By: Alejandro Langa
Companies in today’s competitive markets operate on the margins. Any means to reduce costs and boost profits, be it from suppliers, tax credits, or wages, can increase the company’s stock value, reduce debt and increase profits to share holders.
The Society for Human Resources Management recently carried out a multi year study to help answer the question- “Is it financially viable to hire veterans?” There is a belief, mostly created and perpetuated by Hollywood, that military veterans are grizzled, inflexible people that use wanton profanity and violence to fix any issues due to their experiences in the military. The study unsurprisingly found that many employers thought it would be more costly and time consuming to train veterans, would create new stresses with existing workers and often had inflated estimates of how many veterans suffer from Post Traumatic Stress Disorder.
The reality is that overall, veterans are trained to be flexible, think independently, integrate members of their assigned team to solve complex issues, and work tirelessly - often with little to no direct supervision. In the short term, veterans may need training to bring them up to speed on the policies, procedures and specific equipment used by their civilian counterparts. While the learning curve may be steep, they will quickly adapt and integrate to their environment. Adapting and integrating into new environments and teams is a keystone of military service, with the frequent changes of duty stations and job promotions that happen regularly in the military. Some of the intangible benefits include: honesty, attention to detail, a great work ethic, understanding federal health and safety regulations, and the internalization of the responsibility that comes with their job. Companies can also garner the goodwill factor from consumers by hiring veterans. However, the most tangible benefits companies can take advantage of are the financial and tax incentives.
Many organizations may be eligible to receive the Work Opportunity Tax Credits (WOTC) of up to $5,600 for each unemployed veteran hired, and up to $9,600 for each veteran with a service-related disability. Furthermore, there is the Returning Heroes and Wounded Warrior Tax Credits that credits 40% of the first $6,000 and up to $24,000 of earnings of a veteran. As with any government program there are caveats and restrictions, but some simple searches will yield promising results. Additionally, the DoD has created the “SkillBridge” program, wherein separating service members are given up to 180 days paid leave of absence from the DoD to train and build the requisite skills with their new employer. The employer is solely responsible for providing the training and experience that the separating service member will require.
Hiring separating or retirement eligible aviators directly into the airlines also has other benefits when considering their military contracts. Most military aviators will not be able to complete their first contract until they are approximately 32 to 33 years of age at the earliest (this does not take into account Guard or Reserve aviators). This means that an airline will only have that pilot for approximately 33 years on their payroll. Most airline pay scales top out at approximately 12 years, and not all veterans will be able to transition immediately to their forever airline. Many will have to spend three to five years at a regional, fractional carrier or other employer that can give them the requisite experience to apply and be hired by a legacy/major carrier. Furthermore, if airlines actively pursue veterans that have reached military retirement and its associated benefits, the cost savings continue to pile up for the carrier. Retired veterans will rarely opt for the company medical or dental plans since they have lifetime coverage and most significantly they will be in their early forties in age, which means the company is assured that these pilots will only be on their payroll for less than 25 years. The cost savings over lifetime earnings can be over two million if we assume a pilot at a major airline will earn somewhere in the range of $200k per year.
Harvard Business Review published a paper by Tomas and Chamorro-Premuzic where they touch on the scientific evidence of hiring older workers. “For most people, raw mental horsepower declines after the age of 30, but knowledge and expertise – the main predictors of job performance – keep increasing even beyond the age of 80. There is also ample evidence to assume that traits like drive and curiosity are catalysts for new skill acquisition, even during late adulthood.”
Hiring veterans has lots of benefits. The carrier benefits from training cost reductions, lifetime wage reductions, reduced benefits, tax incentives, increased goodwill from consumers, and an older workforce that is less likely to leave to start again at another carrier. HR departments should not ignore the cost savings, experience, loyalty, and other intangibles that a significantly untapped workforce could make immediately.
Bersin, J., Chamorro-Premuzic, T. (2019, September 26). The Case for Hiring Older Workers. Harvard Business Review. Retrieved from https://hbr.org/2019/09/the-case-for-hiring-older-workers
Riggins, N. (2017, March 5). 15 Benefits of Hiring Military Veterans. Small Business Trends. Retrieved from https://smallbiztrends.com/2017/03/benefits-of-hiring-veterans.html
Society of Human Resource Management. (n.d.). Why Hire a Vet? Building Inclusive Organizations. Retrieved from https://www.shrm.org/foundation/ourwork/initiatives/engaging-and-integrating-military-veterans/Documents/13056-G-01_SHRMF_WhyHireVet.pdf