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Are Your Caregivers Paying the Loyalty Tax?

Investing in current employees vs. new hires

It seems like a no-brainer that the star employees who stay with you through thick and thin and always have a willing attitude to help, should get financial recognition. However, some employers are doing the opposite and charging good workers a “loyalty tax.”

Of course, this doesn’t mean caregivers are getting taxed with an extra bill in the mail. It means that employees are paying a price for being dutiful, reliable team members, instead of reaping the rewards.

Psychologist, New York Times bestselling author, and TED podcaster, Adam Grant, says, “Data on ~20k job titles: new hires are making 7% more than people currently working in the same job…why not offer a retention raise instead? Commitment should be rewarded, not punished.

Instead of promoting within or giving loyal employees a generous raise, some employers choose to hire more workers. A bigger team isn’t always a bad thing, but a lot of these new hires are brought in with salaries higher—or very close to—current, long-term employees.

Fortune.com states, “Labor economists call it ‘salary compression,’ which is what happens when companies keep a tight rein on raising employees’ salaries but, at the same time, are forced to pay higher wages to attract new talent.”

Hiring new employees helps address burnout and keep talent diverse. But it’s expensive. Work culture firm, Vantage Circle, reported a study from The Wall Street Journal which found “that companies pay 20% more in onboarding a new hire instead of internally promoting one.” If you have employees already excelling in their current role, plus taking on additional responsibilities, increasing their pay shows you care about your people and reduces your turnover rate. It also saves you money.

Viktor Incentives & Meetings recently acquired by Motivation Excellence says, “When employees have been at the job for a certain amount of years, they can receive loyalty revenue and continue to receive it every time they reach a certain year number. If you create a loyalty revenue plan, they will know that you are serious about treating them with respect and care while they are working for you.”

Promoting workhorses vs. show ponies

 The O.C. Tanner Institute also reports, “50% feel there is an element of favoritism in the workplace when it comes to opportunity.”

Managers tend to prefer outgoing employees who might work hard, but might work even harder to advertise their achievements. When extroverted workers are chosen for promotions over your quieter crew members, it shows a lack of appreciation for those who do—and enjoy doing—exceptional work, but don’t need the fanfare.

A Harvard Business Review study found that an extroverted man “will earn $600,000 more over a lifetime than his more introverted peer” and that if a man is a very agreeable and helpful employee, he’ll “earn about $270,000 less over a lifetime” than a more difficult personality type.

This goes to show that pure merit can be deeply undervalued, while workers who grab the spotlight are applauded with bonuses and higher positions. Something to remember: It takes all kinds to positively influence the senior living business. With residents who are a mosaic of personalities, cultures, and experiences, focusing on an employee’s individual strengths in how they relate one-on-one to residents should take priority. Not all residents need a loquacious and charismatic caregiver. Some will be introverts who prefer a calm and steady person to attend to their needs.

A Business Insider article suggests, “If you’re a people manager, be aware of the fact that you might be rewarding your reports for classic extroverted behaviors — and try to broaden your understanding of what defines a great employee.”

Changing the narrative starts with one manager at a time. At SeniorVu, we can guide you in building a stronger business known for appreciating your greatest asset: your loyal caregivers. Contact us if you’re interested in hearing more about our applicant management services.

Happy Holidays

Answering inquiries for your community is what our Family Advocate Managers (FAM team) love doing, even on most holidays. Thanksgiving and Christmas Day are the only two days we close up shop. We believe all of our team members deserve time with their families. By the next morning, FAM is right back at it to follow up on any inquiries that may have come in the day before.

What about all those other holidays? Rest assured SeniorVu has your time zone covered from 9:00 a.m. to 4:00 p.m. on each of the following holidays:

Black Friday
Christmas Eve
New Year’s Eve & Day
Martin Luther King Day
President’s Day

Memorial Day
Juneteenth
Independence Day
Labor Day
Veteran’s Day

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