- As some companies respond to the new tax law with minimum wage bumps and one-time bonuses, others are looking at more strategic uses for their savings, Mercer says in a new whitepaper, "Tax Reform Investment Opportunity." Share repurchases, dividends, M&A, debt repayment, and capital investments are at the top of many lists, Mercer said in a press release, but leaders who also carve out and commit to ramping up investments in building a workforce for the future, specifically, will position themselves for faster growth that widens their gap with the competition.
- According to the report, three market conditions are driving the urgent need to invest in the workforce: Tech disruption, the talent war and what Mercer calls "the simmer" — decades of wage stagnation, combined with workers' concerns about retirement savings and being replaced by automation.
- The report recommends that C-suites make four workforce investments: (1) create a brand-building compensation strategy that includes a regular pay equity review process; (2) build a workforce for the future now; (3) deliver a meaningful and differentiated employee value proposition; and (4) continuously communicate to employees what the company is investing in to create an authentic and trusting culture.
Mercer's recommendations echo what others are saying. Employers that don't make a strong employee value proposition part of their brand are losing out on a potential competitive advantage. And because pay remains workers' top priority, its important to have a compensation strategy in place and to ensure that its communicated well.
A windfall as a result of the new tax law may well present an opportunity for employers to undertake some of these strategic, long-term initiatives, as Mercer recommends. But whether your company opts to make headlines with workforce-wide bonuses or chooses to focus resources on culture-building efforts, one thing is for sure: regular contact with workers is key to ensure your efforts don't derail engagement efforts.