Let’s face it—turnover is costly. In fact, it is more costly than many employers even realize.
Cringing seems appropriate when it’s time to address your talent shortage and find creative ways to increase resources for better business with a steady bottom line. But guess what? Even the most costly recruiting missions only require less than one percent of a company’s total budget.
At what point in the employment process should one really worry about getting stung by cost? The stage to focus on is retention. This is the final, never-ending employment step that is easily forgotten once the hire is made. Yet, it is employee retention that measures the effectiveness of the spend it took to get there.
Lackluster retention can be improved while simultaneously expanding an HR budget to acquire loyal talent with the Work Opportunity Tax Credit (WOTC). This may seem a little far fetched but WOTC is no ordinary tax credit. Yes, it is applauded for incentivizing bottom line dollars. It also helps to stop a maddening talent cycle in a way that can create a magnetic employer and superior brand image.
The WOTC savings essentially credits up to 40 percent of the first $6,000 of first-year wages of a new employee. This occurs when that employee is part of a “targeted group.” In turn, employers are able to “give back” by hiring workers who would not typically get a fair shake in the job market. Employers can also use their tax credit to invest in strategic recruiting and employee retention initiatives that help attract and keep top performers for greater profitability.
Today increased numbers of candidates search for work via the Internet. In turn, leading companies are investing WOTC credits in their careers site for an improved candidate experience. Optimizing a job seeker’s experience increases candidate conversions while speeding up the time it takes to fill an opening. Undoubtedly, this can make a company stand out from the rest when it comes to talent acquisition. The WOTC can help make this possible.
By applying WOTC financial gains to assist in increased employee compensation, employers can increase retention and reduce turnover rates. Antiquated HR tactics only allow raises as a percentage of an employee’s current salary. Using tax credits to modernize HR practices essentially provides today’s workforce with the raise it needs to keep employees happy and secure. Good pay is a reflection of an employee’s value to the company.
Hiring and developing great managers is a crucial turnover determinant. Ambitious employees want to work among other first-rate performers and reside where they are valued. If their current manager is unwilling to encourage growth and performance, or match a clearly exceptional opportunity from an outside firm, there should be no surprise when an employee seeks another opportunity elsewhere.
Companies can put WOTC credits to work by setting aside additional funding to increase company branding initiatives and offer twenty-first century benefits. Offering just a few benefit best practices could essentially restore company loyalty for some workers. Some of these benefits include six-week paid paternity leave, house cleaning, laundry service, mani-pedi budget and, believe it or not, on-site massage.
Similarly, “inspiration accounts” provide funds to employees for personal growth. This can include anything from music lessons to sky diving. Other popular benefits are weekly yoga time, bring-your-dog-to-work options, family paid leave and daycare, event tickets and transportation, incentives to go green, shopping loans, spouse death benefits and unlimited sick days. These unique offerings can be used to help round out an exciting compensation package.
Companies shouldn’t discount WOTC – it could essentially pay for an engaged workforce. When you have a tax credit that rewards the hiring process, and not just results, people stick around and companies save money.