topped the £1m mark for the first time and in response to rising inflation they have also given half of their 24,000 UK employees at least a 9% pay rise.
Although this escalation of salaries can lead to a false economy it is becoming more common as 48% of employers with hard-to-fill vacancies have increased wages in a bid to attract new hires. Although this is not always achievable at SME level it does demonstrate that all businesses, particularly within finance need to respond to market changes, in a bid to retain and attract much needed talent.
My advice to clients who have no flexibility on salary is to reconsider your requirements and decide where you can make compromises. If you can consider someone with less experience but with the right attitude and drive who can be trained then you’re likely to find the right candidate in a shorter time period.
Ultimately this is good news for finance professionals. Amid the pandemic and ‘The Great Resignation’ candidates have been reassessing want they want from a career and this shift has led to an increase in salaries as employers attempt to stand out in a crowded market. Newly qualified, top 10 ACA accountants could now expect to receive salaries of £55k or more from their first move with some clients looking at flexing on their ‘ideal candidate background’ to allow them to meet their desired pay and keep in line with current team members.
There doesn’t appear to be any let-up on the horizon either. Whilst the labour market remains competitive, and inflation continues to rise candidates are in a strong position and can carry on demanding top tier employment packages.
Despite the Bank of England forecasting a recession, CIPD research indicates that recruitment and retention intentions remain strong for businesses. In fact, the proportion of employers planning on making redundancies is below pre-pandemic levels which suggests that businesses are continuing to grow and the need to recruit is high.
But if you’re a small business you’re probably thinking you don’t stand a chance with the top
talent because you can’t compete with the ‘Big Four’ salaries or offer 9% raises. Whilst salary is always a huge factor in any candidate’s decision to move jobs, the good news is that candidates are now looking for much more than just financial remuneration.
To improve your position in the market and your chances with the strongest candidates you need to ensure your entire employment package is attractive. This is more than just salary, you need to be thinking about pension, flexibility, and healthcare to name just a few. Gone are the days when 20 days annual leave and a company mobile phone was acceptable. Candidates are demanding much more from employers and if a recession does hit then this will also have a knock-on effect to packages and what candidates are willing to move for.
Although salary is a huge factor to finance professionals, they are now also demanding flexibility in their roles. In a recent survey with our finance candidates, we found that 81% of them prioritise the flexibility to work from home and I regularly have candidates turning down roles that don’t offer it. The pandemic had a huge impact on people’s outlook and many people are now aspiring for a better work/life balance over money in the bank.
If you don’t already offer some form of hybrid working, you risk reducing your talent pool considerably. I would strongly recommend reconsidering your flexible working policy as it will put you in a better position when it comes to hiring.
Offering finance professionals, the opportunity to develop their skillset can help you deliver a competitive edge in the battle for top talent. CIPD recently reported that the top response planned by employers to tackle recruitment and retention difficulties is to upskill their existing staff members. Of course, retaining your current employees can save you time and money so instead of spending on hiring fees why not divert your funds to help upskill your team.
There are lots of opportunities when it comes to training and progression in finance. Funding qualifications for your transactional level employees will help breed loyalty and improve the level of expertise in the business.
We expect salaries in finance to continue increasing for the foreseeable future in a bid to attract talent and combat the rising costof-living crisis that we’re all facing. A high wage can be attractive to candidates in the short-term but they will also be considering progression, culture and the values of the business as these all contribute to a candidate’s future and long term success.
If you’re a client recruiting within finance then it’s important to compare your salary to industry averages to help you benchmark my role. You can take a look at our salary guide here. If you’re unable to compete on salary then it’s important you can compete on other areas. Candidates are increasingly looking for more than just money and will consider moving if the holiday, flexibility, benefit and culture are the right fit for them.
