As the markets continue to adjust to the economic turbulence brought on by the pandemic, the RV industry so far has remained resilient to economic fluctuations. Spurred by renewed consumer interest in outdoor recreation, 2021 was a record-breaking year for RV shipments, with 2022 ranked the third-best year on record.
That is good news, but RV dealerships are not entirely immune to macroeconomic factors affecting consumers and businesses. In the short-term, economic impacts related to inflation, higher interest rates and the unusual labor market may challenge RV dealerships, especially because first-quarter shipments are expected to drop before picking up speed later in the year.
Weathering economic uncertainty requires striking a balance between immediate action and investing in and supporting personnel. Most economic signs indicate the labor market will remain tight in 2023, so keeping and attracting talent will be key.
HR policies can help you make such decisions with an eye toward your dealership’s long-term success. Here are three things to consider regarding the economy and your workforce.
Revisit Your Compensation Structure
This year, 26 states and 41 cities are set to increase their minimum wages. And while most will end up between $10 and $15 per hour, several cities will reach the $16 to $18 range. Some states, such as Arizona, have tied their minimum wages to the Consumer Price Index, meaning they could change every year. Only 20 states still follow the federally mandated minimum wage of $7.25 an hour, which has not increased since 2019.
This means dealerships must comply with increasing minimum wage expectations for nonexempt positions. Forward-looking employers will not only raise the floor, however. They also will revisit their entire compensation structure.
A comprehensive approach to compensation helps you spot and correct pay compression, which is when new or entry-level workers are making near to or more than seasoned employees.
We all know pay is an important motivator. It can drive productivity, performance and efficiency. Pay has significant impacts on retention and recruitment. When employees start to feel the financial pinch, they may become less engaged and less productive. Ultimately, they are more likely to leave. Dealerships want to avoid all these outcomes, especially in 2023.
Rather than “setting and forgetting” their pay ranges, employers should audit their pay structure for pay compression. Over time, forgetting about pay ranges leads to new, lesser-experienced/skilled employees earning nearly the same as tenured staff. When I explain the concept to employers, I liken it to a growing child whose parents bought shoes at the beginning of the year but then try to squeeze the child’s feet into the same pair the next year. Much like a child’s growing feet, pay scale inequity generally happens subtly but has a wide impact, requiring monitoring.
An audit will help you find and correct pay equity issues so you can stay compliant with federal and local regulations as well as attract and retain a productive workforce.
Keep Employees Engaged to Increase Retention
The U.S. Chamber of Commerce reports people continue to spend, even as savings dwindle, and 2023 industry projections seem to reflect consumers’ spending levels. You will need an engaged workforce to sell and repair all those RVs.
According to Gallop, engagement is “the involvement and enthusiasm of employees in their work and workplace.” Meta-analysis by Gallop from its Employee Engagement survey shows engagement correlates with better business outcomes “across industry, company size and nationality, and in good economic times and bad.” As such, employee engagement is a critical metric to attracting and retaining staff.
Unengaged employees’ consequences are grim: they tend to quit. One study found 51% of employees who left their jobs voluntarily said their managers did not ask about their jobs or futures in the last three months of their employment.
Avoiding engaging with employees is an expensive mistake. It can cost between half and two times an employee’s salary, depending on skill set, to replace them. The math makes sense, as costs compound from the recruiting process and time spent interviewing, conducting background and drug tests and getting new hires up to speed.
Usually, managers can make small changes to prevent workers from quitting, such as building in regular check-ins to their workday. Employees whose managers provide daily feedback are three times more likely to be engaged than those who receive less-frequent input.
Managers can use engagement surveys as well. Seriously consider the data and implement changes where needed.
Tools such as engagement surveys can help you avoid exit interviews. If you do have people leaving your business voluntarily, give the exit interview earnest attention.
Many businesses do not even conduct interviews, leaving valuable data on the table. Other businesses conduct the interviews but do nothing with the data. So, conduct the interview, listen to the feedback and implement changes. Doing so can prevent a mass exodus from happening and improve your organization.
Maximize Your Workforce
Engagement has two primary benefits. As we have seen, engaging with workers helps increase retention over the long term. However, engagement also helps you determine your short- and long-term staffing needs—and how to use the staff you already have to meet those needs.
When you know a critical team member is on the way out, or you simply want to stay one step ahead, consider succession planning. Succession planning helps you fill key roles, the ones keeping your RV dealership running and competitive, by identifying and developing the talent you already have to fill those jobs.
That way, you reduce your need to hire externally, which may be a boon in the coming year, when businesses likely will have a hard time finding skilled workers in their local market.
You can include upskilling in your succession planning, too. The practice gives your workers the flexibility to move around within your organization. Upskilling is especially important when roles are suddenly vacated or eliminated, and duties must be divided among other positions.
With upskilling, you identify where your current employees want to go and the skills they need to get there. Then, you help them acquire those skills through learning and development programs, job rotation, peer mentorship and more. As a result, upskilled employees are ready to take on new responsibilities when needed.
Retention Is Key
Although the probability remains difficult to accurately assess, economists still say there is a 25% chance of a recession, however mild, in 2023. Inflation, the labor market and other economic factors remain question marks as well.
From an HR perspective, weathering economic uncertainty by battening down the hatches makes sense. Maximize your workforce’s ROI by keeping them happy, productive and flexible.
Brianna Martin is a human resources consultant at workplace compliance and safety company KPA. She helps clients who need to train employees, tackle compliance issues and effectively manage HR processes across the employee life cycle. Among her tasks are helping with HR process automation, training and applicant tracking.
