The last few years have seen updates and changes which have impacted wages. The $15 minimum wage some cities and states adopted is an example. And with the most recent overtime ruling, certainly, businesses have felt these changes. Likely in the future, wage rules and laws will be updated again. So, it’s imperative your Middle Market organization start planning for that inevitability as early as possible.
Being prepared in advance means you’ll have the power and time to make necessary adjustments at your leisure. Instead of struggling to quickly adapt, you’ll already be where you need to be.
With an eye to the future of wages, what can you be doing now to set your organization up for success?
Long-Term Preparation
Have you heard of getting a million dollars in cash or a penny doubled every day for 30 days? Even without being a math whiz, you probably can guess the penny is a significantly better deal. It is, to the tune of 4+ million dollars! If you put that in reverse, what would saving a penny a day, doubled do for your organization? Instead of having to come up with a million dollars tomorrow?
The longer you can cut costs, revamp budgets, invest in people, processes, and technology, the better off you’ll be. Plan for the eventuality of increased payroll costs now. And begin in small ways to offset those increases. Then, ideally no one will really feel the impact of those pennies being set aside.
Where To Start
Possibly neither of the most recent wage changes have affected your company much. However, you can use them as examples of how you could be impacted. It’s a good idea to figure out what effect a major wage increase or overhaul would have. Using the recent figures, can you extrapolate any data?
⦁ Are any employees close to the $15 minimum wage range? What would the impact be if Federal minimum wage was raised to $15? What about $20 or $30? Far-fetched possibly, but at some point, you need to calculate your potential impact.
⦁ What effect is the overtime ruling going to have for your business? If nothing now, what if the standard salary were raised to $55,000? What about $70,000 or $85,000? Again, this might seem outlandish, but it gives you an idea of how your Middle Market company could be impacted in the future.
Using your calculations, you might now have a sobering picture of how your bottom line could quickly be enormously impacted given the right circumstances. And now, you have a number and that means you have a goal.
How To React
Obviously, you don’t want to make large, drastic changes – you aren’t trying to incite employee panic or shave millions off your budget tomorrow. Now is the time to develop a long-term process and strategy to get you to the optimal budget – at a point in the future.
Start by evaluating your processes, infrastructure, budgets, equipment, technology and people. In each area, you probably can find items to tweak, fix, upgrade or scuttle. Ideally, you’d make changes that are small in how they are felt by your employees and overall business health but will sustainably reduce costs and improve your bottom line.
Updates vs Downgrades
It might be tempting to say you’ll just slash payroll costs or production or the budget of departments you don’t view as necessary. It can be easy to feel like if you just reign in spending altogether the problems will be resolved.
Unfortunately, stopping or curbing innovation, employee development, marketing, R&D, etc. isn’t going to be the long-term answer. Your organization might be better off spending first to save later. When you think about spending a sum of money now to save down the road, you usually are talking about technology.
Technology is fantastic, it generally has improved most facets of everyday life repeatedly. But, it can be expensive and therefore it feels a bit counter-intuitive to think about spending a large sum up front to save smaller sums going forward.
If you can judiciously look at where you could save time, effort and energy by upgrading something, it shouldn’t be too hard to see the benefit, however.
No matter what you come up with or how you decide to move forward, thinking now about the how wage rulings and laws of the future may affect your Middle Market organization is a smart move – today and down the road.
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