Offense or defense? Which of these wins ball games? Sports fans have heard this question raised many times. If the offense scores a lot of points but the defense allows more, you lose. If the defense stands tough, allowing very few points but the offense scores none, you lose. The answer may be as random as the opening coin toss, says Dennis Swearingen, a business development representative at Sequent.
“Over the past few years, the economy has affected many businesses to the point that some have reduced their work force, while others have either closed their doors or sold their company,” says Swearingen. “The analysis of what to do has been difficult and the decisions have been twice as hard.”
He says that some executives chose to add sales representatives but slice the expense of advertising and marketing their product or services, while others made reductions in areas that they believed provided no revenue or profit opportunities. In a sense, executives have made a choice to take either an offensive or defensive strategy, and how they view the role of their HR department has played a large part in that.
Smart Business spoke with Swearingen about how to view your HR department and how it can help you increase the profitability of your organization.
Should the human resources function be considered a profit center or overhead?
When it came time for work force reductions, some owners or executives (depending on the size of the organization) started their cuts with the human resources department because it is typically viewed as an overhead function, not adding value to the organization. However that is not the case, and a strong HR department can be critical to the success of your business.
Let’s review some of the offensive strategies to the HR function. There are many facets of human resources that, if managed properly, can help increase the profitability of your organization. There are two basic ways to proactively impact your profits — either increase revenue or decrease expenses. Below are a examples of how a strong HR function can increase the profitability of your organization.
- Periodically review your outsourced vendors, such as your payroll processor and 401(k) provider, mandated by the Pension Protection Act, to determine if you have the best system and product for your organization that provides best service at a reasonable price.
- Evaluate not only your medical plan design and premiums but educate your employees on consumer-driven health decisions and the use of your preventive and wellness benefits.
- Manage the unemployment process closely. For example, if a company has 100 employees and its unemployment rate is reduced by 1 percentage point, it could save the company approximately $9,000 in state unemployment taxes the following year.
- Focus on employee retention. Depending on your industry, the cost avoidance of turnover can save your company thousands of dollars in hidden costs of retraining, production, efficiency and even customer retention.
What is the cost of noncompliance?
What about the defensive side of human resources? In other words, does your organization have a professional, certified HR person who is proactively implementing and managing the risk and compliance programs within your organization?
If you have eliminated or reduced your human resources staff, or have never had one, the probability of your company to be noncompliant in any area of HR is high. Over the past few years, there has been a substantial increase in the number of audits that have been conducted by the numerous agencies enforcing employment regulations.
Following are just some examples of where noncompliance can easily cost your bottom line, and even your company.
- Payroll tax filing with the IRS. If your provider fails to file your payroll taxes in a timely manner, it is likely that your company will pay the penalty. The IRS views nonpayment of payroll taxes as theft. Verify what certifications your vendor has obtained to protect your liability.
- Are your job descriptions classified properly as exempt or nonexempt under the Fair Labor Standards Act? If not, you could be liable for unpaid overtime and subject to fines up to $10,000 and possible imprisonment.
- Cross the I’s and dot the T’s on the I-9 Employment Eligibility Verification Form. Civil violations alone can range from $110 for each form out of compliance to $16,000 for each person hired knowing the individual is not authorized to work in the United States. Imprisonment could occur for criminal violations.
- The Department of Labor is monitoring 401(k) fiduciary liability more closely than ever. Whether the violations occur with the broker, investment advisor or third-party administrator, the ultimate responsibility may lie with the fiduciary, which often is the owner of the company. Penalties could reach hundreds of thousands of dollars.
Should the human resources function be managed in-house or outsourced?
The most common factor in determining when human resources should be managed internally is typically based on the number of employees a company has but is not the only basis. Additionally, there is not a magical cutoff when a company should hire a professional HR person. In order to provide the most efficient and compliant HR function, many factors must be considered.
With the economic challenges that we face today, cost will rank as one of the leading deciding factors. Another important component is how much valuable time is not being spent on increasing revenue and profitability for the future growth of your organization. So ask yourself whether human resources be managed in-house or outsourced. With the ever-changing compliance issues that employers face, the answer must be one or the other.
Dennis Swearingen is a business development representative at Sequent. For a free consultation, reach him at (513) 535-1970 or email@example.com.
Insights HR Outsourcing is brought to you by Sequent
We hear about all types of learning, but there is really only one kind: The learning that drives the desired behavior changes and business results. Period. Anything else misses the point.
Learning has evolved and comes in many varieties from instructor-led to CBT, eLearning, vLearning and now mLearning, along with the systems that support them like LMS, LCMS, CMS and more. The bottom line is that learning doesn’t end when the formal class or session is over. And that is where mobile comes into play, says Josh Klarin, vice president of Business Development for the Consulting Division of Sequent.
“Mobile devices allow us to extend our learning environment and make critical information, performance support tools, refreshers and much more available to our workforce when and where it’s needed,” says Klarin. “The notion of ‘moment of need’ and ‘on the spot’ learning takes on a real meaning with real impact and results through mobile devices. There are even solutions that do not rely on being connected to the Internet and still provide measurement. So, the ‘no bars’ situation is not a factor.”
Smart Business spoke with Klarin about how to incorporate mobile into your corporate learning strategy.
How have mobile devices changed the game?
Mobile devices such as iPads change the learning game not only by their portability, but more important, by their capabilities. The use of high-quality HD video for simulations, role plays, improved learner interaction and engagement have demonstrated improved results in learning and retention.
How do you know which mix or blended approach is right for your organization?
Here are a few questions that can be asked when considering your strategy. Does it:
* Help you achieve your business objectives?
* Make learning more engaging and effective?
* Drive real change and create a learning culture?
* Extend the learning environment?
* Reach all users, at all levels at all times, when needed?
* Reduce classroom hours?
* Reduce/eliminate retraining?
* Provide immediate feedback?
* Identify areas needing attention?
If you answered no to any of these questions, you should consider what an extended learning environment can do for your program. Mobility is the solution. Associates are bringing their own devices to work (and everywhere else), extending the classroom to not only increase engagement, but add value to content, redefine performance support, improve access and enhance the user experience.
What else is on the horizon for the mobile market?
* Think of mobile as a distinct, standalone capability. It is part of the delivery options that are increasingly being requested and required by the learners and their leaders.
* Mobile learning is not a novelty. It is part of a newly defined solution that deals with shorter engagements, lean learning, and access. The key is finding its place on the learning continuum.
* As the Millennials continue to hit the market and move to higher positions, the way they are learning, and have learned at all levels of school, will become the norm and they will influence and drive these changes. They are now expecting to learn in a connected, collaborative, social and, in many ways, informal environment.
* It will also be easier to access shorter, video-based learning. This will include gaming and simulations.
* The perspective here is that mobility drives the behavior. It’s the access to content when and where it’s needed that’s key.
* Instructor-led training will not disappear by any stretch of the imagination. But the tools they use in the classroom and the extended learning experience are changing.
* Consider what the LD and CLO teams are facing. Learning is coming back to the forefront. This is due in part to improved accessibility and better employee engagement through the devices. Learning can be fun again. And effective And measured. And prove its ROI.
* As employment turns positive, more will re-enter the market, and the need to train, refresh, and reinforce will increase.
It has always been a challenge to sustain learning and extend the learning experience beyond the initial classroom or course delivery.
Mobile changes the game and allows the CLO to reach all the learners, wherever they are, whenever they need it. It opens up access to critical information and allows the enterprise to reinforce learning, check knowledge and provide refreshers when needed.
Mobile is a wonderfully enabling solution and should be an integrated part of every learning strategy and plan. We should look at it as a true game changer that makes learning more accessible, effective and yes, even fun, while effectively improving business results and employee engagement.
Josh Klarin is vice president of Business Development for the Consulting Division of Sequent where he specializes in learning environment strategy and execution and leads the company’s mobile learning practice. He has more than 25 years of HR experience concentrating on learning to drive desirable results using learning technologies to address all aspects of employee development and engagement. These solutions help to build and retain workforce, improve leadership and development, and strengthen strategic partnerships with lines of business and partners across the enterprise. Reach him at (888) 456-3627 or firstname.lastname@example.org.
Insights HR Outsourcing is brought to you by Sequent
Although there are federal laws that impact employees who are minors, most requirements and restrictions come from state laws, and each state has its own set of regulations that employers must follow when hiring minors, says Holly Dangler, human resources service manager at Sequent.
“Many employers are eager to hire minors to fill part-time and seasonal jobs because of their enthusiasm, energy and motivation,” says Dangler. “However, while there are many advantages to hiring minor employees, these advantages also come with challenges.”
Smart Business spoke with Dangler about what employers need to be aware of when hiring minors.
Before a minor employee begins work, what does an employer need to do to prepare?
There are several things an employer must do to prepare for the employment of a minor employee. First, be aware of what minors can and cannot do.
Ohio law specifically prohibits minors from performing certain job functions, and there are additional prohibited job functions for minors under the age of 16. Employers should verify the job for which the minor is being hired to ensure he or she is permitted to perform the job functions.
Those between the ages of 14 and 17 must also present a valid work permit prior to the start date. Work permits are usually obtained from the minor employee’s school. A work permit may not be required for minors 16 and 17 years of age if they are employed during summer vacation months; however, a signed statement consenting to the proposed employment is required from the minor’s parent or guardian.
The employer must also display, in a conspicuous location at the job site and frequented by minors, the Minor Labor Laws poster and a complete listing of all minor employees. The listing should contain, at minimum, a current list of minor employees’ names, ages, dates of birth and occupations.
Finally, minor employees must complete a minor wage agreement with the employer that confirms the rate of pay he or she will be paid, and the employee must provide proof of age in the form of a birth certificate, baptismal record or work permit.
Are there restrictions on the hours in which a minor employee may work?
Yes. Ohio law restricts the hours when minor employees may work. Those hours depend on the age of the employees, as there are different restrictions for those ages 14 and 15 and those ages 16 and 17.
Minors aged 14 or 15 are not permitted to work during school hours, more than 18 hours a week while school is in session or more than 40 hours a week when school is not in session. However, those prohibitions do not apply if employment is incidental to bona fide programs of vocational cooperative training, work-study, or other work-oriented programs with the purpose of educating students, and the program meets standards established by the State Board of Education.
Those aged 14 or 15 are prohibited from working before 7 a.m. and after 7 p.m. while school is in session. When school is not in session or during any school holiday that is five school days or more, they may work until 9 p.m.
Minors 16 or 17 years of age who are required to attend school are not permitted to work before 7 a.m. on any day that school is in session; however, the minor may start after 6 a.m. if he or she did not work after 8 p.m. the previous night. Those in this age group are also not permitted to work after 11 p.m. on any night preceding a day that school is in session. There are no limitations to the start and end times, nor are there any limitations in the number of hours per day or per week, when school is not in session.
What break periods are required under the law?
Although break periods are not required by Ohio law for most employees, there are requirements for minor employees. Minors working five consecutive hours or more must be granted an uninterrupted rest period of at least 30 minutes. However, the rest period does not need to be included in the computation of the number of hours worked by the minor.
What are the state requirements for compensation and record retention for a minor?
First, wages cannot be reduced for any minor without giving that person 24 hours written notice of the reduction. Employers also may not retain or withhold wages because of presumed negligence, failure to comply with rules, breakage of machinery, or alleged incompetence to produce any standard of merit. Payment for any and all wages must be received by the minor by the next regularly scheduled pay period.
For record retention, the worksite employer must maintain for at least two years time records showing the actual start and end time, and rest periods. Failure to comply with any of the requirements outlined by the State of Ohio could cost your organization up to $1,950 per incident.
Employing minor employees can provide many advantages to your organization. However, these advantages come with several responsibilities, and employers need to make sure that they are following the law.
For Kentucky businesses interested in learning more about these laws, contact Dangler at the e-mail address below.
Holly Dangler is a human resources service manager at Sequent. Reach her at email@example.com or (888) 456-362
With the availability of defined-benefit pension plans diminishing as benefit offerings and the future of Social Security remain uncertain, 401(k) plans have evolved into a very popular benefit for employees to use for retirement savings. In addition, company owners and administrators have used 401(k) plans as strategic planning tools to aid in recruiting and retaining key employees.
While 401(k) plans offer tremendous advantages to employees and plan sponsors, they must also comply with several annual IRS testing requirements. One of those annual testing requirements is a top-heavy test.
Smart Business spoke to Phil Scott, Investment Advisor Representative with Sequent Retirement & Benefits Group, about the consequences of a top-heavy 401(k) plan.
When does a 401(k) reach top-heavy status?
A 401(k) reaches top-heavy status when more than 60 percent of the plan’s assets are attributable to key employees. In determining the 60 percent ratio for any plan year, the calculation is made as of the last day of the immediate preceding plan year. Key employees are best defined within 416 of the Internal Revenue Code, but here is a simple checklist that will help determine whether or not an individual is a key employee:
- Officers of the company earning greater than $160,000 annually
- Any employee who owns more than 5 percent of the company.
- Any employee who owns more than 1 percent of the company and earns more than $150,000 annually
What are the implications or penalties when a 401(k) plan falls into top-heavy status?
The plan must meet special minimum contribution and vesting requirements for non-key employees each year that the plan is deemed top heavy. The minimum contribution required to bring the plan back to compliance is the lesser of:
- 3 percent of annual compensation for all non-key employees; or
- A percentage equal to the highest percentage contribution of any key employee
Due to several factors, some plan sponsors may be concerned their 401(k) plans are currently headed into top-heavy status. The economic recession and financial meltdown of 2007-2008 forced many companies to cut salaries, downsize staffing and reduce or eliminate company matching contributions to their 401(k) plans. In reaction to these factors, some 401(k) participants have reduced or even stopped their contributions. Other participants have been forced to take financial hardships or full distributions as a result of job losses. When combining these factors with a plan whose key employees have maintained their contribution levels and seen their account balances improve as a result of the market's recovery, it is a scenario that may cause the 60 percent top-heavy ratio to be compromised.
How can plan sponsors protect themselves against this top-heavy threat?
Plan sponsors can protect themselves against this top-heavy threat by adopting a Safe Harbor 401(k) plan, which is a specific type of 401(k) plan that encourages non-key and key-employee participation. Safe Harbor plans provide plan sponsors more leniency in setting up their plans, without concerns of becoming top heavy. The Small Business Job Protection Act of 1996 provided for this new type of 401(k) plan, which carries four mandated conditions to maintain its Safe Harbor status:
- Required annual contributions from the company
- 100 percent immediate vesting attached to the required annual company contributions
- Required annual Safe Harbor notification distributed to all eligible plan participants
- Withdrawal restrictions
By following these Safe Harbor guidelines, plan sponsors are permitted to allow their 401(k) plans to become top heavy with no restrictions or penalties.
Securities & Advisory services offered through National Planning Corporation (NPC), Member FINRA / SIPC, a Registered Investment Adviser. Sequent Retirement and Benefits Group and NPC are separate and unrelated companies.
Phil Scott is an Investment Adviser Representative with the National Association of Securities Dealers and a licensed Life & Health Insurance Representative, with 20 years of financial services experience. Reach him at (888) 456-3627 or Philip.firstname.lastname@example.org
Sequent is an outsourcing and consulting firm that helps clients improve business performance through HR support, payroll/HR technology and benefits consulting. Sequent also has a safety/risk group and a consulting function that specializes in learning strategies, change management and leadership development.