Sunday Message From Ben: The Pendulum is Swinging the Other Way!

Aloha,

It’s been a couple of months since my last weekend message — and how things have changed!

We’re seeing progress

In Hawaii, nearly 30,000 visitors have been landing every day, which is near pre-pandemic numbers, despite restrictions and few international travelers. This reflects pent-up demand and also the safety that visitors perceive. Infections statewide are low and 69% of us have received one or more jabs —  the 3rd highest rate of vaccination within the country.

It was a big win this week for business and the economy too. Governor Ige announced the easing of travel restrictions and relaxing of restaurant and social gathering limitations. Mainland travelers can now bypass quarantine and testing requirements, and restaurant seating capacity is up to 75%. 

These are solid steps in the right direction that will help our hospitality and service industries recover. 

But with readily available vaccines and solid treatment regimens, let’s push further, faster to normalize and adapt. There are many risks other than COVID to society. 

With growth returning, new challenges emerge 

I’d argue that Hawaii’s challenges in recovery are even greater than the challenges we faced during the pandemic. Our community enjoyed a lot of federal aid during the pandemic but the flow of those funds will soon decline dramatically. Now our challenges are around the competitiveness of Hawaii on all playing fields (education, cost of living, cost of doing business, ease of doing business, etc.).  

A lot of people left Hawaii during the pandemic for lower-cost states, and hiring challenges are more acute than ever. There are a lot of job openings despite the 8.5% unemployment rate headline! Until Hawaii is more attractive for job creation (cost of doing business and taxes) and for labor (cost of living and quality education), attracting and retaining talent will be a big challenge. 

With these challenges, we cannot wait for things to happen. 

Hawaii should embrace the fact that we now have the tools to live with COVID (vaccines and treatments) at the macro level and commit to moving forward.  

And more locally at work, we can create opportunities by adapting our focus on the workplace, on culture, and on talent in our teams. Disruption in the workplace is affecting all employers, and no one has all the answers yet. This is an opportunity to be seized.

Here are some considerations as employers:

• Is workplace stress high? Given remote work and lots of change, it is natural for workplace stress to be high. So as leaders of your organization, you have to face this challenge head-on and address the root causes. Safety is still front and center. Consider offering employees paid time off or an incentive to get vaccinated to help their sense of safety (and claim the tax credit). And strengthening the sense of connection and work community is critical. With lots of change, it's even more important to build community among your team. Communicate, and offer employees a chance to connect with you and each other to navigate the stresses of change together.
• Is retention a challenge? With stress and life’s frustrations, lots of people are looking for a change — and changing jobs is one of the easier “big changes” to make. So weather this by deliberately focusing on retaining your high performers. It starts by enlisting them in the challenges and opportunities of the business. Informed, engaged employees are far more likely to stay. Look at what benefits you offer as an employer too. Everyone focuses on pay, and that’s table stakes, but look at other benefits too. Consider company events or a fun all-hands gathering, encourage employees to take time off, or explore if a flexible schedule might work for you.
• Having trouble finding workers? Don’t go it alone. Start an employee referral program with cash incentives to have your team bring qualified talent to the table, or review your job descriptions to remove dry and boring language — update it with all the reasons why employees would want to work for your company. Lastly, it’s a big world out there — consider remote workers. Use what you learned working in the pandemic and hire someone in Vegas!

No one has figured out the recipe for the workplace and work culture post COVID — there simply is no cookbook.  

Even business titans like Google and Apple are struggling with this, which makes it an opportunity for all of us. Building a winning company culture that drives collective ownership and excitement is within your control, and the playing field is wide open. We can’t control the future but a little creativity (and HR sophistication) can help us adopt the mindset to take on what comes. 

I am convinced that with all of the changes coming out of the pandemic, talent and culture will be an even bigger differentiator than before, and ongoing disruption in work is an opportunity for those who seize it.

Thinking ahead

With demand increasing and the need to invest in the workforce, local businesses should capitalize on every available resource and relief program. That’s why we’re urging our clients NOT to miss out on a powerful but little-known program that can inject cash into your business. 

It’s called the Employee Retention Credit (ERC).

Why you shouldn’t snooze on ERC

If you haven’t considered ERC (or if you thought a PPP loan made your business ineligible) you may be leaving “free” money on the table.

ERC was created to reward employers for keeping employees on payroll and continuing to pay their health benefits during the pandemic. And the credit could be significant. 

Eligible businesses can recover up to $5,000 per employee if they amend and retroactively claim the credit on their 2020 taxes. And if businesses are eligible for the 2021 credit, they can recover up to $28,000 per employee for the year.

Unlike other relief programs, this tax credit is not to be confused with a loan or a grant program (or anything that needs to be repaid). Rather, each pay period, employers withhold a certain amount of an employee’s earnings for FUTA taxes. Payroll tax credits (like ERC) let businesses keep some of this money by reducing (or refunding) the federal taxes they have to pay.

How ProService is Prepared to Help

Knowing how much meaningful money is on the table for our clients, we’ve created a system that not only helps eligible businesses file for ERC, but we’ve found ways to run multiple calculations to determine the maximum credit you can claim. 

Unlike other tax credits you may be familiar with, ERC is extremely complex. It will require close collaboration and information sharing between eligible clients and ProService — but we believe it’s 100% worth it.

Next Steps

If you haven’t begun the 2020 ERC process with us, I encourage you to check your inbox for previous ERC communications and complete the questionnaire sent to you.  

As owners and leaders of your company, thank you for your patience and collaboration with us on this. At this time, our team has prioritized efforts for the 2020 tax credit but we’ll be sharing more information in the coming weeks about how we plan to help our clients take advantage of the 2021 credit. 

As your partner, we are here to advocate on your behalf. And just like we did with PPP and our pandemic rebates, we’re here to help you get the money you deserve.

With Aloha,

Ben Godsey