Since I can’t build a wall around our talent, here’s how I reduce turnover – TechCrunch

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As the CEO of a tech company for 15 years, I have seen employees come and go for many reasons. But in the past four months we’ve seen more revenue than the previous two years combined. We have lost almost 20% of our team of 50 people. This puts a lot of pressure on our current employees.

What is driving this? During the current labor shortage, many talented workers now have unprecedented opportunities to increase their wages by making the jump to another company. Nationally, the workforce has been reduced by 3.5 million people – a level not seen since the 1970s – and employees have more bargaining power than at almost any time in recent history.

In the past four months, we have achieved higher sales than the previous two years combined. We have lost almost 20% of our team of 50 people. This puts a lot of pressure on our current employees.

With large employers looking for remote talent across the country, they can sometimes offer salaries 20-30% higher than what we have traditionally paid as a small business based in a smaller market.

To stave off the threat of talent poaching, which has long been a factor in the tech world, we’ve invested heavily in our culture and our people. Even before the pandemic, employees owned 40% of the business through an employee share ownership plan established in 2016. But to make sure our compensation package remains relevant, we continually changed it during the pandemic.

One of our biggest initiatives has been to reallocate some of the money we have traditionally set aside for employee development to help team members pay off student debt, recognizing that many don’t. are not as inclined to take professional development courses as in recent years and there was a lot of unspent professional development dollars in the budget. After months of the pandemic, people had neither the time nor the desire to attend professional conferences, and many of those conferences were not taking place anyway.

We were allowed to redirect funds due to a little-known provision in the CARES (Coronavirus Aid, Relief and Economic Security) law that we learned about when some of our team saw a tweet about it. Employers are allowed to repay up to $ 5,250 per year in student debt for employees without having to treat it as income from 2020 to 2025. This started a one-year program but was extended in December 2020.

To make sure the program was relevant to our business, we conducted a staff survey before rolling it out. We learned that of our 40-45 employees, 20 said the reimbursement program would have a positive impact on them. It gave us the confidence to move forward.

We started the program as a pilot, providing $ 1,200 in reimbursement to each employee per year. When it worked well, we doubled it to $ 2,400 per year. It’s one way for us to set ourselves apart as an employer: Only 8% of employers had student loan repayment plans in 2019, according to the Society for Human Resource Management.

There is a bit of configuration involved in running a program like this. You must run an Education Assistance Program (EAP) that complies with Section 127 of the Internal Revenue Code. And the program must benefit all employees equally, not just a group of employees. To ensure that those who had no student debt could avail themselves of the funds, we continued our professional development program at the same time. Any employee can claim reimbursement of professional development costs from the same pool of money.

Fortunately, it didn’t take long to fall into place. Once the research was done, it took us less than a month to draft our student loan repayment policy, publish it, and share it with employees.

To roll out the program, we announced it during a weekly videoconference with our staff. We’ve simplified the application process by asking employees to complete a basic one-page form. To be reimbursed, employees must submit a copy of a student loan invoice from the past 12 months showing how they made their loan repayments. We wrote them a check for reimbursement.

So far, the feedback on this program has been very positive. Many employees in our industry are younger and struggle with mountains of student debt. Canceling student debt is something our employees need.

The program has another advantage: tax savings. Employees can save on their federal tax and their share of payroll taxes. In turn, we save on payroll taxes and also receive a compensatory deduction equal to the amount of reimbursement we offer.

While we are optimistic about student loan repayments, we recognize that this advantage, on its own, is not enough to help us stay relevant and win the war for talent. The only way to know what matters to them is to listen to them, so we spend a lot of time doing it.

In response to concerns about the cost of living, we’re now looking at programs like retention bonuses and 10-year bonuses. The challenge for a small business like ours is finding the money to support these bonuses. Most of our customers sign one or two year contracts, so we should probably increase the rates to add programs like this. And even if we increase the rates, it will take some time to see the effects on our budget.

Nevertheless, we are ready to seek creative solutions. We want our employees to know that we will take good care of them. This is not only the right thing to do, but it ensures that they can contribute the best they can to our business and are not distracted by concerns such as whether they can afford to fill their gas tank to go to work.

I hope that at the end of the day, once the employees settle down to work for us, we can attract and retain the best talent by offering something that has nothing to do with money or benefits. but which became more important to many people during the pandemic: A sense of belonging and a purpose.

A job is more than just a job here. In a small business like ours, everyone on our team matters. And in a small town like the one where we are located, every employer counts for the community. By providing a workplace where smart people can come together to exchange ideas, enjoy the company of others, and make a difference outside of the Silicon Valley pressure cooker, we hope to continue to attract people who seek these things.

Will they get competitive benefits and compensation? Yes. But these things are ultimately part of a total experience that we will continue to think about a lot, so that we can keep our business successful and growing.


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