Why workforce initiatives should be your New Year’s resolutionJanuary 1, 2021
Ask any CEO and they’ll tell you employees are their most valuable asset. That may be benevolence on the part of a caring CEO, or a harsh calculation that turnover is expensive by a less caring CEO, but either way, employees are a resource that must be carefully managed. Unfortunately, it’s a resource that’s likely to get a lot more expensive in the next few years.
The reality of the pandemic is that states are in rough shape when it comes to unemployment funds and tax revenues. Massachusetts is keeping the numbers vague but estimates place the unemployment fund negative by $2B today and negative by over $4B by the end of 2021. With just over 3M workers in the state that’s an additional tax of $1200 per worker just to bring the fund back to zero. You can argue science and politics, not math.
In our first published research note of 2021 we look at talent acquisition solutions and found organizations using these solutions can reduce average turnover by 30 to 60 percent in high turnover industries and 20 percent among organizations with salaried workers. Using technology to recruit the right employee has moved from an interesting solution a few years ago to a necessity today. Putting aside the legal issues of candidate selection, these are significant decisions that need to be made in a short timeframe based on limited, and sometimes slightly fraudulent, information. I’ve given up on GPA’s or the reputation of their Alma Mater (does anyone at Harvard or Brown actually go to class?) and rely on our own testing, but for us, that will be automated soon. Including pre-canned video interviews, personality tests, and a look at their social profiles adds valuable information to the selection process. Casting a broad net and using technology to aggressively filter for the best candidates will become the normal procedure for high performing organizations.
Keep the best
Salary is only part of the equation with the work environment and benefits the other part. From health care and 401K to flexible PTO and work locations, for the employee, benefits add color to the job, but they come at a significant cost for the employer. I’ve yet to see a health care plan plainly written or a 401k plan that didn’t include pages of terms and conditions few employees take the time to read. Companies are providing the benefits but are the employees taking advantage of what they have? In our second research note of 2021 we look at benefits administration systems and found they can save an average of $1,060 per employee per year. The savings comes in large part from reduced healthcare costs as employees are guided to the best solutions for them through benefit preselection and automation capabilities.
Payroll will be more complex
You can forget about the office. The pandemic will end but your employees got a taste of what it’s like to work remotely and that desire is not changing. Plan to provide a flexible work environment and look to your payroll providers to manage the tax complexities of employees in multiple states. Get used to setting objectives and tracking output rather than hours.
Human resource management has always been a key part of managing a company but the costs of making a mistake have increased. A bad hire has a long-term impact on both the morale of current employees and the taxes the organization will pay for unemployment. Using technology to choose the right candidate then compensating them fairly with benefits that are right for them will be the new standard for successful organizations.