In the latest of concerns raised by companies, major retailer JD Sports has said the living wage will impact its ability to take on more staff, while Whitbread, which owns Costa Coffee, also announced it would need to raise prices in order to pay staff a living wage.
The media has been rife with negative comments, but there are measures that businesses can take to absorb the costs of an increased wage bill.
The national living wage will soon become a reality for UK firms and in order to manage its potential impact, owners need to holistically assess other areas of the business such as procurement, supplier management and staff productivity to drive cost savings and plan ahead.
Improve your supply chain
Many businesses fail to recognise the importance of working with suppliers closely, but by selecting a few key partners, better service levels can be achieved. Look for suppliers that can offer multiple services and goods under one roof as a way to streamline costs to offset against a rise in the minimum wage.
Vendors are now expected to have the ability to become more than just a supplier, but act as an extension of their client’s business by providing consultation and bespoke solutions.
Consolidating suppliers has several benefits for business performance. With fewer suppliers on board, the ordering process becomes more straightforward allowing businesses to challenge suppliers to provide further support where needed. By having a smaller roster of suppliers, this reduces complexities within the supply chain and greater control is retained by the business.
As margins are set to become squeezed for businesses with a large contingency of workers being paid the minimum wage, it is those that assess the wider picture and take a health check of current procedures and practices that will come out stronger.
Change your workspace
One particular area that companies often overlook is how they can maximise the use of available space and create an adaptable working environment. By introducing mobile desks, wireless workstations and moveable partitions, companies can easily make changes to a workspace without the need for expensive redevelopments.
In addition to this, by removing any unwanted files packed away in storage cabinets, businesses can operate more cost-effectively and reduce the overall square footage required by the business.
Many firms still have stock rooms filled with files, old furniture and outdated technology. In order to free up these areas for a more productive purpose, documents should be scanned and stored electronically via cloud computing, as well as protected by a back-up system to guard against data loss.
Keep workers motivated
Further to this, companies should scrutinise the working environment itself and how it can be used to keep staff motivated. A motivated workforce is a productive one and by offering a working environment in which staff can thrive, productivity levels and output can be increased.
While we have considered how consumer-facing industries such as retail can reduce costs to offset the impact of a living wage, for office-based environments, employers have more flexibility to cater for different working preferences. We’re now seeing a movement towards more flexible working patterns where employees are trusted to complete tasks to a high standard within their own time.
Read more about the National Living Wage:
- National Living Wage: How to prepare in five steps
- Businesses say “yes” to Living Wage but ask government to be cautious
- Whitbread CEO plans to raise prices at Costa Coffee to pay for Living Wage
Businesses are realising that installing trust and handing a sense of responsibility to individual workers is helping to increase motivation and, in turn, the efficiency of their business operation.
Workplace design has now come full circle following a rise in exclusively open-plan offices. There has been a realisation by many employers that working in close proximity to fellow employees through benching and shared pod furniture can be distracting.
Businesses can increase staff productivity and output by creating a balanced environment which allows for collaboration and group discussions, as well as installing quiet zones or space divisions for workers to complete cognitively challenging tasks.
Large tech companies such as Google and Facebook have led the way in creating offices that inspire collaboration, where individual working spaces and desks are easily interchangeable and employees can easily engage in group discussions and then lock their stations down to concentrate on an individual task.
Through focusing on changes that can potentially increase productivity and make cost savings, business owners can address the financial impact of a national living wage. Standing still is no longer an option and it is those companies that look to other areas of the business to plan ahead for a rise in staff costs that will ultimately win the day and move ahead of the competition.
Nigel Crunden is a business specialist at Office Depot.
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