Leveraging the HIRE Act and
Smart Hiring Strategies
September 15, 2010
HREX Series:
Joyce Nelson
Partner & Vice President ...
 Hire Incentives to Restore Employment
Act (HIRE): 6.2% FICA Exemption
 Health Reform Act
 Smart Hiring Strategies
© HR...
Was the replaced employee
separated voluntarily or
terminated for cause?
Wages do not qualify
for exemption
Did employment...
©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)
Tot...
 WOTC = Work Opportunity Tax Credit
 Can’t double dip on same wages.
 HIRE Act benefit is more certain and immediate bu...
 Present and Future
 Obama Administration credits the HIRE Act for 5.6
million new hires in the first 6 months of the
pr...
Employer does not qualify
for credit
(1) See transition rule for 2010
Does the employer pay a uniform percentage of
premiu...
© HREX-Human Resources Excellence. All Rights Reserved.
 For tax years 2010 through 2013
– Tax credit up to 35% of employer’s portion of premium if employer
pays at least 50% of...
Facts
ABC Company
40 PT employees = 20 FT employees
Wages $500,000 or $25,000 per employee
Employer paid health insurance ...
SMART HIRING
STRATEGIES
© HREX-Human Resources Excellence. All Rights Reserved.
Survive
Thrive
Excel
 Effectiveness in driving results
through people?
 Ability to execute - right mix of
people, tools and practices?
 Larg...
Performance
Effectiveness
Effective
Management
Practices
Leadership
Effectiveness
Talent
Recruitment
Selection &
Retention...
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...
 3-15 times individual salary (20% direct 80% indirect cost)
 Over 80% of recruitment decisions based on biographical
in...
89%
fail for reasons that have nothing
to do with skills or abilities
‘Failed’ employees
rarely fail because they
aren’t s...
1. Inadequate salary and benefits.
2. Limited opportunities for advancement.
3. No recognition for good work.
4. Unhappy w...
1. We don’t really know what we are looking for.
2. We don’t consistently use well-crafted questions to probe
and gather r...
 Simple process for identifying and hiring A Players with a high
degree of success. It helps you get the “who” right.
 “...
 Pre-Screening Interview (15-30 min by phone)
1. What are your career goals?
2. What do you excel at professionally?
3. W...
 Reference Interview - Be aware of:
 Not willing to help
 Only wants to give dates of employment
 Use hypothetical que...
 On Boarding
 Plan to acclimatize new hire for a smooth transition
 Orientation and Training
 Clearly defined expectat...
 Invest the time at front end to make everything else easier
 Systematic and targeted process to hire “A” players who wi...
 HIRE Act 6.2% FICA exemption
 Health Care Act 35% credit
 Hiring Best Practices
• Invest time upfront to avoid spendin...
Q & A?
For more information contact:
Scott Buchanan (727) 895-4700
Joyce Nelson (813) 514-2889
Thank You
2010 St. Petersbu...
HREX Surviving to Thriving Growing on a Budget 091510
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Leveraging the benefits from the HIRE Act, Health Reform Act, and Smart Hiring Strategies

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HREX Surviving to Thriving Growing on a Budget 091510

  1. 1. Leveraging the HIRE Act and Smart Hiring Strategies September 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
  2. 2.  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
  3. 3. 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 anyone who 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.
  4. 4. ©HREX-Human Resources Excellence. All Rights Reserved.
  5. 5. 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
  6. 6.  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. © HREX-Human Resources Excellence. All Rights Reserved. WOTC or HIRE Act?
  7. 7.  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 © HREX-Human Resources Excellence. All Rights Reserved. HIRE Act Present & Future
  8. 8. 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) © HREX-Human Resources Excellence. All Rights Reserved.
  9. 9. © HREX-Human Resources Excellence. All Rights Reserved.
  10. 10.  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. © HREX-Human Resources Excellence. All Rights Reserved. Health Care Act Credit & Phase Out
  11. 11. 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 © HREX-Human Resources Excellence. All Rights Reserved. Health Care Tax Credit Example
  12. 12. SMART HIRING STRATEGIES © HREX-Human Resources Excellence. All Rights Reserved. Survive Thrive Excel
  13. 13.  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 © HREX-Human Resources Excellence. All Rights Reserved. Challenges & Opportunities
  14. 14. Performance Effectiveness Effective Management Practices Leadership Effectiveness Talent Recruitment Selection & Retention Team Effectiveness KPI’s & Metrics © HREX-Human Resources Excellence. All Rights Reserved. The People Side of a Successful Business
  15. 15. 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 © HREX-Human Resources Excellence. All Rights Reserved. Hiring Is…
  16. 16.  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 © HREX-Human Resources Excellence. All Rights Reserved. Real Cost of a Bad Hire
  17. 17. 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% © HREX-Human Resources Excellence. All Rights Reserved. Why Hires Fail – Success is More Than Skills
  18. 18. 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% © HREX-Human Resources Excellence. All Rights Reserved. Top Reasons Why People Quit Their Jobs?
  19. 19. 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’. © HREX-Human Resources Excellence. All Rights Reserved. 5 Most Costly Hiring Mistakes 42.7% contain false informationProbe, Probe, Probe…. Take the time, understand how they behave and are wired.
  20. 20.  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) © HREX-Human Resources Excellence. All Rights Reserved. “Who: The A Method for Hiring”* * Reference: “Who: The A Method of Hiring”, Geoff Smart & Randy Street
  21. 21.  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) © HREX-Human Resources Excellence. All Rights Reserved. “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.
  22. 22.  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?
  23. 23.  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 © HREX-Human Resources Excellence. All Rights Reserved. “You’re Hired!... Now What?
  24. 24.  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 practices and 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. © HREX-Human Resources Excellence. All Rights Reserved. Value of Recruitment Best Practices
  25. 25.  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
  26. 26. 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-Human Resources Excellence. All Rights Reserved.

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