I have been having more and more conversations with business owners and accountants about the future of the workforce. Pre-COVID, businesses ran a certain way. Everything has changed since then, and many businesses struggle to understand why and what is changing.
The most prominent of these changes can be condensed into three items:
- Compliance
- Government
- Employees
1. Compliance
Compliance is ballooning to highs we have never seen. COVID revealed a lot about the state of business and the employee. Many businesses would not have survived the COVID period without government intervention. The scary thing is many businesses would not have lasted 30 days. The number of businesses that did not even have enough cash for one pay period was astonishing. Employees were in the same situation. The lack of savings and preparations was astounding. This revelation of reality resulted in the Government asking, what do we need to do to strengthen businesses and employees? The answer, as always, is additional compliance. We are seeing many States institute mandatory paid family leave, mandatory retirement programs, and mandatory sick leave, and we will see mandatory disability soon enough. All of these new compliance areas stem from the revelations of COVID. Businesses and individuals were not prepared for a “shock” event.
One could argue that COVID was a once-in-a-lifetime event, but the revelation of the financial status of businesses and individuals does not change. 50% of Americans over 50 have no retirement savings. The average savings balance is $5,000. 64% of Americans live paycheck to paycheck. How can this be solved….compliance.
2. Government
Government in itself is operationally dysfunctional…more than we have ever seen. The new development of the remote government employee and new software solutions birthed from COVID events all led to this. When we add that there are more private employees working remotely, which requires businesses to register more State Accounts, all lead to problems at the operational level of Government.
For the first time in my career, we see the Government take up to 9 months to process standard forms. Getting a new State Tax Account can take up to 6 months. All of these lead to more dysfunction. More notices are sent, more incorrect notices are sent, updates are delayed, and more. This is something we do not see changing in the near future as the status quo becomes permanent in many cases.
3. Employees
Then the most complicated part of the new workforce is the employee component. Employees are demanding better all around. With companies such as Amazon, Google, Apple, etc, reporting record-high profits, employees are demanding more. To compound this, we have a new generation of employees, some of which despise “the man” and believe all corporations are nothing more than stealing from the employee. We have employees who have gotten used to remote work during COVID and refuse to return to the office. We have a new generation that demands fair pay among their peers and pays transparency. The current supply and demand tips the scales in favor of the employee resulting in higher wages which many businesses cannot sustain.
The old way of managing a workforce is gone. Business owners must be ready to change their business model as well as their attitude to run a successful business. This requires businesses to be open-minded and flexible. Agile businesses will succeed, but those stuck in a pre-covid mentality will fail.
In the coming weeks, I will write about how businesses can succeed in this new world of work—breaking down pay transparency, benefits, remote work, and more.
There is a lot of hope in the new workforce. It won’t be easy, but the ability to succeed for employees and businesses is at an all-time high if we are willing to change. The question is, are you willing to change? Share your thoughts in the comment section below.
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