Day: December 19, 2023

Two Recruiting and Retention Advantages Small Businesses Have Over Big Businesses

Small businesses have two major advantages over large corporations when it comes to pay and benefits. That’s right – advantages!

First, you likely operate out of one location, which makes it easier to be well-versed on local economic conditions so you have deeper insight into what may be impacting your employees and how. Second, with fewer employees, it’s easier for you to find out what can make the biggest impact on retention and loyalty.

Let’s start with geography… It’s no secret New York is in one of the most expensive regions of the country and it’s a tough place to save money. According to the Federal Reserve Bank of New York, household debt is on the rise, especially when it comes to mortgages, credit cards, student loans and auto loans. Except for student loans, delinquency rates are increasing. As a result, anything you can do to help employees build savings and lower debt will undoubtedly be appreciated.

Next, consider how your employees’ demographics may impact pay and benefit needs. For example, a high school graduate may be mostly concerned about saving to move into his/her own place. A college graduate may be mostly concerned about student loans. New parents may be wondering where they’re going to come up with the estimated $25,000 needed for their newborn’s first two years. Middle aged adults may be more concerned about a mortgage or paying for college. Those approaching retirement may be preoccupied with wellness and whether they have enough retirement savings.

Based on what you know about your employees’ needs (or what you find out via a survey or focus groups), you’ll be in a better position to invest in rewards that help strengthen recruitment and retention. In addition, your business may be eligible for tax deductions and credits for offering certain perks. Consider:

Health care coverage If eligible, there’s a Small Business Healthcare Tax Credit worth up to 50% of the cost of employee premiums.
Retirement savings plans With SECURE 2.0, costs for starting certain plans may be covered 100%. What’s more, eligible employers can receive an annual credit up to $1,000/employee for contributions. Plus, small businesses can receive a $500 tax credit for automatically enrolling employees in its 401(k).
Paid time off For Paid Family Leave coverage, consider sharing the cost or paying the full cost of coverage, so employees keep more of their pay and have peace of mind that they’ll have an income and job protection should they have to take a family leave.
Early wage access or on-demand pay Allow employees to access earnings before payday, so they can avoid penalties for late payments due to cash flow issues, reduce the need to use high interest credit cards, and more.
Emergency savings accounts Help employees prepare for an emergency with an account set up at a local bank or credit union. Starting in 2024, under SECURE 2.0, add an emergency savings account to your 401(k) plan or allow for hardship withdrawals via self-certification.
Groceries How much would a membership at a local discount store mean to your employees? How about a meal allowance or food stipend?
529 College Savings Plan Help employees save for school for themselves or dependents. You can contribute and earn a tax credit. Savings can be used to pay for school or educational loans.
Tuition reimbursement or education assistance program In addition to helping pay for school, a program can also be used to help pay back student loans.
Child and elder care Depending on the type of benefit offered (i.e., onsite childcare versus paying for an offsite provider), your business may be eligible for tax credits or deductions.
Discounts programs or memberships Help employees leverage group buying power to save on everything from pet, car and home insurance to everyday purchases, appliances, and more.

Please note: The preceding are very brief summaries; a lot of conditions and requirements typically apply. To fully understand potential tax benefits of adopting certain benefits, it’s always best to consult a tax advisor. Also, before offering a benefit, it’s a good idea to run it by your employees to make sure it’s something they’ll value and use.

One benefit that may add value to all employees is financial education or advisory services. Whether you purchase classes online, hire a professional from a neighborhood bank to host classes, or take advantage of free online tools, helping your employees evaluate their financial situation, develop a savings plan, and reach goals is a valuable benefit given today’s economic environment. You help relieve the financial stress your employees may be under and build loyalty. (Avoid giving direct financial advice yourself, as it can backfire and lead to legal issues.)

Finally, if you’re struggling to retain employees there’s a good chance neighboring businesses are as well. Team up to see if you can offer discounts to each others’ employees – it can be a win-win for employees and businesses. (Your local Chamber of Commerce may be able to help.)

What if We Already Know How to Solve the Labor Crisis?

The current labor situation is different from any in our country’s history in one major way: there are simply more jobs than people to fill them.

A recent article on Bloomberg. com summed up the result, stating, “The time has arrived when America’s demographics are conspiring against its economic ambitions.” (Donnan, 2023) This sentiment holds true, according to a 2022 Manufacturing Institute/Deloitte study reporting almost half of manufacturing executives had turned down business opportunities due to the lack of workers (Institute, 2022). The situation is not going to get better any time soon, with the Congressional Budget Office predicting the American workforce will grow by less than .2% a year through 2031 (Office, 2023).

Many employers have set their sights on finding new, leading-edge solutions to address the crisis. No doubt innovation has its place, but so does creating a mutually beneficial, healthy employer-employee relationship and workplace based on fundamentals.

In January, Gallup reported that employee engagement is at its lowest since 2015, with the biggest declines in clarity of expectations; connection to the mission or purpose of the company; opportunities to learn and grow; opportunities to do what employees do best; and feeling cared about at work. The path to drive improvements isn’t new (ask employees for feedback; make changes based on feedback; clarify expectations; share and celebrate positive results); but, Gallup does have decades of proof that it works (Harter, 2023).

Another survey’s results issued in January, this time by the Conference Board, reinforce the crucial role fundamentals play in creating a workplace that works for today’s employee. The 2023 C-Suite Outlook Survey identified four strategies to create a better workplace: prioritize employee wellness to promote physical, mental, and financial health, as well as stress management; embrace flexible work arrangements; invest in all employees’ professional development; and strengthen succession plans. (Board, 2023)

There’s more. Executive Networks’ “The 2023 Future of Working and Learning Report” points to upskilling as the most critical aspect of organizational success this year. 45% of knowledge workers and 30% of front-line workers said people are leaving their company due to insufficient career advancement or development opportunities. About 83% of HR leaders and 79% of business leaders agree skills-based training should be used as a retention tool. (Networks, 2023)

Together, these survey findings and reports tell a powerful story: businesses need to get back to basics and walk the talk when it comes to creating the type of work environment that attracts, retains, and grows skilled talent. Still, this appears easier said than done.

The Manufacturing Institute with support from Colonial Life issued a report in November called: “The Manufacturing Experience: Closing the Gender Gap.” It says: “As it stands, women make up more than 29% of the manufacturing workforce. By raising the percentage of women in the manufacturing sector to 35% of total employment in the sector, there could be 800,000 more female manufacturing employees. This would be enough to fill almost every open job in the manufacturing sector today.” (Life, 2022) It sounds easy enough until you look at decades-old issues like pay equity.

The Pew Research Center issued a report in March stating, “The gender pay gap in the U.S. persists, and in fact, has 26 HV MFG barely budged during the past two decades.” In 2002 women earned 80 cents on the dollar as compared to men. Twenty years later, the pay equity gap improved by just 2 cents, with women earning 82 cents for every dollar earned by men in 2022. (Kochhar, 2023)

Another disconnect relates to diversity, equity, inclusion, and belonging (DEIB) initiatives. A survey commissioned by Indeed. com earlier this year found 49% of Black workers are considering or actively looking for another job due to unfair compensation, lack of career advancement, and lack of managerial support. Survey respondents indicate the actions companies take for DEIB (i.e., diverse hiring practices, diversity committees and awareness events) simply do not align with what Black employees want (i.e., pay transparency and equity; scheduling flexibility for work/life balance; and increased representation). (Team, 2023)

A presentation at the International Manufacturing Technology Show reinforced the disconnect. Cofounder of Thurgood Industries Darnell Epps said, “Black unemployment in our big cities is extraordinarily high, yet there’s very little outreach and recruitment in communities of color throughout our big cities. In Philly, LA, NYC…black unemployment in February was above 15%. In Detroit it was about 20%. More could be done with regard to the industry and with trade schools in focusing on those populations that have been underserved and have historic levels of unemployment and underemployment.” (Webster, 2022)

No doubt there is a place for innovations like artificial intelligence, employer/education/government collaborations, and more to address the labor crisis, but equal focus and effort should be given to getting back to the basics that create a great workplace, and really committing to drive long-lasting progress.