In This Issue:
- How to Adjust Year-End Tax Strategies in an Uncertain Tax Environment
- Navigating Counteroffers — What Employers Need to Know
- 4 Steps to Maximize Your Total Rewards Investment
- Equal or Equitable — The Family Business Owner’s Dilemma
- Commercial Lines Market Trends Report — Q2 2021
1. I D E A S T O H E L P G R O W Y O U R B U S I N E S S
S T R A T E G I E S
ISSUE 89 • FALL 2021
Your Team.
Your Team.
Navigating
Counteroffers—
Equal or Equitable—
The Family Business
Owner’s Dilemma
Commercial Lines Market Trends
Report – Q2 2021
HowtoAdjustYear-End
TaxStrategies
inanUncertain
TaxEnvironment
to Maximize
Your Total Rewards
Investment
4 Steps
WhatEmployers
NeedtoKnow
Market Trends
2. In This Issue
2 | BIZGROWTH STRATEGIES – FALL 2021 CBIZ, INC.
CBZ
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CBIZServices
BY JAY MESCHKE
U
p until fairly recently, counteroffers were rarely an issue. It seemed
as though an employee would, upon accepting an offer from a new
employer, resign and that would be the end of it. Employers would
never even consider issuing a counteroffer and might even show the
employee the door that very day.
This scenario has changed drastically over the last decade.
Employers are now readily willing to issue counteroffers because they
understand the cost of backfilling a key position. Further, it is a fact that
employees are not only susceptible to counteroffers but will actually
take them and stay with their existing employers more often than not,
especially in today’s hot market.
It’s not uncommon for candidates who have signed or verbally
accepted an offer from a new organization to renege on their promise
without a second thought. Why? Employees are being swayed to stay at
their present employer when they’re showered with benefits such as more
money, more responsibility, more flexibility, a higher ranked title, a visit
from the CEO and other perks that were not offered before.
Employer Tips to Combat the Counteroffer
■
Anticipate a counteroffer. With top talent in such high demand,
you must plan to receive a counteroffer so you’re not taken by
surprise.
■
Prepare to counter the counteroffer. Be prepared to stretch your
compensation ranges and have a counter-to-the-counter offer. Ask
candidates specific questions in the interview process that provide
you with insight into their biggest motivations for leaving. Leverage
their answers and remind them why they decided to seek a new
position in the first place.
■
Evaluate your existing hiring processes. Examine your existing
hiring processes from beginning to end to ensure you’re portraying
your organization as an exciting and welcoming place to work with a
Talent Compensation
Navigating
Counteroffers—
WhatEmployers
NeedtoKnow
CBIZ Experts
In the News
Forbes Advisor
Robo-advisor vs. target-date
fund: Which do you need?
September 27, 2021
Accounting Today
Lease accounting changes
keep on coming
August 19, 2021
Inc.
Who wins and loses as Democrats
look to curb tax breaks for
pass-through businesses
July 21, 2021
Talent Compensation............... 2
Navigating Counteroffers —
What Employers Need to Know
Tax Strategies............................... 4
How to Adjust Year-End Tax
Strategies in an Uncertain Tax
Environment
Employee Benefits....................... 5
4 Steps to Maximize Your
Total Rewards Investment
Management Performance...... 7
Equal or Equitable — The Family
Business Owner’s Dilemma
Risk Management........................ 8
Commercial Lines Market
Trends Report — Q2 2021
3. CBIZ, INC. BIZGROWTH STRATEGIES – FALL 2021 | 3
strong employer brand. Use the latest recruiting
and retention data to evaluate your hiring process
and ensure it’s on the right track.
■
Offer comprehensive compensation packages.
Culture, innovation and impact are all incredibly
important factors in attracting talent in a
candidate-driven market, but compensation is
the determining element. Organizations must stay
competitive with their compensation structures.
This requires due diligence and market research.
Know what your local and national competitors are
paying and seek guidance from a compensation
consultant. Run a compensation analysis on base
pay, annual performance bonuses, retention
incentive bonuses, stock options, retirement
plans and contributions, health and life insurance
benefits, and miscellaneous perks. If your total
package doesn’t live up to market standards,
you’re in for disappointment and frustration.
Counteroffers are part of today’s war for talent.
Employers who are well prepared to respond will have a
solid advantage in attaining and retaining top talent.
JAY MESCHKE
EFL Associates | CBIZ Talent Compensation Solutions
jmeschke@eflassociates.com | 816.945.5401
DISCLAIMER: This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional
advice. This information is general in nature and may be affected by changes in law or in the interpretation of such laws. The reader
is advised to contact a professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in
connection with the use of this information and assumes no obligation to inform the reader of any changes in laws or other factors that
could affect the information contained herein.
4. 4 | BIZGROWTH STRATEGIES – FALL 2021 CBIZ, INC.
What changes the Biden administration and the slim
Democratic majority in Congress would make to the tax
environment has been one of the largest questions running
behind the scenes of the pandemic response, and it came
to a head with the recent infrastructure bill conversations.
If the party aligns, a separate tax bill could be passed
through budget reconciliation that would make changes to
long-term capital gains taxes, individual income taxes and
other items, likely toward the end of the year.
Timing of Income Deductions
Business owners often have control over the
timing of types of income, such as bonuses, billings
for consulting income that are accounted for on a cash
basis, retirement plan distributions that are not required
distributions, gain on real estate sales and gain on
investment sales. Tax rates may be going up in 2022 for
high-income taxpayers, particularly for gains, which would
favor strategies that accelerate income to 2021.
BY NATE SMITH, CPA
“W
ill they or won’t they?” makes for good
television, but when this tension involves
your tax rates and obligations, it’s much
less enjoyable. Congress has the framework for a budget
proposal that would increase taxes. Whether lawmakers
will pass that framework is unclear. This uncertainty
leaves business owners in a tricky spot for 2021 tax
planning. There’s time to implement strategies, but as
of the date of this publication it’s hard to know whether
or when Congress will answer these questions. The
following analysis describes what can be done, with
reasonable certainty, in this tenuous environment.
Where We Are Today
We know that the Biden administration’s tax plan
differs from the previous administration’s and that certain
provisions of the 2017 tax law would be flagged for repeal.
Tax Strategies
HowtoAdjustYear-EndTaxStrategies
inanUncertainTaxEnvironment
5. CBIZ, INC. BIZGROWTH STRATEGIES – FALL 2021 | 5
Tax Deductions Not Affected by the Current Legislation
To offset income in 2021, consider how you are
taking advantage of the following deductions that have
not been targeted for updates:
■
Net Operating Losses (NOLs) — NOLs generated
in tax years beginning after Dec. 31, 2020 are only
carried forward and can be deducted up to 80%
of taxable income in a given year. NOLs generated
in earlier tax years are not subject to the 80%
limitation. If you have the appropriate income in
2021, the NOL carryforward should be properly
categorized to support the maximum deduction.
■
Business Interest Expense Limitation — In
2021, the Section 163(j) limitation on business
interest expense deductions is essentially
30% of tax-basis EBITDA. Starting in 2022, the
calculations for business interest limitations
change, where depreciation and amortization
are no longer part of the equation (it essentially
becomes EBIT), which is expected to further
restrict business interest deductions.
■
State Local Tax Deduction Limitations — The
limit on state and local tax (SALT) deductions may
be here to stay, and more states are creating
workarounds to the so-called SALT cap. If you
haven’t considered the possibility of entity-level
taxes in the states in which you operate, you may
want to evaluate this workaround option.
Keep in mind that individuals generally use the cash
method of accounting, so expenditures are deducted in
the year paid. You can choose to accelerate the timing
of the payment of a deductible expense, such as those
for medical costs (e.g., health insurance premiums,
non-urgent medical and dental services, non-urgent
prescription drugs, non-urgent mileage).
Working with your tax advisor can help you adjust
your tax strategy as more insights come to light.
Tax Strategies
NATE SMITH,CPA
CBIZ National Tax Office
Nate.Smith@cbiz.com | 727.572.1400, x348
Y
ou’ve likely invested a great deal of money and
time into your total rewards program. Now you
need to ensure that investment is maximized to
stay ahead of the competition. This article outlines the
four steps your organization can take to do so.
STEP 1 — Take inventory.
Compensation — Benchmarking is critical.
Employers must understand how all of their jobs stack
up against the competition. Is your base pay market
competitive? Are your incentives competitive?
Benefits — It’s also essential to benchmark your
benefits against your competitors. Take a comprehensive
look at all of the benefits you offer so you can ensure
your employees are aware of those benefits, understand
those benefits and understand their value. An inventory
is also an opportunity to assess if your offerings fit the
current needs of your employees. Additionally, explore
what options might be available through your existing
Employee Benefits
4StepstoMaximizeYour
TotalRewardsInvestment
6. Employee Benefits
6 | BIZGROWTH STRATEGIES – FALL 2021 CBIZ, INC.
CBIZ EMPLOYEE BENEFITS
CBIZ TALENT COMPENSATION TEAMS
partners. There are often very valuable resources to
support employee wellbeing that are not advertised by
your vendors.
Employee Experience — Taking inventory of the
employee experience can be challenging. However, the
following four categories will give you a solid foundation
to build from:
■
Growth Development
■
Team Building Social Opportunities
■
Physical Workspace
■
Policies
STEP 2 — Make adjustments.
There are a number of questions that employers
need to ask themselves regarding their inventory.
■
Does this align with our strategic priorities?
■
Do employees value it?
■
Does it make financial sense?
■
Are there gaps to be filled?
Once you’ve answered these questions and identified
gaps, it might seem a bit overwhelming to cut back and/
or make additions. There are more specific questions you
can delve into to help you prioritize your next steps.
■
What are our competitors offering that we should
consider adding in order to not lose top talent to
them?
■
What would your employees say is the most
important thing you can do to improve their daily
work experience?
■
Three years from now you are recognized as an
employer of choice. What was the catalyst for
change this year?
While this may take years to achieve, decide what
steps you can take today to improve your total rewards
package and get you one step closer to that goal.
STEP 3 — Communicate thoughtfully.
Your communication strategy doesn’t have to
be complicated. It breaks down to the following six
components:
■
Catering to the audience
■
Short, digestible content
■
Multi-media channels
■
Proactive timeline planning
■
Resource inventory
■
Data analytics
Further, utilize accessible technology solutions, for
example:
■
Website (make sure it’s mobile friendly)
■
Instant messaging tools
■
Mobile — text, apps
■
Video
STEP 4 — Measure results.
Quantitative — CFOs (among others) expect to see
tangible results. Therefore, it’s important to compile as
much quantitative data as possible. The following are
various methods you can employ.
Qualitative — Some components of the employee
experience are captured in the quantitative analysis.
However, others can be difficult to attach numbers to.
This is when you can take measure through qualitative
means. Here are a few ideas:
■
Customized employee experience surveys to gauge
components such as the quality of workplace
relationships with peers and supervisors,
perceptions of leadership, and sense of purpose in
their role
■
Employee engagement and satisfaction surveys
■
Employee net promoter score
■
Focus groups
By diving into these four steps, you will be well on your
way to maximizing your total rewards investment, helping
your organization stay ahead of the competition.
Volume Quality of Communications
to Measure Awareness
■
Web traffic
■
Email click-through open rates
■
Meeting attendance (in-person or online)
■
Communications surveys
■
Focus groups
Benefits Program Utilization
to Measure Behavior Changes
■
Health plan enrollment
■
401(k) contributions
■ EAP
■ PTO
■ Philanthropy
■
Growth development
Financial Cultural Outcomes
to Measure Business Impact
■
Claims data
■
Total Rewards ROI
■
Retention internal promotions
■
Employee referrals
7. CBIZ, INC. BIZGROWTH STRATEGIES – FALL 2021 | 7
EqualorEquitable—TheFamily
BusinessOwner’sDilemma
Management Performance
BY ANNE LONG, RICP®
C
onsider a scenario where a family business owner
grapples with how to equalize inheritances for his
four children; two are active in the business while
two have careers separate from the family business.
Most of the family wealth, which is illiquid, is tied to the
business. The business owner faces the vexing problem
of how to provide the children with equitable shares of
the business without liquidating the business upon the
death of the parents.
Buyout Inactive Successor Owners
One approach would be to leave it to the siblings who
are running the business to buy out their other siblings.
This raises a number of issues, including assessing the
fair market value of the business, determining the length
of the payout period and whether interest would be paid
until the buyout is complete. A real concern would be the
prospect of short selling some or most of the business’
assets to buyout the siblings who are not active.
Equal Payout
Another alternative is to leave the business to all four
children equally. This presents another set of challenges
as the two active children would now have to involve
their inactive siblings in the business’ decision making.
Further, the business may not be able to financially
support everyone. If that was the case, the wishes of the
business owner for continuity and family harmony would
be in jeopardy.
Survivorship Single Life Policy Solutions
A simple, more elegant solution is for the business to
purchase life insurance on the owner, naming the children
who are not active in the business as the beneficiaries.
If the spouse is alive or the owner has significant health
issues, a survivorship policy might be the appropriate
choice. The policy could also be purchased personally
and put in an irrevocable life insurance trust. In this case,
the amount of the coverage would be equal to 50% of the
fair market value of the business, split between the two
inactive children. Upon the death of the business owner
(for a single life policy) and the spouse (for a survivorship
policy), the two children operating the business would
inherit the business, while the other children would
each receive 25% of the tax-free death benefit of the life
insurance policy. The business continues on, and each
child receives an equitable inheritance.
With the help of a professional advisory team,
including a CPA, attorney, financial planner and insurance
agent, an estate equalization plan (also known as an
inheritance equalization plan) can be developed to
pass on a family business, allowing the owner to enjoy
their wealth and success while ensuring that the next
generation is taken care of — whether or not they are
involved in the business.
ANNE LONG, RICP®
CBIZ Life Insurance Solutions
anne.long@cbiz.com | 512.784.4001