Tax Reform Impact on Business
We’ve all been there at one time or another. We get a decent tax refund and then face a decision, splurge on something we couldn’t normally justify or make a sound investment. Sure, we would all like to (and should) treat ourselves occasionally, but shouldn’t we also invest in our family’s future?
Business leaders face a similar dilemma today. With the passage of major tax reform at the end of 2017, companies stand to benefit through lower corporate tax rates and additional incentives around capital investments. This has led to several high-profile companies passing along some of the benefit to their workforce in the form of one-time bonuses.
This is great for morale in the short-term, but could the savings be better invested for the long-term?
3 Ways to Leverage Corporate Tax Savings to Grow Your Business
1. Investigate Incentive Based Programs to Drive Productivity
If we look at tax reform from the workforce perspective, while the one-time bonus is attractive, providing an opportunity to enhance earnings consistently over time is going to be a differentiator for the company in a competitive labor market experiencing a very low unemployment rate.
Incentive based pay (Pay for Performance) is a mechanism that can create such differentiation. These programs generate increases in productivity that lead to lower costs for the company. These cost savings are then shared with the workforce as a reward for strong team or individual performance.
Incentive programs are most effective using a labor management program, including a labor management system (LMS), that ensures fair and accurate measures as a foundation.
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2. Consider Investing in Training and Development
Your company is only as skilled as the people that make up your organization. Another way to invest in your workforce is to provide ongoing training and development.
Too often, training ends after a brief orientation period. Once again, a robust labor management program provides a built-in training approach that ensures skills continue to grow and your workforce can perform a wider range of functions in your operation thus increasing job satisfaction and retention.
3. Drive Efficiency by Reviewing Your Systems and Technology Needs
And what about that tired, old system and IT infrastructure? Could that stand to get an injection of capital? Many operations are running on old technology that has been “upgraded” in a patchwork fashion to try to meet evolving customer requirements.
Whether it be a supply chain execution system such as a warehouse management system (WMS), transportation management system (TMS) or material handling & automation, large investments are being made across the industry to ensure that technology investments support a unified commerce strategy.
Your customers’ expectations continue to evolve. Keep up by investing in technology that will support growth and enable you to move into the future with confidence.
Use Your Tax Savings for Long-Term Competitive Advantage
Resist the temptation to blow your windfall on a short-term boost. Invest in your firm’s future by deploying your tax savings on initiatives that enhance your firm’s long term competitive advantage. While it may be less exciting in the short-term, your company and its stakeholders will realize a sustained benefit.
Learn how enVista can help you get started with these goals.