The restoration industry has seen a shift toward higher wages in recent years. This trend is not just a response to labor shortages but also a recognition of the connection between higher wages and employee retention. While increasing pay is a positive step for employees, it can create extra restoration company cashflow pressure.
Balancing the need for competitive wages with maintaining strong cash flow can feel like a tightrope walk. Fortunately, by understanding industry trends, implementing strategic compensation structures, and focusing on workforce health, restoration companies can strike the right balance.
Paying competitive wages is no longer optional for restoration businesses looking to attract and retain skilled employees. April Slater, HR Manager at OCS, explains, “It’s important to understand industry standards. If your competitors are paying more, you’re likely to lose people to them—or struggle to hire in the first place.”
The 2023 State of the Industry Report found that businesses offering higher wages saw increased employee tenure. In 2024, more restoration companies began implementing this strategy on a wider scale. Offering competitive wages doesn’t just improve employee satisfaction. It reduces turnover expenses and ensures that your team has the skills and experience needed to perform quality restoration work.
Rising wages don’t have to derail your business’s financial stability. With the right strategies and the right cashflow, restoration companies can balance higher pay with a healthy cash flow. Here is how:
Regularly review what your competitors are paying. This can help you establish fair compensation bands for different roles within your company. April recommends reassessing wages at least annually.
When financial constraints make it difficult to offer raises, transparency is key. “If you’ve built a strong workplace culture and you’re honest with your team about the situation, many employees will stick around,” April points out. The key is to communicate openly and have a plan to address the gap in the future.
Variable compensation like performance-based bonuses is a great way to reward employees without permanently increasing fixed costs. April suggests exploring different variable compensation strategies based on individual and team performance. According to the 2024 State of the Industry Report, 74% of companies now offer some form of variable compensation for mid-level managers.
Variable compensation can be challenging to budget, especially if all employees perform exceptionally well. But it also provides a way to incentivize performance. Of course, better employee performance often leads to better restoration company cashflow.
A healthy, engaged workforce is more productive, which helps offset rising wage costs. Focus on developing strong frontline managers, recognizing hard work, and addressing burnout. As April puts it, “If you don’t have humans, the work’s just not going to get done.”
Implementing tools to track cashflow is important. Many restoration companies use claims management services like OCS to improve their restoration company’s cashflow and reduce the time it takes to get paid.
While managing rising wages alongside cash flow may feel challenging in the short term, the long-term benefits are worth the effort. Companies that pay competitively and invest in employee performance see reduced turnover, higher productivity, and stronger financial performance overall. By staying informed about industry standards, being transparent with your team, and leveraging tools like variable compensation, restoration businesses can create a win-win situation for both your employees and your restoration company cashflow.
At OCS, we work with restoration companies every day. We understand the cashflow challenges restoration businesses face. If you’re looking for new cashflow strategies after a tough 2024, restoration claims management services might be the answer. At OCS, our claims management services help restoration contractors collect payments faster, giving them the cash flow stability needed to invest in their teams. Contact OCS today to learn more about how we can help.