Demographic changes are affecting employers across the economy. MLA Companies urge those running small to medium-sized businesses, to pay attention to their employees’ perception of how you handle these changes. The variety of situations created by COVID-19 has seen demographics affect employee retention.
MLA provides finance, strategy, and solutions that work to address the needs of employee retention. From payroll and tax service to compensation plans for key employees, MLA can serve as your trusted advisor.
According to a recent study by the Work Institute, notes Seth Morgan, MLA CEO, the cost of replacing a single worker is approximately one-third of that worker’s annual salary.(2) Part of this is due to lost productivity, but another important component is escalating replacement cost, even for nonprofessional positions. A survey by the Federal Reserve Bank of New York shows that the “reservation wage”—the minimum compensation workers would require to accept a job—was, for those without a college degree, 19% higher in March of 2021 than in November of 2019, an increase of nearly $10,000 per year.(3)
One MLA client recently moved most of their contract employees to regular employees. Alicia Hatcher, Associate Principal oversaw the transition. “Making this move was a big investment,” she observes. “They are going to absorb 28% more cost from payroll by adding benefits and other costs, but this is the right thing to do for their employees and tax reporting.” In addition to doing things the right way, the owners recognized this move would give them an attractive compensation model that would help them keep their existing team and attract new hires.
Among the factors at work in this situation, says Morgan, is the still-ongoing workplace disruption brought on by the COVID-19 pandemic. But of potentially greater impact, he notes, may be demographics. In 2010, 60% of the U.S. population was between the ages of 20 and 64. By 2030, the proportion of Americans in this age group will drop to 55% as the baby boomer generation continues to age. This is adding further pressure to a shrinking labor pool.
What can companies do to affect employee loyalty, particularly as perspectives on work differ across generations? One important step is to be open with employees about the various challenges those on their team are facing. “Covid has brought our relational networks into the workplace like never before,” observes MLA Principal Gary Wilkins. “Now we have to take into account how each other’s families will be affected by our interactions.” For those with young children, or caring for aging parents, these overlapping worlds become increasingly complicated.
In its recently released 10th Annual Workplace Benefits Study, The Guardian Life Insurance Company identified several ways COVID-19 has impacted the employer-employee relationship. Employee loyalty is significantly affected by how employees believed their employers handled the disruptions caused by COVID-19, the study finds. This translates into 49% percent of employees with a favorable opinion of how their companies responded to the pandemic wanting to stay with those companies for 10 or more years, as opposed to 28% who view their company’s response poorly.
MLA can help bring clarity to the value of your employees to your organization. Contact us to learn more.