I’ve spent 15 years as the CEO of a digital firm, and I’ve seen employees come and depart for a variety of reasons. However, there has been greater turnover in the last four months than in the prior two years combined. Our 50-person team has lost roughly 20% of its members. It’s placing a lot of strain on our current workforce. What’s the driving force behind this? During the current labor scarcity, many skilled workers have never-before-seen opportunity to enhance their pay by switching jobs. Employees have greater negotiating leverage than at any time in recent history, as the labor force has shrunk by 3.5 million people nationwide, a level not seen since the 1970s.
When big companies are seeking for remote talent across the country, they may sometimes give salaries that are 20 percent to 30 percent greater than what we’ve paid in the past as a tiny business in a smaller area.
We’ve invested extensively in our culture and people to combat the threat of talent poaching, which has long been a factor in the tech business. Employees held 40% of the company even before the pandemic, thanks to an employee equity ownership plan launched in 2016. But, to ensure that our compensation package remains relevant throughout the epidemic, we’ve modified it on a regular basis.
One of our most significant decisions was to redirect some of the money we’ve traditionally set aside for employee development to help team members pay off student debt, recognizing that many people aren’t as interested in taking professional development courses as they were in previous years and that there were plenty of unused professional development dollars in the budget. People didn’t have the time or interest to attend professional conferences after months of epidemic life, and many of those conferences weren’t happening anyhow.
We were able to redirect the cash thanks to a little-known clause of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which several of our team members found about after seeing a tweet about it. From 2020 to 2025, employers can pay off up to $5,250 in school debt for employees without having to record it as income. This was supposed to be a one-year program, but it has been extended until December 2020. Before implementing the program, we conducted a staff survey to ensure that it was relevant to our organization. We discovered that 20 of our 40 to 45 employees thought the reimbursement scheme would benefit them. That gave us the assurance we needed to move forward.