Employee Retainage in the $15/Hour Minimum Wage Era
Small business has seen the fallout from the $15/Hour Minimum Wage mandate.
As an example: One small business that I know recently lost two key employees over wage disputes related to new hires that were now being paid equal to or more than what existing long-term staff was. Because the employer could not afford the additional
wage increase requests made by the long-term employees, they quit after finding jobs that paid higher wages. The additional fallout from this was that the employer was forced into working 14 – 16 hour days doing the work that the other employees had done previously. This included having to spend existing time training the new employees. Another issue that came up was with the quality of new hires coming into the workplace. In some cases, this involved new workers with a lesser skill set than the previous staff, and those with a poor work ethic.
In discussing some of this with the business owner, the following creative suggestions came to mind.
Business Model Changes
Consider making various business model changes such as:
- Increase Prices – Gradually raising retail prices over time in order to help offset the increased cost of wages – As an example, one might increase prices by 1.25% a quarter rather than hitting customers with an immediate 5% price increase up front.
- Diversification – Consider diversification of product lines to include new items or items that provide for a higher margin. This might include items from new sources or be carrying more competitive generic or “home-branded” products that you can obtain from suppliers at a lower cost.
- Subletting – Consider subletting a seldom used or unused part of your facility to another business. – One good example of this involved a retailer/distributor who leased out part of their fully paid for the warehouse to another business. This scenario generated additional revenue that helped offset increased personnel and overhead costs.
- Customer Loyalty Programs – Establish a customer loyalty program or other by using such promotional programs such as NCR Customer Connect or BLoyal to help incentivize your customers to spend more at your business. If you would like more information on these programs, please contact the CCS Sales Department.
Employee Based Incentivize.
Consider incentives long-term employees with benefits that are not initially offered to new employees, such as:
- Commissions Based on Productivity – Set-up an employee commission structure that incentivizes employees based on total sales volume over time, and/or that pays a higher commission the longer that an employee works for the company. This could also include establishing a company-wide profit-sharing program
- Additional Paid Time off – Offer additional paid time off based on longevity of employment. As an example, instead of offering just a standard 2 weeks of paid vacation, you might offer an additional day per year that they work for you.
- Higher Employee Purchase Discount rates – Offer higher employee discount for long-term employees than for new staff. As an example, if you normally offer a 10% employee discount on purchases, you might consider offering an additional percentage point per year that the employee has worked for you.
- Employer Paid Healthcare – If not already offered, consider providing partially or fully paid health care benefits.
- Employee Wellness – Offer to subsidize an employee’s health club membership, meditation classes, or Yoga classes.
- Additional insurance – Consider offering paid personal life insurance benefits and/or disability insurance for long-term employees.
- Retirement Benefits – Offer a 401K or other pension benefits.
- Educational Benefits – Offer College tuition assistance, or tuition for continuing education classes.
– John