Finding Employees - Coping in a Difficult Environment
Greg Dowell • September 5, 2023
Having a business fail for lack of employees was unheard of 10 years ago. The problem existed for many businesses long before the pandemic, but it certainly went to a whole new level from 2020 to the present.
Almost every business has dealt with the problem of the scarcity of good employees since the pandemic in 2020, and many businesses have been dealing with this issue for many more years. Certainly since 2020, the issue has been compounded by the Great Resignation and the massive increase in remote working. The ultimately painful and fundamental answer for businesses will come when a recession results in higher levels of unemployment, which should re-balance the scales that have favored employees for so long. Until then, however, businesses can not afford to bury their strategic heads in the sand.
Business has to be creative about how to approach this problem in order to survive and (hopefully) grow. The following are some ideas that might help a business bridge the employment gap in the short run. Some of these ideas will also position the business to produce optimally in the long run, hopefully long after the employee crisis has been solved:
- Promote from within - Take an objective look at the current employee roster. Who on the list can take on more responsibilities, who has room for growth, who would love to take on the challenge? There may be some stretching and some learning to do early on, but careful mentoring and guidance may just bridge the talent gap quickly.
- Realign jobs - promoting from within (above) can often be coupled with stepping back and taking a holistic look at the operations. Is there a way to change the way things are done to be more efficient? Listen for "we've always done it that way" and use that as the clarion call to study the "why". Can responsibilities from multiple people be realigned in a strategic manner, perhaps freeing up time here and there among those in the talent pool. It is possible that the solution to a talent shortage can come in a collective manner from the more experienced employee base.
- Optimize the time of critical employees - Almost every highly-skilled employee spends time doing tasks that are well below their pay grade - sometimes employees are reluctant to give up those easier tasks, so you'll have to push a bit to uncover them. identify those time-sucking tasks and offload them to a less-critical staff member and you've just unearthed more capacity. Even if there is no one to offload to at the present, it is much easier to hire someone to do that routine work than it is to find and hire employees capable of higher end work.
- Put lines of business and product offerings under the microscope of profits - Far too often, businesses don't fully understand where they make their money - which products or services have the highest profit ratios. Again, the "we've always done it that way" syndrome can creep in. Status quote can be a silent killer. Maybe the business has always made 36 different products, even though only 12 are the real winners. Maybe the business has "always" provided a certain service offering to its clients, but that service is not as profitable as the other lines of business and takes valuable employee time. Discover those blackholes of product and time and make a bold choice to focus on what the business does best. Doing so will free up the time of many employees in the organization - not only could this solve the employee crisis, but it could have a major positive effect on cash flow for years to come.
- Consider training younger talent - If a business does not have a feeder program for new graduates, consider starting one. This is not going to provide the same immediate fix versus hiring experienced employees, but young talent can absolutely reinvigorate a business with new ideas and approaches. By building routines and putting up guardrails, it is possible to get real production from young talent, even as they are training. This is a longer term solution but, when the problem is chronic year in and year out, long term solutions eventually pay off.
- Also consider an internship program at your company - You may be able to partner with a local community college, trade school, or university to find good candidates. Depending on need and scale, your company might even be able to sponsor a new training initiative in conjunction with a local partner. The exposure, experience, and connections that interns make while working at the company at these formative times can often turn into full-time job offers. Just like the option above, this is a longer term play. Like any longer term project, the best time to start is yesterday; the second best time is today.
The employee crisis is real. No one knows when this will end - is it a matter purely of demographics, will it be resolved by a recession - but a business owner can not afford to be passive. It's better to assume the problem is chronic and to look for solutions. The above are just a few ideas that businesses can consider. Find one, or a combination of a few, that seems to fit your situation and give it a shot.
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As you may be aware, you can't keep retirement funds in your account indefinitely. You generally have to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or 401(k) plan when you reach age 73. Roth IRAs do not require withdrawals until after the death of the owner. Your required minimum distribution (RMD) is the minimum amount you must withdraw from your account each year. You can withdraw more than the minimum required amount. Your withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts). We typically instruct our clients to turn to their investment advisors to determine if they are required to take an RMD and to calculate the amount of the RMD for the year. Most investment advisors and plan custodians will provide those services free of charge, and will also send reminders to their clients each year to take the RMD before the deadlines. That said, it is still good to have a general understanding of the RMD rules. The RMD rules are complicated, so we have put together the following summary that we hope you will find helpful: When do I take my first RMD (the required beginning date)? For an IRA, you must take your first RMD by April 1 of the year following the year in which you turn 73, regardless of whether you're still employed. For a 401(k) plan, you must take your first RMD by April 1 of the year following the later of the year you turn 73, or the year you retire (if allowed by your plan). If you are a 5% owner, you must start RMDs by April 1 of the year following the year you turn 73. What is the deadline for taking subsequent RMDs after the first RMD? After the first RMD, you must take subsequent RMDs by December 31 of each year beginning with the calendar year containing your required beginning date. How do I calculate my RMD? The RMD for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS's "Uniform Lifetime Table." A separate table is used if the sole beneficiary is the owner's spouse who is ten or more years younger than the owner. How should I take my RMDs if I have multiple accounts? If you have more than one IRA, you must calculate the RMD for each IRA separately each year. However, you may aggregate your RMD amounts for all of your IRAs and withdraw the total from one IRA or a portion from each of your IRAs. You do not have to take a separate RMD from each IRA. If you have more than one 401(k) plan, you must calculate and satisfy your RMDs separately for each plan and withdraw that amount from that plan. May I withdraw more than the RMD? Yes, you can always withdraw more than the RMD, but you can't apply excess withdrawals toward future years' RMDs. May I take more than one withdrawal in a year to meet my RMD? You may withdraw your annual RMD in any number of distributions throughout the year, as long as you withdraw the total annual minimum amount by December 31 (or April 1 if it is for your first RMD). May I satisfy my RMD obligation by making qualified charitable distributions? You may satisfy your RMD obligation by having the trustee make qualified charitable distribution of up to $108,000 in 2025 ($105,000 in 2024) to a public charity (some public charities excepted). The amount of the qualified charitable distribution will not be included in your income. You may also make a one-time election to make qualified charitable distributions to certain charitable trusts or a charitable gift annuity. What happens if I don't take the RMD? If the distributions to you in any year are less than the RMD for that year, you are subject to an additional tax equal to 25% of the undistributed RMD (reduced to 10% if corrected during a specified time frame).
