Soaring Gas Prices & Retention: Are Your Employees Taking Permanent Vacations?

By Cara Whedbee, Ph.D.

With soaring gas prices and the height of vacation season colliding, what does this economic clash mean for your employees, and ultimately, your business?

The IRS Responds to the Rise in Gas Prices

Whether or not you have had a chance to react to the effect of higher gas prices on your business and your employees, the IRS is responding by raising the optional standard mileage rates for all business miles driven from July 1, 2008 through December 31, 2008 from 50.5 cents per mile to 58.5 cents per mile. Normally these changes occur once a year, but with the dramatic change in gas prices in the first half of 2008, the IRS had to respond with a rate change sooner. The Announcement 2008-63 on their Web site contains more details.

Gas Prices are Affecting Your Employees’ Vacation Plans

According to a USA Today/Gallup poll conducted from May 2-May 4, 2008, 36 percent of Americans report they are changing their summer vacation plans due to the rise in gas prices. Thirty-seven percent of those who are changing their plans are canceling those plans altogether; 24 percent say they are changing their destination to make the trip shorter; while 20 percent say they are cutting down on the number of trips they are taking.

Vacations and time off are important for employee morale, but even more important is for an employee to feel their job is worth the money and effort it takes to get to work each day. With gas prices soaring, more employees have begun to look for and find work closer to home, leaving their companies to struggle to find replacements.

What Can You Do to Keep Your Employees from Taking Permanent Vacations?

A recent Society for Human Resource Management (SHRM) survey, What Employers Are Doing to Help Their Employees with High Gas Prices in 2008, showed the following results you can use to get your own ideas to help your employees:

• 42 percent raised the mileage reimbursement to the IRS maximum
• 26 percent offered a flexible work schedule
• 18 percent allowed employees to telecommute
• 14 percent gave public transportation discounts
• 14 percent rewarded employee performance with gas cards
• 12 percent assisted employees in organizing carpools
• 7 percent offered priority parking to employees who carpool
• 4 percent offered new non-executive hires help in finding housing closer to the office
• 1 percent offered a monetary incentive for employees to buy hybrid cars

A complete copy of the survey is available at www.shrm.org/surveys.

Take Action before Your Employees Take Off

In spite of soaring gas prices causing fewer employees to take vacations this year, and possibly to take a permanent vacation from your business in favor of a job closer to home, you have several options besides offering a raise to help your employees and your business thrive. Just pick one or several of the options above, or create some of your own, and take action before your talent takes off! 

With soaring gas prices and the height of vacation season colliding, what does this economic clash mean for your employees, and ultimately, your business?