BIZGrowth Strategies Newsletter - Spring 2013


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Articles in this edition include: Performance Management: Looking Beyond the Numbers; Audit & Streamline Your Voluntary Benefit Program to Improve Employee Attraction & Retention; Staying Safe & Compliant in the Technology Era; Branding from the Inside Out: Empower Employees to Become Brand Ambassadors; Health Care Reform Basics; and The Return of the Research & Development Credit.

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BIZGrowth Strategies Newsletter - Spring 2013

  2. 2. In This Issue… Management PerformanceManagement Performance.......2 Performance Management: Looking Beyond the NumbersInsurance Strategies...................4 Audit Streamline Your Voluntary Benefit Program to Improve Employee Attraction RetentionRisk Management....................... 5 Staying Safe Compliant in the Technology EraMarketing...................................6 Branding from the Inside Out: Empower Employees to Become Brand AmbassadorsEmployee Benefits.......................7 Health Care Reform BasicsTax Accounting........................7 The Return of the Research Development Credit PERFORMANCE MANAGEMENT: @cbz CBIZ BIZ Tips Looking Beyond VideosTo view the electronic versionsof current and past issues ofBIZGrowth Strategies, register for our online version, the Numbersvisit can also call us at1-800-ASK-CBIZ (1- 800 -275 -2249). HCBIZ in the News istorically, many organizations measure the health of their business through traditional financial reporting metrics.Marketwatch Executives tend to evaluate success or failure based on high-5 ways to avoid an audit level results such as revenue growth, net income, current ratios andFebruary 25, 2013 others. There are obvious reasons for this. First, traditional financial statements provide very specific analysis. By comparing financial statements to prior financial statements, a stakeholder canWhat is more important for recentgrads: salary or benefits easily determine where a business has improved or deteriorated simplyJanuary 23, 2013 by comparing current results to prior or budgeted results. Second, many third-party stakeholders such as banks, outside investors or regulatoryAccounting Today groups utilize traditional financial statement results to assess their ownFiscal cliff deal will have far-reaching compliance needs, creating an obvious incentive for management toimplications focus on those metrics.January 2, 2013 While financial statement reporting metrics provide value, they have certain inherent limitations. First, financial statement resultsFor complete articles: are “lagging” indicators; they represent a measurement of results a certain time, which can be days or even months behind when that2 | BIZGROWTH STRATEGIES – SPRING 2013 CBIZ, INC.
  3. 3. data is being evaluated. These are fine for evaluating around for a number years, but continues to gainthe viability of an enterprise. More valuable for traction as many organizations are looking forstrategic planning purposes are “leading” indicators, competitive advantages in this tight, global economy.which are generally non-financial metrics that can be The balanced scorecard measures an organizationproduced easily on a real time basis and can provide through its financial results, customer satisfaction,management with more relevant information in the internal processes and its own employees. Thedecision-making process. Second, financial statement approach is dictated by the assumption that all partsmetrics only report on a portion of an organization’s of a business, both financial and non-financial, need toactivities. Many important aspects such as intangible be evaluated and improved. The balanced scorecardasset usage, human capital, organizational culture approach requires a business to develop its ownand others are not easily evaluated through the review non-financial reporting metrics that can be monitoredof financial statements. Yet, they can be some of and evaluated on an ongoing basis. This is critical asthe most important elements of an organization and any performance measurement plan must provide thethe successful utilization of these areas is often not ability to measure success or failure.monitored and measured. Regardless of the particular performance To better measure an organization’s success in measurement plan an organization uses, if metricssuccessfully carrying out its vision and strategy, many are to serve as a useful tool, they should address allare now looking beyond the numbers and utilizing functions that support the success of the organization,broader, far-reaching performance management both financial and non-financial. measurements that capture both financial and non-financial performance metrics. A great example of this is the balanced scorecard JEFF MANWILLERapproach. Developed by Robert Kaplan and David CBIZ MHM, LLC • Bethesda, MD 301.951.3636 • jmanwiller@cbiz.comNorton, the balanced scorecard has actually beenDISCLAIMER: 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 – SPRING 2013 | 3
  4. 4. Insurance Strategies also enrolling their employees into a voluntary dental product.Audit Streamline Your • An employer offered voluntary long term disability Voluntary (LTD) benefits through one agent and voluntary short term disability (STD) through another and the policy Benefit Program provisions did not dovetail. In some instances employees had STD and LTD policies thatto Improve Employee concurrently paid benefits for almost 24 months. • An employee making $30,000 in salary was Attraction Retention spending $2,400 per year (or 8% of his salary) in premiums for voluntary products with coverageA properly-designed voluntary benefit menu enables overlap. your employees to purchase cost-effective If your voluntary benefits are in need of review, insurance policies that complement your consider partnering with an experienced benefitsemployer-paid benefits and improve financial security. professional. Alternatively, conduct the audit internally, Valuable voluntary product insurance offerings using the following steps:include life, short and long term disability, dental, vision 1. Run a census of your employees that includes their and supplemental medical. Most of these products can product selection and corresponding payroll deductionbe offered as a core benefit in lieu of employer-paid for all of your benefits, employer paid and voluntary.coverage and some can be offered to supplement theexisting employer-paid benefit. 2. Determine if there is coverage overlap in your benefit package. Here is an example benefit menu, displaying howvoluntary benefits can effectively complement and a. ure Overlap: for example, enrollment in both an Pround out your employer-paid benefits: employer-paid dental plan and a voluntary dental plan Employer-Paid Benefits Voluntary Benefits b. Disability Overlap: Ensure that STD benefits end Group Health Plan with a $500 when LTD benefits begin. Hospital Indemnity copayment for hospitalization c. upplemental Medical Product Overlap: When S $50,000 in Group Life Insurance Supplemental Life more than one supplemental medical product Long Term Disability Benefits, is offered, the risk adverse may over-purchase. Supplemental Long For example, an employee with employer-paid insuring 60% of salary to a Term Disability group health coverage also purchased hospital monthly cap of $7,500 indemnity, cancer and critical illness products. Voluntary Short Term Disability 3. etermine which products to keep, which to eliminate D Voluntary Dental and which to modify to eliminate overlap. Voluntary Vision 4. Through a Request for Proposal (RFP) process, select your insurers. However, over time, coverage overlap can occur 5. Effectively communicate your enhanced offering to within a voluntary benefit menu when: your employees. • ultiple agents manage the voluntary product m 6. oving forward, control the benefit communication M offerings and enrollment process to ensure that employees are • roduct representatives meet directly with p only offered those products within your set menu. employees Whether performed by a benefits professional • insurers seek to maximize revenues by offering or conducted internally, an audit of your voluntary their full suite of products, despite possible benefit plan can streamline coverage, improve coverage overlap benefits and reduce employee costs – all without increasing the budget. In these instances a professional audit of thevoluntary program will isolate any areas in need ofcorrection. Here are some examples of commoninefficiencies uncovered in this type of audit: ZACK PACE CBIZ, Inc. • Columbia, MD • While an employer provided a robust 100% 443.259.3240 • employer-paid dental plan benefit, their agent was4 | BIZGROWTH STRATEGIES – SPRING 2013 CBIZ, INC.
  5. 5. Risk Management STAYING SAFE COMPLIANT in the Technology EraI n recent years the importance of information to interrupt or compromise the company’s information. security has taken center stage with media While an IT department may be aware of reported attention given to incidents involving WikiLeaks, vulnerabilities, they sometimes need an outside expertthe “hacktivist” group “Anonymous”, alleged cyber- to report them officially. Penetration testing will alsowarfare involving government entities and the like. As a provide internal controls and processes as to how yourresult many organizations are taking a more proactive IT department responds when an actual attack occurs.approach to security, resulting in significant progress. Penetration tests are valuable for several reasons: However, despite security improvements, the 1. Determining the feasibility of a particular set of increase in mobile computing, portable devices and attack vectorscloud computing has introduced a host of additionalsecurity risks to be addressed, including the loss 2. Identifying higher-risk vulnerabilities that result from of the physical layer of security over organizational a combination of lower-risk vulnerabilities exploitedinformation and the increased complexity of the in a particular sequenceIT infrastructure. Keeping in mind that many 3. dentifying vulnerabilities that may be difficult or Iorganizations still suffer from basic vulnerabilities, the impossible to detect with automated network ortask of achieving adequate security can seem rather application vulnerability scanning softwaredaunting, but there is hope. 4. Assessing the magnitude of potential business and Network Security Assessment operational impacts of successful attacks A risk assessment is an excellent tool for clearlypresenting to management, in business terms, the 5. Testing the ability of network defenders to risk posed to the organization by a lack of security, successfully detect and respond to the attacksthus presenting the business case for implementing or 6. roviding evidence to support increased Pimproving an information security program. While this is investments in security personnel and technologyoften an intensive process, it is not without tangentialbenefits, including increased integration between the As technology advances so will the threats tobusiness and IT and enhanced visibility into business organizations’ information security. At any given timecontinuity management via the identification of critical attackers and hackers are at work, looking for newinformation assets and related processes. Although a ways to penetrate systems. The slow pace of legislationrisk assessment should be customized for the specific is no match for the speed of this evolution, making aorganization, security standards can be used as a proactive approach to security a necessity. Treatingframework to ensure holistic coverage and aid in the an information security program as a living, breathingdevelopment of resulting security policies. The overall organism that requires ongoing attention givesobjective of a network security assessment is to provide organizations the best opportunity to keep up with,the organization’s executive staff with a confidential and or even stay ahead of, those who wish to exploit theirindependent assessment of their current information defenses. Remember, ultimate responsibility for thesecurity infrastructure. Potential vulnerabilities are security of IT assets rests with management becausedisclosed and recommendations for addressing them it is they, not the administrators, who decide what theare provided. acceptable level of risk is for the organization.Network Penetration Testing The main goal of internal and external network CHRIS ROACHpenetration testing is to find vulnerabilities and fix CBIZ Risk Advisory Services 866.956.1983 • croach@cbiz.comthem before an “unethical” attacker has the chanceCBIZ, INC. BIZGROWTH STRATEGIES – SPRING 2013 | 5
  6. 6. MarketingBranding from the Inside Out:Empower Employeesto Become BrandAmbassadors “Your brand is what they say about you when you’ve left the room.” — Jeff Bezos, founder of Amazon.comT hink of branding as a strategy that creates a positive memory of your business. Whether you are a small business owner or the CEO of a largecorporation, building and reinforcing your reputationamongst your audience (“they” in the quote above)should be your top marketing priority. “They” is more than your consumers, clients andprospects. “They” includes your workforce, too. Yourbrand will never be successful unless you link yourcompany’s brand values to your employees’ work tagline, key messages and product packaging helpexperience. Whether they are answering the phone, build your brand. These tactics need to be consistentvisiting clients or negotiating contracts with vendors, and clear. Branding and style guides will help youryour employees are the face of your organization. employees deliver consistent messaging among allEngaging your employees with branding initiatives audiences. All companies, no matter how small,will help you align your brand with your clients’ should implement formal guidelines to establish andexpectations and, when necessary, will help you protect their brands.realign that brand. Harness the Power of the BrandCommunicate Educate According to a 2009 Gallup report, companies Employees already understand the concept of the who practice high employee engagement levelsbrand. From their morning cup of Joe to reading the have a 12% higher customer advocacy, 18% higherdaily paper, their day-to-day routines include well- productivity and 12% higher profitability.*branded products and services to which they exhibitbrand loyalty. The long-term effects of building your brand internally will go beyond a consistent corporate Establishing brand loyalty doesn’t happen overnight identity and distinguishing your company amongst– neither does building good brand ambassadors. Giving competitors. It will also build a company cultureaway logoed coffee cups, although a nice gesture, will that recruits and retains great employees, fostersnot engage your employees enough to consistently innovation, improves the client experience anddeliver the brand promise. Teaching your employees increases the bottom line.branding principles such as consistency, clarity and * allup, Building Engagement in This Economic Crisis, Gidentity and educating them specifically about your February 2009brand attributes will lead to brand “buy in”.Consistency PATRICIA GAMBALE Consistent messaging and corporate identity is CBIZ MHM, LLC • New York, NYimportant to establishing your brand. Maintaining that 212.790.5751 • pgambale@cbiz.comconsistency internally is just as essential. Your logo,6 | BIZGROWTH STRATEGIES – SPRING 2013 CBIZ, INC.
  7. 7. Employee BenefitsHealth Care Reform Basics(if there can be such a thing)HCR, ACA, Obamacare, Penalties, Tax Issues… complicated stuff.A s can be expected, concerned companies actuary in order to design and underwrite a plan that across the nation are seeking a hand to hold meets those specifications.) through this challenging, far-reaching law and 2. The plan must be made available within 90 days of the accompanying regulations. However, there are commencing employment to all employees who worksome key parts of the law that, in many ways, can 30 hours per week or more. Again, there are somesimplify many of the complexities and perhaps lessen guidelines to help make those determinations withthe level of concern. respect to seasonal employees, but 30 hours per If you have more than 50 full-time employees week is the threshold for full time.or equivalents and one of your employees chooses 3. he plan must meet an affordability threshold. The Tto access one of the state-sponsored or the cost to the employee cannot exceed 9.5% ofpossible default Federal exchanges and is eligible “household income”. The employer can rely onfor assistance, you may be subject to a non- box 1 of the employee’s W-2 for this purpose.deductible excise tax. The tax is either $3,000per year times the number of employees obtaining Taking into account the need to gather the testingcredit from the exchange or $2,000 per year information, perform proper plan design and set atimes all employees minus 30, depending on the proper contribution level, if the aforementioned threecoverage option you offer. key conditions are met, the employer is exempt from paying the penalty regardless of how many employees The law is very specific with respect to the coverage may choose to purchase coverage through anyou must offer to qualify for an exemption… Now’re paying attention, aren’t you? As with all things associated with this law it is The law refers to three guiding principles subject to change. However, it is advisable to plan nowwhen determining the potential applicability of that according to what we know today.exemption:1. The plan must provide “minimum value”. Generally this means that the plan must pay for 60% of DOUG GWILLIAM medical expenses. Regulators continue to provide CBIZ Benefits Insurance Services, Inc. additional guidance in this area. (You may need San Diego, CA • 858.795.7455 • some help from a professional consultant andTax Accounting is recognized as a significant but under-utilized taxThe Return of the benefit. The credit rewards a variety of different types of efforts undertaken by a company, includingResearch activities that would be performed as a necessary part of the business such as developing or improvingDevelopment Credit manufacturing processes related to new products or experimentation efforts related to improving the quality and efficiency of an existing process.T he passage of the American Taxpayer Relief Act One of the primary stipulations of the credit, of 2012 (“the Act”) not only helped avert the however, is that the expenses that may be included fiscal cliff but also helped companies looking to are only those expenses that were related to the workgrow. The Act reinstated and extended the research performed in the U.S. The legislative expectation isand development (RD) credit, allowing for the credit that not only will companies be aided in developing andto be generated retroactively for expenses incurred improving their products and processes, but will do soin 2012 as well as for expenses that will occur in the by hiring more people in the U.S. to perform that workcurrent 2013 calendar year. This incentive, which is rather than outsourcing the work to foreign of the few tax items that has bipartisan support, (Continued on page 8)CBIZ, INC. BIZGROWTH STRATEGIES – SPRING 2013 | 7
  8. 8. our business is growing yours Tax Accounting (Continued from page 7) claims being disallowed. As of August 17, 2012, Furthermore, by allowing development activities in the IRS announced (LBI-4-0812-010) that it will a myriad of industries and business types to qualify, no longer use its “tiered issue process” to manage including activities being performed by job/ audit issues. In its place they have created machine shops, food manufacturers and specialized practice groups to serve as government contractors, a significant advisors to examining agents. The number of small and mid-sized new process also provides more companies are able to take authority to their agents and teams advantage of the credit. This credit to settle issues, realizing that while has wide applicability, as discussed. consistency is important, there is It also has a number of provisions no “one size fits all” approach. related to properly determining© Copyright 2013. CBIZ, Inc. NYSE Listed: CBZ. All rights reserved. • CBIZ-020, Rev. 55 Even in light of these new qualifying activities and the provisions, companies should related costs. engage in careful consideration and In 2006 the IRS Large Business analysis in order to properly maximize and International Division (LBI) this incentive to reduce their overall tax initiated a “tiered issue process”. Among burden. The benefits of taking advantage the issues most scrutinized were RD of this credit can have a significant impact on credits, which were designated as a Tier I issue. a company’s bottom line and proper documentation is This often led to long and onerous examinations, still vital, as the IRS will continue to consider the RD a large backlog of appeals and many RD credit tax credit a significant issue. RAJ RAJAN MIKE SILVIO CBIZ MHM, LLC • Irvine, CA CBIZ MHM, LLC • Irvine, CA 949.727.1327 • 949.727.1322 • 8 | BIZGROWTH STRATEGIES – SPRING 2013 CBIZ, INC.