Company Strategies to Address Rising Employee Cost

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Company Strategies to Address Rising Employee Cost

Key Takeaways

  • Rushdown Revolt increased its workforce by 525% by allowing employees to dictate their wages.
  • Project44 increased employee engagement by providing innovative benefits that allowed employees more flexibility while staying connected to the company.
  • Leveraging a transparent reasoning process and developing other cash alternatives are two strategies companies can employ to address rising wages.

Introduction

  • This report provides case studies and publications regarding how companies adapted to rising wages. Project44 and Rushdown Revolt are examples of companies that adjusted their strategy to address the situation of soaring labor costs. However, as noted in a McKinsey report and with the advent of the great resignation, there are alternative ways to keep employees satisfied beyond increasing their wages. We found case studies regarding company strategies for addressing rising wages. However, information regarding success metrics such as employee retention and profitability from these strategies was limited.

Project44

  • Project44 is a freight-tracking software company in Chicago. This company responded to rising wages by finding new ways to keep their employees engaged while providing them with increased flexibility and freedom.
  • The company's solution was to offer a subsidized 'Romeo' van, equipped for work and personal travel uses such as family outings and road trips. The van has convenient installations like Wi-Fi and desktop workplace installations. It also has a bed, toilet, and shower.
  • Project44's strategy allowed employees to work from different locations at their convenience while staying connected to the company. Team members well received the solution, which extended the project from a pilot program in 2021 to 2022.
  • Within minutes of launching the project internally, the company noted that reservations were complete within 10 minutes, and by the end of 2021, over 20 unique team members had participated.

Rushdown Revolt

  • This video-making company in New York changed its compensation routine to adapt to rising wages by allowing employees to dictate their paychecks instead of using a fixed method.
  • The company provides a minimum wage of $15/hour. However, employees who seek higher wages are not turned down or sent away. Instead, the company management requests that the employee provide value for higher wages.
  • Rushdown Revolt requests a timeframe from the employee to justify the higher compensation request and pays two-thirds of the indicated sum in the meantime. That way, the employees develop creative strategies to add more value to the company, and the company retains its workers by being more profitable.
  • This strategy increased Rushdown Revolt's workforce by 525% (from (75 - 12 / 12) x 100%) from 12 employees to 75 employees.

#Article 1

  • Topic: 5 CFO Tips for Adjusting Wages to High Inflation, Labor Shortages
  • Publication Date: December 21, 2021.
  • Description: This article by CFO Dive provides insights regarding increasing wage pressure due to the COVID-19 pandemic and supply chain disruptions. It also provides tips for chief financial officers to respond without contributing to employee attrition and ensuring sustained profit growth.
  • Here's the link to the report.

#Article 2

  • Topic: As Minimum Wages Rise, Prepare for Pay Compression Issues
  • Publication Date: October 20, 2021.
  • Description: This article by Society for Human Resource Management (SHRM) describes increasing wage pressure for the lowest-paid employees arising from government mandates regarding minimum wage. It provides expert opinions regarding how best to address the situation, including the issue of wage compression for employees that are not in minimum wage positions.
  • Here's a link to the report.

#Article 3

  • Topic: 3 Ways to Address Pay Fairness When Inflation is High
  • Publication Date: January 14, 2022.
  • Description: This article by Gartner describes the increasing pressure to address employee wage concerns due to inflation. It provides insights and statistics for the same, including three ways to address the problem.
  • Here's a link to the report.

#Article 4

  • Topic: How Managers Should Deal with Pay Rise Requests
  • Publication Date: November 10, 2021.
  • Description: This article by Silicon Republic provides strategies managers should employ when dealing with pay rise requests, including following a transparent reasoning process and developing other cash alternatives.
  • Here's a link to the report.

#Article 5

  • Topic: How to Manage Pay Rise Requests
  • Publication Date: March 29, 2022.
  • Description: This article by Raconteur provides insights on how to address increasing employee wages in the era of 'the great resignation,' including providing pathways for improvement and negotiating benefits.
  • Here's a link to the report.

#Article 6

  • Topic: 'Great Attrition' or 'Great Attraction'? The Choice Is Yours
  • Publication Date: September 8, 2021.
  • Description: This article by McKinsey provides insights into internal questions companies can address to resolve the issue of increasing employee attrition. It covers other ways to keep employees satisfied beyond increasing their paychecks, benefits, and other financial perks.
  • Here's a link to the report.

Research Strategy

We leveraged reputable sources such as SHRM, CFO Dive, Raconteur, and McKinsey to provide the requested information. We found other case studies for companies such as Schneider Electric and KPMG. However, we did not include them due to a lack of success metrics. The case studies are available in this report.

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