hrex surviving to thriving growing on a budget 091510

Leveraging the HIRE Act and

Smart Hiring StrategiesSeptember 15, 2010

HREX Series:

Joyce Nelson

Partner & Vice President Client Services

Advex-Advancing Excellence, Inc.

Scott Buchanan

President

Human Resources, Inc.

From Surviving to Thriving:Growing on a Budget

http://seialliance.com/

Hire Incentives to Restore Employment Act (HIRE): 6.2% FICA Exemption

Health Reform Act

Smart Hiring Strategies

© HREX-Human Resources Excellence. All Rights Reserved.

Agenda

Was the replaced employee separated voluntarily or

terminated for cause?

Wages do not qualify for exemption

Did employment begin after February 3, 2010?

Were wages paid to employee after March 18, 2010?

Did the employee work more than 40 hours during the 60 day period ending on the date of employment?

Did the employee replace another employee?

Is the employee related to the employer (related to anyonewho owns more than 50% of the employer?)

Did employee complete Form W-11?

Wages paid to employee after March 18, 2010 qualify for the exemption

from the 6.2% FICA tax.

YES

YES

NO

NO

NO

YES

NO

NO

YES

YES

YES

YES

NO

Qualifying for the Exemption from FICA Tax Under the HIRE Act

(as of March 18, 2010)

©HREX-Human Resources Excellence. All Rights Reserved.

Without HIRE With HIRE

FICA 6.20% 0.00%

Medicare 1.45% (1) 1.45% (1)

FUTA 0.80% (2) 0.80% (2)

SUTA 2.70% (3) 2.70% (3)

Total 11.15% 4.95%

1) Scheduled to increase for certain high income individuals

2) May increase to 1.10% in those states that do not timely repay Federal loans

3) Starting rate for new employer

NB: A retention benefit of $1,000 is also available.©HREX-Human Resources Excellence. All Rights Reserved.

HIRE Act Example:Employer’s Portion of Payroll Taxes

WOTC = Work Opportunity Tax Credit

Can’t double dip on same wages.

HIRE Act benefit is more certain and immediate but WOTC may provide a greater benefit.

Can take WOTC and the retention benefit from the HIRE Act.


WOTC or HIRE Act?

Present and Future

Obama Administration credits the HIRE Act for 5.6 million new hires in the first 6 months of the program;

US Senator Charles Schumer (D-NY) is calling for a 6 month extension of the Act

Expect election year activity


HIRE Act Present & Future

Employer does not qualify for credit

(1) See transition rule for 2010

Does the employer pay a uniform percentage of premiums for each employee enrolled? (1)

Does employer pay at least 50% of the premium for single coverage?

Does the employer have fewer than 25 full-time equivalent employees for the tax year (see worksheet)?

Are the average annual wages (see worksheet) for the tax year less than $50,000?

Employer qualifies for credit.

YES

YES

YES

YES

YES

NO

NO

NO

NO

NO

Eligibility for Small Business Health Care Tax Credit

Does employer provide health care coverage?

(as of March 30, 2010)


For tax years 2010 through 2013– Tax credit up to 35% of employer’s portion of premium if employer

pays at least 50% of a benchmark premium

For tax years 2014 & 2015– Eligible small businesses that purchase coverage through the State

Exchange will receive a tax credit up to 50% of the employer’s portion of the premium if that portion is at least 50% of total premium cost

Phase Out– This credit gradually phases out for firms with average wages between

$25,000 and $50,000 and for firms with the equivalent of between 11 and 25 FT workers.


Health Care Act Credit & Phase Out

Facts

ABC Company

40 PT employees = 20 FT employees

Wages $500,000 or $25,000 per employee

Employer paid health insurance premium $240,000

Credit Computation

(1) Initial credit before phase out $240,000 x 35% $ 84,000

(2) Credit reduction for employees in

excess of 10 ($84,000 x 10/15) ($56,000)

(3) Credit reduction for wages in excess of $25,000 0

(4) Total 2010 Tax Credit $ 28,000


Health Care Tax Credit Example

SMART HIRING

STRATEGIES


Survive

Thrive

Excel

Effectiveness in driving results through people?

Ability to execute - right mix of people, tools and practices?

Large labor pool?

HIRE Act: cost of extra person vs. risk of lost opportunity?

Survive

Thrive

Excel


Challenges & Opportunities

Performance Effectiveness

Effective Management

Practices

Leadership Effectiveness

Talent Recruitment Selection & Retention

Team Effectiveness

KPI’s & Metrics


The People Side of a Successful Business

a) Hard to do well

b) Time-consuming

c) The most important thing you do

d) All of the above

Hiring is your hardest job but vital to your business’ success


Hiring Is…

3-15 times individual salary (20% direct 80% indirect cost)

Over 80% of recruitment decisions based on biographical

interviews with some form of reference check.

On average, 45% of new hires leave in the first 6 months, and

15% of new hires are fired within the first year*

* Charles A. Handler, Ph.D. (2009) Using Technology to Support Informed Decision Making Within the Hiring Process


Real Cost of a Bad Hire

89%fail for reasons that have nothing

to do with skills or abilities

‘Failed’ employees rarely fail because they

aren’t smart.

They fail because they don’t fit.

Coachability 27%

Emotional Intelligence

24%Motivation

17%

Temperament

15%

Competence 11% Other 6%


Why Hires Fail – Success is More Than Skills

1. Inadequate salary and benefits.

2. Limited opportunities for advancement.

3. No recognition for good work.

4. Unhappy with management, how they were managed or didn’t connect.

5. Bored with the job

6. Other (retirement, career change)

15%

20%

25%

30%

5%

5%


Top Reasons Why People Quit Their Jobs?

1. We don’t really know what we are looking for.

2. We don’t consistently use well-crafted questions to probe

and gather relevant information from each candidate.

3. We rely too heavily on one person’s opinion of the

candidate…usually our own.

4. Our evaluation of the candidates tends to be incomplete.

5. Hiring the ‘Best We’ve Seen’ rather than ‘What’s Best for

the Position’.


5 Most Costly Hiring Mistakes

42.7%contain false

informationProbe, Probe, Probe….

Take the time, understand how they behave and are wired.

Simple process for identifying and hiring A Players with a high degree of success. It helps you get the “who” right.

“A “Player 90% chance accomplishing outcomes. Good vs. Great

You are Who you hire

Four ‘S’s = ‘A’ Method for Hiring

• Scorecard (= job description with purpose, accountabilities, outcomes, required competencies)

• Source (referrals, professional/personal networks, recruiters etc.)

• Select (structured interviews in pre-screening, top grading, referencing)

• Sell (what matters to candidate: fit, family, freedom, fortune, fun)


“Who: The A Method for Hiring”*

* Reference: “Who: The A Method of Hiring”, Geoff Smart & Randy Street

Pre-Screening Interview (15-30 min by phone)

1. What are your career goals?

2. What do you excel at professionally?

3. What are you not good at or unwilling to do professionally?

4. Who were your previous bosses and how will they rate you on a scale of 1-10 when we speak with them?

Top Grading Interview (1-2.5 hrs)1. What were you hired to do or what did you do in your previous job?2. What accomplishments are you most proud of?3. What were the low points of your past jobs?4. Who were the people you worked with what will they say about

you? (boss and coworkers specifically)5. Why did you leave that job? (Push – Pull)


“The A Method for Hiring”: Selection

References: “Who: The A Method of Hiring”, Geoff Smart & Randy Street. ““Topgrading: How Leading Companies Win by Hiring, Coaching and Keeping the Best People”, PhD, Bradford D. Smart.

Reference Interview - Be aware of: Not willing to help

Only wants to give dates of employment

Use hypothetical questions

Stick to same questions in screening interview

Background Screening - Job related E.g. Criminal, physical abilities or drug testing, employment, education,

professional license, motor vehicle, fingerprinting, worker’s comp.

Behavioral Assessments determine Organizational FIT :1. Right People in the Right Jobs

2. Identify Training needs

3. Help Managers to be more effective in coaching process

4. Promote People into positions where they will succeed

5. Predictive value of traditional recruiting methods about 14%

6. Increase ability to target “A” Player (90% vs. 50%)© HREX-Human Resources Excellence. All Rights Reserved.

“The A Method for Hiring”: Is it Enough?

On Boarding

Plan to acclimatize new hire for a smooth transition

Orientation and Training

Clearly defined expectations, support etc.

Evaluate Progress (Probation period)

Attracting and Retaining

Evaluate Your Self and Managers first

Create a Culture of Recognition and Accountability

Create a Healthy Work Environment

Create an Atmosphere of Continuous Self-improvement

Put Your Best Foot Forward

Match Right People to Right Jobs


“You’re Hired!... Now What?

Invest the time at front end to make everything else easier

Systematic and targeted process to hire “A” players who will achieve at least 90% of set outcomes vs. 50%.

Get full picture: skills, experience, attitudes, values, interests, drivers

Probe for the “What” and the “Who” to determine best FIT

Standardized processes minimizes risk of discriminatory practicesand allows for a more objective and thorough evaluation process.

Focus is on attracting and retraining a highly qualified workforce vs. searching needlessly and hiring the wrong talent

The cost of retaining an “A” employee is far lesser than recruiting a new one.


Value of Recruitment Best Practices

HIRE Act 6.2% FICA exemption

Health Care Act 35% credit

Hiring Best Practices

• Invest time upfront to avoid spending more time managing and firing

• Probe, probe, probe

• Full picture: Who + What + A Method lead to “A” Players

• FIT = The right people on the bus!

• Effective On boarding

• Recruiting and retaining quality talent = #1 priority

Don’t Leave Your People Decisions to Chance…

The Extra Degree of Effort Separates Good from Great© HREX-Human Resources Excellence. All Rights Reserved.

Summary

Q & A?

For more information contact:

Scott Buchanan (727) 895-4700

Joyce Nelson (813) 514-2889

Thank You

2010 St. Petersburg Chamber of Commerce Outstanding Business of the Year Winner


hrex surviving to thriving growing on a budget 091510

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