Are your long-term staff paying a loyalty tax?

Millennials and Gen-Zers are often criticised for picking up and leaving a multitude of jobs, or ‘job hopping’, but this trend is also common amongst aged care workers who don’t feel appreciated or rewarded by their employer.

Workers may have seen newer hires being offered more remuneration or better working conditions which can cause feelings of resentment or being undervalued, and often lead to them seeking employment elsewhere.

What they experience is referred to as the ‘loyalty tax’.

Loyalty tax is not a real tax, but a phenomenon that refers to long-term employees who stay with their employer and receive lower pay compared to what they could earn if they left and found another job.

You may not realise you are giving better pay and rewards to new staff over current staff, especially as providers look to put incentives in place to attract more workers – but it’s important not to forget your current team.

So how do you avoid placing a loyalty tax on staff and properly show your workers appreciation?

The role of reward and recognition

Reward and recognition are very important facets to ensuring employee satisfaction and good staff retention.

By rewarding staff appropriately for good work and long service, employees experience good self-esteem and are happier in their employment overall. 

Professor Andrew Beer, Executive Dean of UniSA Business, said that outside of the hefty price it costs to keep up with staff turnover, valued long-term employees can do more than just save their business money. 

“Loyal staff are more willing to work longer hours when required and represent a store of shared knowledge about the business,” he said.

“People make complex decisions about where they work and what sort of compensation they are looking for. 

“They also tend to value a place of work that gives them autonomy, where there is a positive culture and have long-term relationships with clients that can help the business prosper.” 

Director of business development company Dale Carnegie Training Australia, Jordan Wang, agreed and said staff who feel rewarded and recognised help raise morale in general, with staff taking fewer sick days and being overall more productive.

“Proper incentives and remuneration suggest the amount of value being placed on workers,” Mr Wang explained.

“There’s a tendency to hold onto staff performance so we sometimes tailor policies around individual staff performance.

“Think of your workplace culture as a bigger ecosystem where every level influences each other so the more consistency you have, there’s a much better flow-on effect.” 

Non-monetary rewards and recognition

Diversifying rewards and recognition for good work outside of the financial realm can sometimes offer staff that same feeling of satisfaction without having to involve money – whether that is offering more flexible work arrangements or upskilling opportunities.

This may mean that employees stay within your business for other valuable career aspects outside of monetary gain.

Mr Beer said it is possible to recruit consultants to benchmark these aspects, but setting clear standards is the most effective way to work towards staff satisfaction and recognition.

“Workers accepting employment at wages they can otherwise receive [elsewhere] really just tells you that they think this is the best place for them to work and that their career isn’t simply a matter of money,” he said.

Mr Wang added that having a lacklustre reward and recognition program creates ambiguity and unclear standards for staff to strive towards.

“When people can’t link their individual contributions to their rewards, it creates ambiguity about where they stand,” he said.

“Providers should also be open to feedback, suggestions and communicate really clearly so people know exactly where they are and what they need to do to be successful.”

Queensland residential aged care provider, Rockpool Residential Aged Care, has a strong reward and recognition program which consistently incentivises good work by staff throughout the year through other means outside of monetary rewards. 

“Rockpool’s rewards and recognition program identifies team members who make an outstanding contribution via care, support, or upholding our values,” explained Rockpool’s Chief Executive Officer, Melissa Argent.

“Recognition is delivered through a variety of programs, including our Annual Team Awards.

“Digital gift cards are scheduled to be introduced at Rockpool in the coming weeks and will be awarded to standout employees who deliver exceptional care and support.”  

In this aged care workforce, consistency is key and can make or break the way employees view your integrity as a business and employer. 

Implementing new initiatives should be consistent and reflect a substantial plan to achieve staff satisfaction regardless of the state of the sector. 

Mr Wang explained, “You don’t want a reputation where, because of external pressure, you implement new initiatives but then move away from them in the following period when the market has re-settled.”

This can risk your branding which will not only cause staff to look for work elsewhere, but it will also be harder to maintain a good business reputation and look like an employer of choice. 

Repercussions of a lacklustre reward system

When considering how your reward and recognition system will work, the most important thing to do is be open and transparent with staff about what is expected of them, what they are achieving, what will earn them rewards and what those rewards may be.

Without a solid understanding of staff satisfaction and a strong reward and recognition system, you run the risk of staff not trusting you and your business, losing cohesion among your teams and ultimately losing staff to another company. 

Avoiding the accidental loyalty tax

There are a few things you can implement in your business to ensure your staff dodge the accidental loyalty tax and feel valued and appreciated. 

Consider implementing:

• Diverse reward and recognition initiatives for staff with a mix of monetary and non-monetary rewards
• An awards system which gives out certificates and other rewards, such as vouchers and gift cards, for excellent work
• Regular and proper compensation reviews with staff that are benchmarked against industry standards at least once every year, if possible and within your budget
• Proactive initiatives that see you regularly touching base with staff to get their feedback and find out what ways would improve their job satisfaction
• A strong open-door policy so staff feel comfortable voicing their concerns with you before looking for other work 

There are a multitude of reasons to properly reward and recognise your staff for the good work they show. 

It not only makes them feel valued and properly compensated for their work and loyalty, it will ensure optimum performance and productivity in your facilities and services.

Failing to adequately reward employees for their loyalty to your organisation, both financially and otherwise, can result in staff finding elsewhere to work which is a grave mistake providers cannot afford as the industry struggles to find and keep good workers.

How do you reward your aged care workforce for their hard work? Tell us in the comments below.