The decision by specialist mortgage and secured finance firm Brightstar to introduce the real living wage was not a difficult one.

“For us, it’s just common sense. The biggest asset we have and need to invest in is our people,” says William Lloyd, Brightstar’s director of operations. “If we get our people right and can retain them, and have people who enjoy coming to work, we will have a far better environment and be more successful as a result.”

What is the living wage ?

In October last year, the firm signed up to the standard, which is independently calculated by the Living Wage Foundation based on what people need to be paid in order to meet basic living costs. At present, it stands at £8.75 or £10.20 an hour for those working London and covers all workers over 18. A voluntary commitment by businesses, it offers more than the government’s national minimum wage national living wage of £7.25 an hour for over 25s only.

Even though most of Brightstar’s 45 staff are based in Essex all are paid the real living wage at a London rate or above. Accreditation reinforces the firm’s values and its commitment to a good working environment and employee relations.

Living wage and living well

The company has recently introduced a well-being room to their office and a mental health champion. “We’re also not naive to the fact that we’ve all got a mortgage or rent to pay and everyone wants to live well,” says Lloyd. To have a happy staff you pay them well and make sure they feel rewarded.”

Web design agency Wholegrain Digital gained accreditation from the Living Wage Foundation last year.

The 16-person strong company had already taken the decision to introduce an internal minimum wage, but felt committing to the national campaign would reflect its aim to be a force for good and raise awareness of discrepancies in pay in their sector.

“Web design jobs are well paid in general, but there are jobs within agencies that aren’t as technical and there’s been a huge intern culture in the agency world, including unpaid, young people starting their careers. If someone is doing real work and adding value to the company and staff, and the company’s earning money out of it, it seems wrong to not be paying people for their efforts,” says managing director Tom Greenwood.

Why is it important?

The incremental increase in cost of introducing the real living wage is worth it, says Greenwood. It’s good for reputation, motivating staff and recruitment, he adds: “The team have really bought into it even if it doesn’t affect them directly. They want to be part of a team that tries to have a positive impact and creates a better society. A lot of people who apply for jobs say it’s something that attracts them. It’s a sign for them of our team culture.”

Brightstar and Wholegrain Digital are two of more than 3,700 businesses now accredited by the Living Wage Foundation, which means around 150,000 employees benefit from the real living wage.

At the end of last year, SMEs made up more than half of the employers signed up. For most, it was an ethical decision or in line with company values, according to a research report into how SMEs have implemented the initiative by the Barrow Cadbury Trust, the University of Middlesex and the University of Liverpool, but wider business benefits are becoming more prominent.

“One of the first benefits that they will often report is increased staff motivation and morale. It’s not hugely surprising: if you feel truly valued as an employee it makes a huge difference to your productivity,” says John Hood, media and communications manager at the Living Wage Foundation.

“There’s also this certain pride in workers knowing that they work for a company that’s going to do the right thing by its employees.”

The benefits

Businesses have reported additional benefits of reduced absenteeism and lower turnover costs thanks to the real living wage. For SMEs, who may not have a dedicated press office, a further reputational boost is felt from the promotion that the Living Wage Foundation can offer.

Despite the benefits, some businesses may be concerned about the cost and administration of introducing the real living wage, in particular, SMEs who may not have a dedicated HR department. Accommodating annual rises in the standard and other staff’s salaries in relation can also be a challenge.

According to the research report, businesses frequently report that the higher productivity generated by introducing the real living wage, in addition to savings on recruitment costs thanks to improved retention potential, offsets the cost. Having an external and independently verified benchmark against which to measure salaries is also useful to SMEs.

Ultimately, businesses should see and plan for the real living wage as a long-term commitment, acknowledging the wider business benefits that it can bring, says Hood: “We are very keen that the living wage is part of a broad commitment to responsible and ethical business practices.”

Laura Oliver is a Freelance Journalist and Former Head of Social and Community at the Guardian.