BCA

By John Riley

 While today’s political environment is cause for frustration and uncertainty for companies, a new jobs idea being advanced by Senator Charles Schumer (D-NY) and Senator Orrin Hatch

(R-UT) could recharge their business strategies while creating new job opportunities.  In one of those rare bipartisan efforts, the two senators have come up with a proposal so simple and easy to understand, you wonder why no one came up with it sooner.

  If a public-sector employer hires an employee that has been unemployed for more than 60 days, the employer would not have to pay the 6.2 percent Social Security payroll tax for the balance of 2010. The benefit is immediate and the longer an employer waits to hire, the less dollars he or she would receive. It is unbiased in that the 6.2 percent remains constant. A company would save money on an employee who earns $30,000 as well as someone who earns $60,000. There is no cap.

 Whatever losses the Social Security trust fund would incur would be made up from spending cuts in other programs between now and 2015.

 Business Strategies Boosted by Immediate Hiring

 While many companies are understaffed due to severe personnel cutbacks over the past couple of years, this idea provides the opportunity to minimize the cost of staffing up as the economy starts to strengthen. This is more appealing than adding an employee now and then having to wait until 2011 to get a tax credit. Furthermore, the payroll tax stays in the employer’s pocket since the tax is never collected.

 But there’s more. For any worker hired in 2010 and who was retained on the company’s payroll for 52 weeks or longer, the company would receive an additional $1,000 credit on its 2011 tax return. According to the Senators, “Imagine that three million unemployed workers were to be hired this year under the plan. If they all worked an average of six months in 2010 at a salary of $50,000 and every single one of them stayed on payroll for 52 consecutive weeks into 2011, the gross cost of the Social Security tax cut and the additional credit would be only $7.6 billion.”

That would be before the payroll taxes and offsets paid by these workers.

 Additional Rules Needed

 To help ensure long term business growth, additional rules will be necessary:

 1)     Family members of the employer would not be eligible to participate.

2)     Workers would need to work a minimum of 30 hours a week.

3)     The payroll tax plan is limited to the  private-sector

4)     New jobs created by tax dollars cannot be included

5)     Employers with a lower total payroll in 2010 than it had in 2009

cannot participate…businesses cannot cut jobs and still be eligible Unfortunately, there are no rules prohibiting senators and house members from adding amendments or earmarks thereby ensuring what is now a simple and easy to understand idea will eventually become incomprehensible. Nevertheless, it is encouraging to see a promising new idea that can benefit business when it needs it most.   

 By John Riley

 After months of a wrenching economy, the generally accepted philosophy is that employees have hunkered down and  put any notions of changing jobs on the back burner, at least until economic conditions improve. A study by Salary.Com, a payroll and compensation consulting firm, earlier this year reveals exactly the opposite is true.

 The study reports 80% of employers believe it will be a few months before employees start a job search, however 65% of the employees have already started searching passively or actively and say they will be intensifying their efforts.  Over 7,000 employees and 363 human relations professionals were covered by the survey.

 According to Nicholas Camelio, senior vice president, Salary.com, “Employers were out of touch with their employee’s satisfaction levels and were over estimating the tough economic environment as a deterrent to job seeking. Consequently, many employers have not placed enough emphasis on important retention strategies. This could lead to their best employees defecting during the next year, just when this talent will be most needed to help turn  businesses around.”

 When employees were asked about various industries, financial services, construction and retail were at the top of the list of extremely dissatisfied employees.  The Internet, education/government, non-profit and software and networking came out on top with extremely satisfied employees.

 In another study, this one by Career Systems International  in 2005, over 7,400 employees from diverse industries were asked about things available in organizations that engendered commitment and a willingness to stay.  The most influential factors:

1)      exciting work/challenge(48.4%)                                       

2)      career growth/learning (42.6%)

3)       relationships/working with great people (41.8%)

4)       fair pay (31.8).

With the economic and employment uncertainty, it is no longer easy to plan a career path. As a result, employees, especially the top performers, may rely on mobility as the solution to increased compensation and a better title. Recognizing the situation, many employers are starting to focus on professional growth and skill development as retention tools.

 However, that may not be enough and policies may be incorrectly implemented.  For example, an employer may interpret the employees’ desire for exciting work/challenge as an opportunity for management to reassign a laid off worker’s responsibilities to the employee. For management, it is a logical step in several to help the business survive.

 Then the employee learns that the work isn’t sufficiently different from what he is already doing and neither his compensation nor his title will be changed. So rather than motivate the employee, the transfer of responsibilities becomes a millstone.

 Employee retention is the most critical element in the future success of the business and a strategy to survive should not conflict with a strategy to retain the company’s most important asset. It’s not too soon to revisit your strategies for the future and make sure employee retention is not only on your list, but at the top.

By John Riley

This commentary is for the young businessman or woman starting a career. It is an attempt to answer the foremost question in his or her mind, “what is the secret to success?”  I offer it here because it is so profound and  so true.

 Former Secretary of State and four-star general Colin Power recently related a story he learned while a young infantry officer at Ft. Benning in an interview by Fortune Magazine July 6:

 “There was a brand new second lieutenant who  was very ambitious and wanted to be a general. One night at the officer’s club, the young officer spotted this old general sitting at the bar, and he went up and said, ‘How do I become a general?’  And the general Answered, ‘Son, you’ve got to work like a dog. You’ve got to have moral and physical courage. There may be days when you’re tired, but you must never show fatigue. You’ll be afraid, but you can never show fear. You must always be the leader.’

 “The young officer was so excited by this advice.  ‘Thank you, sir,’ he said. ‘So this is how I become a general?’  ‘No,’ said the general, ‘that’s how you become a first-lieutenant, and then you keep doing it over and over.’

 After telling the story, General Powell added, “Doing your best in the present has to be the rule. You won’t become a general unless you become a good first-lieutenant.”

 For anyone entering the job market in today’s business environment, this is sound advice.