The Covid-19 pandemic ravaged the economy, and many businesses had to temporarily shut down operations or operate at less than full capacity. Some businesses, however, soldiered on and did their best to stretch resources and find various means to continue paying their employees.
Employee Retention Credit
The United States government recognizes the importance of employee retention. According to the Internal Revenue Service (IRS), the Taxpayer Certainty and Disaster Tax Relief Act of 2020 revised and extended the Employee Retention Credit (ERC) up to June 30, 2021. In March, the American Rescue Plan Act of 2021 further extended the ERC to December 31, 2021.
The ERC provides refundable tax credits for businesses and non-profit organizations that continued to pay employees despite fully or partially stopping operations due to Covid-19 restrictions or had a significant decrease in gross revenue within a quarter in 2020 or 2021. The significant decrease in gross revenue means a 50% decline in a quarter in 2020 compared to the same quarter in 2019 or a 20% decline in a quarter in 2021 compared to the same quarter in 2020.
The ERC for 2020 is 50 percent of all wages paid from March 12 to December 31, 2020, with a limit of $10,000 per employee. The ERC for 2021 is 70 percent of all wages paid from January 1 to December 31, 2021, with a limit of $28,000 per employee.
Value of Employee Retention
A company needs to retain its best employees because they already have invaluable experience and knowledge in the way the company runs its business. Losing an employee means shifting the burden of tasks to other staff members whose plates are already full while looking for a replacement. This can cause a domino effect of dissatisfaction. It is also not easy to find applicants qualified for a post. Recruitment, hiring, and training are costly and take time.
Also, a company with a high rate of employee turnover gains a bad reputation among customers and prospective employees. It gives the impression that there is something wrong in the company culture, raising questions about the company’s work ethics.
Looming Employee Departures as Pandemic Threat Decreases
According to Forbes, data from the Employee Engagement and Retention Report by Achievers show that 52 percent of respondents aim to look for new jobs in 2021. The Pulse of the American Worker Survey among 2,000 American adults employed full-time nationwide shows that 26 percent intend to find a job with a different company as soon as danger from the pandemic decreases.
The Pulse Survey was conducted in March 2021 by Morning Consult for Prudential. Among respondents who intend to leave their company, 34 percent are millennials, 24 percent belong to Gen X, and 10 percent are Boomers. Most or 80 percent of them expressed concern regarding career growth, 72 percent are reassessing their skill sets, and 59 percent have been undergoing skills training independently during the pandemic. Almost half or 42 percent give their employer a grade of “C” in taking efforts to maintain company culture. About a third or 34 percent intend to find a job that will allow them to work remotely.
Employee Retention Strategies
In the Pulse Survey, employees who intend to leave stated that they can stay with their current employer if offered higher compensation, more flexible work schedules, opportunities for mobility, and options for remote work. Among all 2,000 respondents, 73 percent agree that companies must continue to allow remote work even after the pandemic.
Among those who are currently working remotely, 42 percent intend to leave if their company discontinues remote work. They stated that employers can support remote work by providing benefits such as subsidizing remote-work expenses including resources needed to set up a home office and, again, allowing more flexible schedules. To strengthen company culture, remote workers stated that employers must increase communication with employees, offer remote work resources, and update policies to align with remote work.
Companies are recognizing the importance of listening to employees and meeting their needs. Forbes cites data from a survey among 500 human resources (HR) leaders by human capital management (HCM) platform isolved, showing that 92 percent identified employee experience as their highest priority in 2021. Companies can hire a professional employee experience solutions service with experts who will help set up listening and engagement systems to gather, organize, and process feedback properly.
Forbes describes the employee experience as starting from recruitment, hiring, and onboarding to development, engagement, and performance, including the employee’s well-being. It covers the total of the employee’s interactions with the employer, company relationships, and the physical work environment.
A company must, therefore, use employee feedback to make the necessary changes to the employee experience and increase employee satisfaction and retention. With a roster of loyal personnel, a company grows stronger with increased productivity and profitability.