So, is there really a correlation between training and developing employees and profitability for the company? Let’s look at some of the benefits of training:

•  Increased productivity
• Increased performance
• Increased retention
• Increased job satisfaction
• Increased job knowledge
• Decreased turnover
• Decreased lawsuits/claims against employer
• Decreased worksite accidents
• Decreased compliance violations

Based on these benefits it would certainly appear that there is indeed a correlation between a company’s profits and training and development. Businesses who mitigate risks and improve production and employee morale are certain to reap the rewards in their bottom line. Before implementing any new programs carefully consider if the training makes sense for the specific business and ensure that it has measurable results in terms of performance, behaviors and company goals.

Tips for implementing training programs:

•  Align training with organizational goals
• When providing information always show how to use the information
• Follow up by measuring results after training
• Reward and recognize behaviors learned in training
• Provide “take aways” or “cheat sheets” that can be utilized on location

What do training budgets look like for most companies?

•  Businesses with < 500 employees typically budget for outsourced training for the                following reasons:

              *Cost Effectiveness

              *Allows a Greater Focus on Core Business

             *Provides access to customizable solutions with a much smaller investment of resources than                creating and maintaining in-house programs

• Estimates show 50% or more of allocated dollars are spent on technical training with a mere 5% on employee orientation and even less on the development                               of critical “soft skills”                                                                                                      *The exception, highly customer focused companies

• In the US, total training budgets average between 2 and 2.5% of the payroll with 3% being reported by leading company
• A properly managed training budget can provide some of the best ROI in your business

The Federal government has publicly stated that the misclassification of employees as independent contractors costs $2.72 billion in lost tax revenue.

Simply put, both Federal and State government plan to crack down on employers who improperly call what are actually employees, “independent contractors”.

“Misclassification” is the government’s term for not abiding by the IRS definition of an independent contractor. If the employee is requested to work specific hours and is directly supervised by the employer, then the worker can not be considered an independent contractor (the IRS publishes a long list of requirements a worker must meet to be considered an independent contractor).

Some additional statistics on this issue are -

· In December 2011 alone, 30% of employers using independent contractors mistakenly classified them that way.

· During 2011 the DOL Wage & Hour Division hired an additional 90 investigators and upped their budget by $244 million with the goal of uncovering    new FLSA violations.

· For every dollar the Wage & Hour Division spends investigating employers for misclassification, it gets $7 back in fines and penalties.

It can be tempting to just “1099” a worker, especially those who might only work seasonally or work during peak periods, but the “savings” are not worth the risks. Unless the “contractor” has other clients, has his/her own business, pays their own expenses, and is not required to work pre-specified hours, the employer should “hire” the worker and pay FICA, unemployment and in most cases, workers’ comp.

HR Dynamics interacts almost daily with employees who have “1099 issues”. Temporary staffing with a well respected agency is considered a viable solution to the 1099 problem.

• Knowledge
• Enthusiasm

At HR Dynamics we interview a hundred candidates each year for jobs with our clients. We see many people with strong qualifications who interview poorly. What are the keys to good interviewing skills and techniques for a job applicant ?

Many, many books have been written on this subject and there are a number of skills to learn and practice. But from our standpoint, two skills stand out above all others.

1.  A thorough knowledge of the hiring company gained from personal research
2. Enthusiasm for the position

The two are most definitely connected. If the applicant displays a good basic knowledge of the business, it follows the applicant will be able to express enthusiasm for the job opening.

Preparing for a job interview means doing the homework to learn everything possible about the business. A thorough Google search is imperative. Contacting people in the industry such as competitors, customers and suppliers will uncover additional information. No matter what position one is applying for; the more research one does on a company, the better.

For example, let’s say you are applying for a position as a bookkeeper/office manager with a local travel agency… the knowledgeable applicant should have an “interview conversation” that sounds like this………

“I understand that XYZ Travel recently merged with the ABC Travel agency…Has that been a good combination?”

“In reviewing your advertising in the local Sunday paper, it seems that working with the major cruise companies is a key component of your business.”

“My Grandmother, who lives in Atlanta regularly uses a travel agent to book cruises and trips to Europe. She says that what matters the most to her when selecting a travel agency is the knowledge and experience of the individual agents. She wants to work with an agent who has been to the destination. Do you find this important to XYZ’s clients?”

Just the mere fact the applicant has done their homework and research makes the interviewer feel the applicant wants the job and has enthusiasm for the industry. Other ways an applicant can show enthusiasm are:

• Body Language – Most books that describe the best interviewing techniques will tell you to maintain good eye contact, smile, sit forward in the chair and show enthusiasm in your voice and your actions.

• Ask about growth potential – With a good knowledge of the industry, the applicant is able to ask meaningful questions about the company’s strategy to grow and be more profitable. (“In the travel industry I’ve noticed more and more of the big resorts are appealing to young families. Do you see XYZ growing by focusing on young families? “)

• Describe, specifically how you can add value …. “In addition to my bookkeeping skills, I think I can help XYZ by conducting a cost analysis of the new marketing strategies and making recommendations based on effectiveness”. The interviewer wants to know how hiring you will benefit the company.

Everyone can improve their interview technique. An excellent place to start is to do your homework; research the company, the industry and the position and then show enthusiasm for the position based on this knowledge.

In working with our clients, HR Dynamics has come to believe that there are two important factors causing this decrease in morale.

1) Downsizing – Because of the economic downturn, many companies’ existing employees feel overworked, under appreciated and stressed; and there seems to be no end in sight.

2) New Hires – In this current environment, if a company hires a new employee, the existing staff expects the new employee to make an immediate and noticeable contribution (“after all, as an existing employee I have been denied salary increases or bonuses for the last couple of years, so why not give me a raise instead of hiring the new person”).

These two factors require new thinking in order to motivate existing employees and make the right new hire choices.

To make good hiring decisions, a company should have a step by step hiring process which includes consistent interviewing techniques and reference checks. Additionally, a “try before you buy” approach can greatly improve the odds of making a successful hire.

Using an employment agency, the new “hire” can be a temporary worker, usually for 2 to 3 months, and then converted to permanent employment if the try-out period is successful. During the try-out period the employment agency is responsible for all statutory benefits such as workers compensation and unemployment insurance. If the try-out period is not successful, the “hire” is turned back to the agency eliminating the company’s obligation for unemployment insurance or severance.

For existing employees, the issues are morale and retention. Two solutions to solve these issues are …

New Training Concepts and Incentive/Recognition Programs.

Training can make existing employees feel more engaged – more part of the business. Also, everyone enjoys learning new skills that allow them to be more efficient and productive in their work. An important CAVEAT!… the new training programs must be relevant and custom designed to fit the needs of the individual company – not something pulled off the shelf.

The right incentive and recognition programs are excellent morale builders. They need not always be cash bonuses. A day off with pay, flex-time, dinner for two, gas cards, movie tickets, etc. show appreciation for hard work and reward workers by giving them something they want. Recognition in the form of “Employee of the Month” programs instill pride in employees and create a little friendly competition. Design programs that are specific to the company’s goals for the biggest overall impact.

Also, benefits such as health care and disability insurance certainly have a cost, but compared to a salary increase might be more valued and improve employee retention.

When will this economy turn around? I don’t think anyone knows, so we better learn to operate our businesses in the environment of a struggling economy.

On March 2, 2011 the City of Vero Beach contracted HR Dynamics to conduct an executive search for a new City Manager.

The City Manager is a chartered officer and reports to the 5 member City Council of Vero Beach. All City employees (about 500) report to the City Manager.

David Johnson, President of HR Dynamics headed up the search. In early April he narrowed more than 50 candidates to 5 finalists. These five were interviewed by each of the 5 Council members using the Skype video service. In late April 4 of 5 finalists were selected by the Council to come to Vero Beach for “live” interviews in an open to the public Council meeting.

The Council, by a 4 to 1 vote chose Jim O’Connor, who is currently the City Manager in Winchester, VA. Jim must give 60 days’ notice, so he will start in Vero Beach by July 25, 2011.

Lessons Learned

1. Local is very important when recruiting a government employee

Choosing a search firm that is headquartered in Vero Beach made a significant difference. With local knowledge of the Vero Beach lifestyle and current issues facing the City, HR Dynamics was able to quickly gain the professional respect when contacting candidates. Many of the City Manager candidates had been contacted by other search firms during their careers and had experience going through the executive recruiting process. Several mentioned they noticed a difference in professionalism and knowledge when contacted by the Vero Beach recruiter.

2. Reporting to 5 member Council makes City Manager a difficult job.

The City Manager, like a CEO or President has a five person “Board of Directors”. The big difference with the City Manager position is the “board” can change every two years depending on elections. Also, because of the “Sunshine Law” the board/council cannot deliberate outside of a public forum. Therefore the City manager can not meet, informally with Council Members to share ideas and discuss alternatives. That must be done in the public Council meetings.

3. A City Manager’s skill set must include general management, politics and spokesperson for the community.

Several members of the City Council wanted to consider candidates from the private sector; that is general managers from private industry. Private sector candidates were evaluated, but the unique requirements of the job made HR Dynamics recommend those candidates who had “been in the chair” of a City Manager as the combination of on-going communications to the public, listening to every constituent, managing so many diverse services, and knowledge of municipal utilities, did not exist with private sector candidates

4. The Sunshine Law makes recruiting more difficult.

This is true up to a point. Candidates who are currently employed are reluctant to throw their “hat in the ring” because it immediately becomes public knowledge. On the other hand, the total public exposure of candidates virtually assures complete background knowledge and exposure of any “skeletons in the closet”

5. Every city has unique challenges but currently, Vero Beach has several.

Most senior managers are recruited to initiate change; to be a “change agent”. In the near future, Vero Beach will consider selling two utilities, cutting the size of the government staff and creating a new budget to match lower tax collections. Having been in the City Manager position since 1979 in five different cities, Jim O’Connor has learned how to be a “change agent”. It is expected that his “fresh set of eyes” will enable out-of-the-box thinking and effective new policies.

6. The compensation package was carefully scrutinized.

The Council Members are very conscious of saving the taxpayer money. The overall cost of the O’Connor compensation package is in line with other Florida cities with $130 million plus budgets and 500 employees. Early on Jim asked only for Vero to match his current salary in Winchester, but what was instrumental in sealing the deal was his offer to cut his salary if the City Government is downsized as a result of the potential sale/merger of utilities.

In summary, HR Dynamics feels the City of Vero Beach has a truly outstanding individual in Jim O’Connor. The credit has to be given to the 5 City Council members, each one of whom spent an average of 10 hours interviewing candidates, one on one and probably 5 more hours of Council meeting time. They were involved and realized the importance of getting the best person to lead the City in this time of major change. We are all anxious for Jim’s arrival and success.

The employee then goes to work for the employer and does their job just as if the PEO wasn’t in the picture. Except the PEO provides benefits, administers payroll and 401K programs, provides safety training as necessary and handles the HR aspect of managing the employee.

Many PEOs are automated so an employee can receive direct deposit of payroll, manage their 401k easily and use online time keeping services.

For the privilege of having the PEO handle all your HR administrative functions you pay a fee (typically 2-3% of gross payroll) to the PEO.

The PEO is able add your employees to a large pool to reduce risk and cost for health insurance, benefits, workers compensation, and state unemployment insurance.

In an ideal situation, the cost savings realized in various insurance costs are far greater than the 2-3% administrative handling cost. This is particularly true for workers that work in an industry that had high costs of workers compensation insurance.

In addition to saving money by putting your employees in a large employer pool to reduce costs, companies that use PEOs don’t pay an annual premium for workers compensation. Instead they pay as they go which can substantially improve working capital.

If your company is not large enough to have a full service HR department or are in a high risk industry for workers compensation, you should consider a PEO. You may be surprised at the savings and benefits.

Sam Thacker is a partner in Austin Texas based Business Finance Solutions.
His Direct email: sam@lesliethacker.com.

It might be hard to imagine but the Workers’ Comp Insurance in Florida is a good program providing businesses with risk protection for on-the-job injuries and fatalities at a good price. The employer must maintain a safe work place and in many cases provide safety training

In 2003 the Florida Legislature approved a 182 page revision to the Workers’ Compensation laws. At that time Florida’s Workers’ Compensation Insurance premiums were the 2nd highest in the nation. Since the reforms were enacted, Florida’s rates are the 5th lowest in the nation having been reduced every year since 2003 with a cumulative decrease of 65% in the seven years.

How can it be?….. an insurance product, in Florida, costs 65% less than seven years ago? Simple…tort reform!

The 2003 act limits lawyer fees to a percentage (20-25%) of any monetary award to workers’ comp claimants. With permanent partial disability claims (the most costly) the attorney fees are based on the amount of money ultimately awarded to the claimant above the initial offer made by the insurance company.

Now the insurers to have an incentive to make their best settlement at the beginning and discouraged attorney from representing claimants when it is unlikely legislation will improve on the award. A side benefit with less attorney involvement is cases are settled faster allowing the injured worker to make a faster return to the work force.

As in most states, Florida’s Workers’ Compensation program ensures an employee, who is injured on the job, regardless of who was at fault, prompt payments covering medical costs and lost wages. Workers can obtain payment without litigation but they lose their ability to sue the employer for a larger sum.

The 2003 reform act also addressed limiting medical costs. For example, prior to 2003 a worker could get second opinions from a variety of specialists; now a 2nd opinion is limited to one specialist.

The 2003 reform act resulted in a good workers’ comp program in Florida where rates are 30-40% lower than the neighboring states of GA, AL, LA, and MI. For most businesses workers’ comp insurance is mandatory, but we feel every business should have this protection. The cost is well worth the protection as one accident can put a company out of business.

One final thought. If the tort reform to limit attorney’s fees has reduced costs for workers’ comp with 7 years of history of fair settlements to the injured personnel, might not these reforms be applied nationwide to the health care industry?

From the employer’s standpoint, the current economy and uncertain future make it very difficult to plan and commit, especially hiring. Many employers, having recently been through lay-offs, are slow to re-hire even if their business is starting to pick up.
What can today’s job seeker do differently in this environment? One thing we have seen in our recruiting business is the need for project managers and sole proprietor consultants. How can the job seeker re-invent him/herself to take advantage of these “project” type opportunities and what does this mean for long term career growth?

To re-invent, job seekers can sell themselves as a “fixer”, a problem solver; someone who is available full time for a finite time period; typically 3 to 6 months to perform a specific assignment.

This re-inventor requires new techniques for the job (project) search. It is not mutually exclusive from what you are already doing to look for a “full-time” job. You can run both searches in parallel. But what is different for the search for project work is:

1. Your search and networking is focused on what problems a company is facing (you would be amazed how the problems are similar across all industries i.e. customer service response time).

2. Instead of standard resume, consider a “brochure” type presentation where you detail “problems you have solved for previous employers”.

3. For project work your interview style should be more proactive: “Here is how I can attack your problem/opportunity”.
You are selling yourself in the same manner as consulting firms sell their services, but unlike consultants whose primary focus is advice and methodology, you will roll up your sleeves and do the work.

Call yourself a project manager, contract employee, interim manager. You must make it easy for the company to “engage” you.

• You must meet the qualifications of an “independent contractor”. You must register for a tax indemnity – an EIN number which is form #SS-4, easily obtained online.

• Be ready to propose your weekly fee requirements – fee not salary.

• Express your interest in longer term employment, but emphasize you do not want the company to be under any obligation to hire you.

To summarize: Companies today have tremendous difficulty forecasting and planning so the concept of a “flexible” workplace is extremely timely. From the job seeker’s standpoint, being active and keeping job skills fresh and up-to-date is mandatory.
Finally, in our experience, at least 50% of these project assignments result in being hired by the company. Both you and the company have had a successful engagement so it’s easy to get married, which is often a major reason for a company to engage a project worker and is an excellent way for both you and the company to make the hiring decision.

Business owners may try to save money by not pay-rolling a new hire; especially if the owner is uncertain how long the worker will be needed at the company. But the Internal Revenue Service (IRS) and state agencies demand assurances that the employee is not misclassified as an IC, thereby avoiding employment laws, worker’s compensation, unemployment taxes and the employer’s contribution to FICA and Medicare.

Misclassifying employees as independent contractors to avoid employment laws and taxes can result in stiff penalties as well as payment and interest for all prior period employment taxes. As you might expect in these tight budgetary times, both the federal and state governments are increasing the employment audits of small businesses.

Another trap for the business owner is that independent contractors who are injured, quit or are fired from a job may end up petitioning the IRS to have their independent contractor status predetermined so they can be eligible for unemployment insurance and medical payments under worker’s compensation. This will bring the IRS and state agencies right to the employer’s front door.

The key is for the company to properly classify the worker as an Independent Contractor (IC) or a “W-2 Employee”. A good place to start is the 20 common law rules published by the IRS. These rules ask questions to test the relationship such as….

•Does the person’s business have a registered name?

•Does the person have more than one client?

•Does the person advertise?

•Are there unreimbursed business expenses and ongoing fixed costs?

Another IRS test addresses the behavior of the relationship. Does the company control what the worker does, how the worker does the job and hours to be worked?

Finally, to better define the relationship there should be a written contract with the worker with a time frame for the specific project or job to be completed.

If a company currently has employees who are misclassified as IC’s or wants to “hire” IC’s in the future, there are basically two options: petition the IRS or use a third party staffing company. To petition the IRS use form SS-8, “Determination of Worker Status”. The IRS will provide a classification for the specific job but it can take up to six months to get the determination.

The second option, well suited to small and mid size businesses, is to use a third party staffing company; either a temporary staffing agency or a Professional Employment Organization (PEO).

The temporary staffing agency need not be involved in recruiting the worker, but should be involved in verifying immigration status and perhaps credit scores. The staffing company then provides the worker to the company for a specific time period and becomes responsible for required tax withholding, employer’s FICA and Medicare contributions, worker’s compensation, federal and state unemployment taxes and payroll administration.

The second type of third party staffing company is a PEO. To use a PEO the company must assign all of its employees and IC’s it wants to reclassify to the PEO who “leases” the employees back to the company. The IC’s become employees of the PEO, which is responsible for the payroll and statutory benefits. Unlike temp staffing, the PEO can provide health and insurance benefits, generally at reasonable costs due to their buying power. The PEO typically charges an administration fee of 3-4% of total payroll. Most PEO’s provide much more than payroll administration and benefit plans. As “co-employers”, the PEO must stay current and knowledgeable of labor law. They work closely with the company to educate and assure compliance with the alphabet of employee regulations: OSHA, FICA, FMLA, EEOC and provide Employment Practices Liability Insurance (EPLI).