BIZGrowth Strategies - Winter 2013


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This issue's articles include: The Importance of Benefits in Total Compensation; Committing to Wellness; Retirement Check-Up for the New Year; How to Build Credibility
Using Social Media; It’s Really Just a Matter of Attraction; and Court of Appeals Agrees that Severance Payments Are Not Subject to FICA.

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BIZGrowth Strategies - Winter 2013

  2. 2. In This Issue… Human ResourcesHuman Resources.......................2 Consider the Full Package: The Importance of Benefits in Total CompensationEmployee Benefits.......................4 Committing to WellnessExpanding Your Personal Wealth.... 5 Retirement Check-Up for the New YearMarketing...................................5 How to Build Credibility Using Social MediaMergers & Acquisitions...............6 It’s Really Just a Matter of AttractionTax & Accounting........................7 Court of Appeals Agrees Consider the that Severance Payments Are Not Subject to FICA @cbz CBIZ BIZ Tips VideosTo view the electronic versionsof current and past issues ofBIZGrowth Strategies, register for our online version, Full Package: The Importance of Benefits in Total Compensation Gvisit iven the relative dominance of cash compensation, compensationYou can also call us at professionals occasionally neglect to consider the other key1-800-ASK-CBIZ (1- 800 -275 -2249). component in the total compensation package – benefits. Yet, benefits are critically linked to compensation in providing total rewards to employees due to the significant ways in which benefitsCBIZ in the News impact employers’ costs as well as employees’ perceived value of total compensation.NPRWhy dividends, capital gains With employee benefits typically equal to 20 to 40 percent ofare big part of fiscal cliff talks payroll expenses, they are a prominent part of total compensation. AsNovember 29, 2012 a result, benefits can offset or amplify cash compensation issues. ForUS News & World Report example, total compensation analyses for public sector clients oftenThe myth of the permanent show that employees’ salaries are below median salaries in relevantworking class labor markets. However, a review of benefits reveals that publicOctober 30, 2012 sector employees frequently receive above average benefits. This is largely attributable to richer retirement plans and a greater portion employer-paid, health-related benefits premiums. In this case, the sumWhat disruptors needto attract capital of below market salaries and above market benefits is relatively in lineOctober 18, 2012 with the competitive total compensation level. An illustration indicative of the market comparisons regularly observed in the public and private sectors appears on the adjacent page. (For simplicity’s sake, variableFor complete articles: cash pay has been ignored so that salary plus benefits equals compensation.)2 | BIZGROWTH STRATEGIES – WINTER 2013 CBIZ, INC.
  3. 3. Average Salary Average Benefits Average Total Compensation (Actual as a % of Market) (Actual as a % of Market) (Actual as a % of Market) Public Sector 88% 123% 100% Organization Private Sector 105% 92% 100% Organization The example scenarios above show employers’ organization want to position itself against competitors?ability to balance salaries and benefits to achieve How should salaries, variable/incentive pay and benefitsoverall competitiveness. Conversely, there are (both tangible and intangible) compare to otheralso cases where deviations from market can be organizations? After such philosophies are established,compounded by the inclusion of benefits in the an organization can utilize total rewards statements asanalysis. In peak recession years, for instance, well as salary increase, incentive plan and benefitssome organizations froze salaries, reduced their program updates to explain its compensation goalsshare of health insurance premium payments and the efforts taken to align each employee’s totaland suspended retirement plan contributions; compensation package with these goals. thus, both salary and benefits (and, thereby,total compensation) fell behind market levels. Employers must first determine their total PRIYA J. KAPILAcompensation philosophy and that of each component CBIZ Human Capital Services • St. Louis, MOin order to effectively communicate the value of the 314.995.5558 • pkapila@cbiz.comtotal compensation package. That is, how does theDISCLAIMER: This publication is distributed with the understanding that CBIZ is not rendering legal, accounting, or other professionaladvice. To the extent anything herein could be construed as tax advice, such advice is not intended to be used and cannot be usedto avoid penalties under the Internal Revenue Code, or to promote, market, or recommend to another person any tax related matter.This information is general in nature and may be affected by changes in law or in the interpretation of such laws. The reader isadvised to contact a professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever inconnection with the use of this information and assumes no obligation to inform the reader of any changes in laws or other factorsthat could affect the information contained herein.CBIZ, INC. BIZGROWTH STRATEGIES – WINTER 2013 | 3
  4. 4. Employee BenefitsCommitting to WellnessT here have been an increasing number of articles, news stories, presentations, webinars and the like on the benefits of having an employer-sponsored health and wellness program. The casestudies have been reviewed and the ROIs have beenproven: an employer-sponsored health and wellnessprogram has the ability to positively impact anorganization’s bottom line. The most important element of a successful provided with quarterly communications and talkingwellness plan is to understand that wellness is a points that they can share with their teams.major, economic business strategy – one that requires Establish a wellness committee. An effectivea high level of organizational commitment and change. wellness committee can provide opportunities forLike all corporate strategies, the wellness plan needs both management and employee involvement in theto align with the organization’s values and goals. development and promotion of the program. A well- The following are strategies to ensure organizational formulated wellness committee serves many importantcommitment and wellness program success: functions, including developing and promoting the organization’s health and wellness brands and Conduct key interviews to determine themes; creating a sense of employee ownership inorganizational readiness. Interview employees from a the program; ensuring input from a broad range ofgood cross-section of the organization to ensure that company stakeholders and perspectives; providingall levels, departments and locations are represented. a source of internal support and advocacy for theAsk key questions regarding current work conditions, program; and helping to drive employee enthusiasmattitudes, senior leadership support and the feasibility and participation.that health and wellness initiatives will be adapted andsupported by all facets of the organization. Obtain operational commitment to the strategic wellness plan. It is important to ensure that the work Develop a senior leadership business case. environment, policies and procedures are in lineManagement needs to understand how supporting with the company wellness mission. From lookingemployee health supports the business strategy, at policies such as smoking, leave of absence andmission and vision. Gain the acceptance and approval sick days to evaluating vending machine and meetingof senior leaders so they are aware of the goals and food service options to assessing on-site exerciseinitiatives of the wellness strategy and understand opportunities like gyms, walking paths and stairwells,that they will be accountable for ensuring success. these items must be considered in determiningDevelop mechanisms of accountability so leaders operational support of the wellness objectives.understand what is expected of them. Develop an annual wellness budget. The Provide coaching and develop a change organization needs to account for wellness activities,management and communication plan. The incentives and events that will incur costs. Havingorganization needs to be prepared to make cultural a pre-approved budget will ensure programs areand behavioral changes that support employee health funded and any incentive dollars are pre-approved.and wellbeing. Employees often require coaching to Communicating a wellness budget also showshelp prepare for change, manage change and reinforce organizational commitment to the wellness initiativesthe change. Also, each employee needs to be aware of in anticipation that a return on the investment madehis/her responsibility to support a culture of health. will be achieved. Prepare a senior leadership communication toolkit. Senior managers need to understand the best way JENNIFER GRAYto communicate with their employees regarding health CBIZ Benefits & Insurance Services, Inc.and wellness initiatives. To ensure a clear, concise Dublin, OH • 614.793.2453 • jgray@cbiz.comand consistent message, senior leaders should be4 | BIZGROWTH STRATEGIES – WINTER 2013 CBIZ, INC.
  5. 5. Expanding Your Personal Wealth MarketingRetirement How to Build Credibility Using Social Media for the New YearT he beginning of a new year is a good time to revisit your retirement planning strategies. To start, consider all of yourretirement savings, such as 401(k) Have you Googled yourself recently? Are you happy with the results?and 403(b), and obtain the total Wamount you have saved thus hether you are trying to generate business,far. A more sobering picture get a new job or expand your professionalof your retirement readiness network, social media is one of the mostemerges when you take efficient tools to accomplish these goals. Whilethat total and execute a almost anyone can build an online presence, the keysimple calculation: take is to build an effective profile across multiple social4% to 5% of the total channels that showcases your true expertise.savings and the result Many people believe you have to spend a ton ofapproximates the annual money to have your website featured on the first pageincome your retirement funds of search engine results, when in fact, you can do thiswill generate. Industry experts for free. There are four key social media channels yousay that one should expect to yield can use to build credibility online and enhance searchabout 85% of the income from one’s last working engine results, all at no cost:year. This number is a generalization; therefore, youshould evaluate what you might want to do after 1. LinkedIn: LinkedIn is purely a professionalretirement and also consider your spending habits. networking site. The first thing you should do is create an effective profile by following ten key steps. After getting a snapshot of your retirement These steps can be viewed in the Summer 2011preparation, you may want to increase the rate at issue located at you are saving. Be sure to take full advantage Once you have built a dynamic profile you can beginof any corporate matching program where the to post status updates with articles and resourcescompany will contribute a certain percentage of your that showcase you as an expert in your field.own contribution to your retirement account for up 2. Twitter: No, Twitter isn’t all about followingto a certain portion of your pay. In addition, evaluate celebrities. As a business professional, you can useif your budget will allow a total contribution of 10% Twitter to share important, time-relevant news,to 15% of your annual income for your 401(k). This updates, events, etc. Plus, search engines loveis the percentage range suggested by many experts. Twitter! This is also a great avenue to reach out toFor 2013 the IRS allows up to $17,500 per year per media outlets. Tip: Everyone loves the kudos when401(k) account. you retweet one of their tweets. This is a great way Also, establishing an IRA is a great way to save up to recognize others in your industry who are alsoto $5,000 per year (and $6,000 per year for those ages sharing relevant content. Spend the time to build50 and older) even if it is with after-tax dollars. your Twitter profile, including carefully crafting your bio and using hashtags. Annuities can be a good option to supplement yourretirement income (after tax). Some annuities guarantee 3. YouTube: What? There is more to YouTube than cutea certain return for life, which is a good way to protect cat videos? Yes, YouTube is a great tool for you toyourself against the risk of exhausting your resources showcase “how-to” or other informative videos thatduring retirement. highlight you as a credible resource. Don’t worry about the fancy equipment or setup. Studies show Even if you are satisfied with your financial progress that more natural, raw-looking videos have bettertoward retirement, there are still a few maintenance traction. Another idea is to create a “behind theissues to consider. Depending on how the markets scenes” video of your business or career. YouTube (Continued on page 8) (Continued on page 8)CBIZ, INC. BIZGROWTH STRATEGIES – WINTER 2013 | 5
  6. 6. Mergers Acquisitions With a substantial number of Baby Boomers nearing retirement age, acquirers have trained a keenIt’s Really Just a eye on companies that will help serve the health careMatter of Attraction needs of this aging segment of the population. Software companies: Darlings of the deal community, companies with few employees or assets other than intellectual property are always attractive.I f you happened upon a sophomore class in college A number of small software companies with minimal physics, you might catch the students being tested revenue recently have sold for substantial multiples. on the basic principles of physics, electronics and Bolting a new software application onto a largemagnetism. The magnetic state of an object refers to customer base allows for revenue expansion thathow that object reacts (degree of attraction) within a simply isn’t available in many other fields. Further,magnetic field. the area of intellectual property surrounding a lot of If you timed things right, you might actually see new applications has become an area of focus forthe students with their right fist thrust in the air and acquirers in recent years. The value of intellectualtheir thumb extended (toward them). No, they aren’t property can’t be underestimated, as evidenced byhitching a ride; they’re using their hands as a visual the infringement case won by Apple Incorporated inrepresentation of the direction a magnetic field its suit against Samsung Group.rotates around the flow of an electrical current. Homeland security-related companies: You’re wondering where I’m Any sector where the governmentgoing with this? is able to throw around mass In the field of MA quantities of money in the nametransactions, there is no right of protecting the homelandhand rule, but from time draws a lot of attentionto time certain types of from potential acquirers.acquirers exhibit strong Companies that developattractions (work with technologies to helpme – almost magnetic) ensure national securityto certain types of will continue to drawcompanies from an substantial attractioninvestment standpoint. from the investmentThe following are sectors community.attracting interest in the Energy sectormarket today: companies: The investment Health care-related community is a littlebusinesses: Health care schizophrenic when it comesisn’t getting any cheaper. As of to energy plays. On one hand,the last statistical year available they like energy companies as(2008), health care spending they realize that conventional energyrepresented over 15 percent of our Gross is derived from dwindling resources.Domestic Product, which places us at the top of On the other hand, they are concerned aboutthe list of nations. There is no doubt that our health the cyclical nature of the commodities consumedcare is excellent when compared to most nations, but by conventional energy sector companies and theany sector that represents such a substantial amount wild swings in resource values driven by Wall Streetof a nation’s GDP is bound to be fertile ground for speculators. When it comes to renewable energy, again,innovative and growing companies. there is a lot of initial interest, but also a fair degree of concern over businesses whose profitability is often predicated by the existence of government support. What the government giveth, the government can also In the field of MA transactions, take away.certain types of acquirers exhibit strong attractions (almost magnetic) to LUKE SAGE is registered with CBIZ Financial certain types of companies from an Solutions, Inc. member FINRA, SIPC and investment standpoint. Registered Investment Adviser. 858.795.2088 • lsage@cbiz.com6 | BIZGROWTH STRATEGIES – WINTER 2013 CBIZ, INC.
  7. 7. Tax Accounting Court of Appeals Agrees that Severance Payments Are Not Subject to FICAT he Sixth Circuit Court of Appeals has affirmed a which, if the case is accepted, will drag out the issue’s district court decision that severance payments ultimate resolution for a number of years. made to employees pursuant to an involuntary In the meantime, employers that paid FICAseparation from employment due to a reduction in taxes on severance payments due to a reduction inworkforce are not subject to FICA taxes. Employers that workforce should file protective refund claims beforehave been forced to downsize their workforce in the the three-year statute of limitations expires on thosecurrent economy should consider filing protective refund tax liabilities. Therefore, if an employer paid FICA onclaims to recover these taxes. As the IRS likely will qualifying severance payments to employees in 2009,appeal the decision to the Supreme Court, employers the employer generally has until April 15, 2013 to file ashould continue to subject severance payments to FICA refund claim.taxes (and subsequently file protective refund claims)until the issue is ultimately resolved. The claims must be filed using Form 941-X or 945-X to correct errors previously made on the Form The Sixth Circuit’s decision in U.S. v. Quality 941 (Employer’s Federal Quarterly Tax Return) or FormStores, Inc., CA-6, 2012-2 USTC ¶50,551 (Sept. 7, 945 (Employer’s Federal Annual Tax Return). To file for2012) reinforces the district court’s conclusion that both the employer and employee portions of the FICAsupplemental unemployment compensation benefits you must certify that you reimbursed your employee or(SUBs) are merely treated as if they were wages for secured his consent to allow the claim for refund or,income tax withholding purposes under IRC Section after reasonable efforts, have been unable to do so.3402(o) and are not actually wages, and thus, are not The IRS will not grant any refund claims until thesubject to FICA taxes. In reaching its conclusion, the issue has been resolved, but filing the refund claimCourt looked to the legislative history of §3402(o), as within the statute of limitations will protect your rightswell as to its very title – “Extension of withholding to to the refund should the issue ultimately be decided incertain payments other than wages.” the taxpayer’s favor. The potential refunds, which would Resolution of this issue is far from complete. include interest on the taxes paid, could be significant.The Sixth Circuit’s opinion is in direct contrast to the To determine whether you qualify for this refundFederal Circuit Court of Appeals’ decision in CSX Corp. opportunity or for assistance with filing the necessaryv. U.S., 518 F.2d 318 (Fed. Cir. 2008). The IRS has claims for refund, contact the author or your localalso issued several rulings wherein only certain types CBIZ MHM tax professional.of SUBs were exempt from FICA taxation, such asthose that are conditional on the employee’s receipt MARC MINKERof unemployment compensation benefits. Given the CBIZ MHM, LLC • New York, NYlarge amount of taxes at stake, the IRS likely will file 212.790.5826 • mminker@cbiz.coman appeal of this decision to the U.S. Supreme CourtCBIZ, INC. BIZGROWTH STRATEGIES – WINTER 2013 | 7
  8. 8. our business is growing yours Expanding Your Personal Wealth Marketing (Continued from page 5) (Continued from page 5) move, the percentages of your also makes it very easy for you to embed videos asset allocation will shift and directly into your website, blog or other social may no longer reflect your channels. initial goals. Your investment goals also may have changed 4. SlideShare: SlideShare is a public sharing site that over time. Whatever the case, allows you to upload presentations, whitepapers, it is crucial to rebalance your brochures and videos to “share” with the world. By portfolio regularly so that it doing so, you can expand your sphere of influence. reflects your initial or most up-to-date target allocation. With detailed analytics, you can track how many Some retirement plan vendors offer automatic people have viewed or downloaded your documents.© Copyright 2013. CBIZ, Inc. NYSE Listed: CBZ. All rights reserved. • CBIZ-020, Rev. 54 rebalancing features where participants may set their There is even a built-in lead system that will collect accounts to be periodically evaluated and rebalanced. contact details for those who would like more Finally, remember to revisit and update the beneficiary information about your services. of your retirement funds, following any important Take the time to develop effective profiles for each changes in your life. of these four sites. Be strategic with the keywords that Sufficient cognizance and active planning are you use on each site, as this will help improve your paramount in successfully achieving your retirement rankings. Finally, remember to periodically monitor your goals. The beginning of a new year is a great time to search engine rankings to be better informed about keep these objectives in check among other ambitions what the online world says about you. you might have for 2013. JUNG EUN OH AMANDA MARKOS CBIZ Retirement Plan Services • Cleveland, OH CBIZ, Inc. • San Diego, CA 216.520.6622 • 858.795.2253 • 8 | BIZGROWTH STRATEGIES – WINTER 2013 CBIZ, INC.