There’s been a lot of conversation around what companies are doing with money from the Tax Cuts and Jobs Act recently signed into law by the Trump administration. Some organizations are using the money for one-time bonuses for non-executive employees, while others are considering enhancing employee benefits. As experts note in Carol Patton’s piece, Windfall Wishes, however, leaders should take a step back before making any rash decisions about what to do with corporate tax cuts.
Though living in the moment is important, leaders need to take time to decide what investments will offer the best ROI now and in the future. Mercer recently released The Tax Reform Investment Opportunity: 5 Critical Workforce Investments The C-Suite Needs to Make Now, which highlights potential areas of investment interest for the C-suite. The five suggestions are:
- Maximize tax savings (by reassessing investment strategies);
- Create a brand-building compensation plan;
- Get ahead of the curve in building your workforce for the future;
- Deliver a meaningful, differentiated employee value proposition; and
- Ignite your culture, measure, adjust and repeat.
According to Mercer, the Tax Cuts and Jobs Act presents a one-time opportunity for companies to realize a 20 percent (or higher) post-tax savings gain on pension contributions made by September 15. Reassessing investment strategies will allow companies to continuously benefit from this one-time savings.
When it comes to brand building, Mercer suggests reviewing compensation to ensure its both fair and competitive, which serves to protect the brand and minimize pay gaps, which can vary from 20 percent to 40 percent. This, in turn, benefits employees who are more likely to stay put when pay equity is addressed.
Most everyone knows that the workforce of the future will look entirely different from the workforce of today. But HR leaders, like others, get caught up in the immediate needs of the organization and may lose sight on the importance of thinking ahead.
According to Brian Baker, partner and U.S. digital workforce leader at Mercer, “Spending too much time in the daily management of HR and not enough time preparing for the future of what work is becoming is the biggest risk for HR leaders today. CHROs need to take actions now that prepare their organizations for substantial technology-driven market changes that will determine whether they win or lose in the future.”
By creating a meaningful employee value proposition and igniting the business culture, leaders will build trust among their employees. Investing in total rewards will help inspire, energize and empower the best talent, which will improve employee retention, engagement and productivity. It’s important to also allow employees to contribute to the business strategy. When their voices are heard, employees are much more engaged and can unlock potential that would otherwise go to waste. Empowering and investing in employees will impact business growth and success, securing your organization as a workplace of the future.
“People strategy needs to be aligned with business strategy and anchored in building a workforce for the future,” says Baker. “People data and insights will be the foundation of those plans to future-proof an organization’s talent and people practices.”