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Benefit Plan Trends- Volume 60, Issue 5

Lundstrom Insurance Agency, Inc.

2205 Point Blvd., Suite 200
Elgin, Illinois 60123
Phone: (847) 741-1000
Fax: 847-428-8857
 

This publication intends to provide accurate information pertaining to the subject matter covered, however, it should not be considered as legal or tax advice. It is published and distributed with the understanding that neither the publisher nor Lundstrom Insurance Agency is rendering legal or tax advice. Before taking any action, you should always obtain specific advice and assistance from a competent attorney or tax advisor.


 
Serving you, your business and your community since 1956
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A report covering plan design and legislative changes
 
VOLUME 60, ISSUE 5
 
 

Small and Midsized Businesses Face Challenges When Hiring


As small and midsize companies seek to expand their workforce, many are struggling to get the hiring process right, and are suffering the consequences of having made poor hiring decisions, the results of a survey by recruitment firm Robert Half show.

The survey asked more than 1,000 business owners and human resources managers at U.S. firms with between one and 499 employees about their views on a variety of hiring issues. The findings, released on March 21, indicated that nearly half (49%) of respondents believe that most hiring managers underestimate the complexity of the hiring process. Moreover, 65% of respondents said they had experienced problems with their company's hiring process, and 81% admitted that their company has made a bad hire.

The results also suggested that hiring the wrong person can have serious consequences for small businesses. The owners and managers surveyed estimated that they had wasted an average of 45 hours on hiring and onboarding people who ultimately did not work out. In addition, 53% of respondents reported increased stress on the team members who were working with the bad hire, and 20% said the experience of dealing with a bad hire had decreased their confidence in the responsible manager's ability to make good hiring decisions.

The findings further indicated that while a bad hire could be identified rather quickly, correcting the mistake took longer: 58% of respondents said it took less than a month to realize they made a bad hiring decision, but that it took more than twice that time on average (8.8 weeks) to let the person go. Moreover, the respondents reported that an average of nearly five more weeks passed before a replacement started working, with 68% acknowledging that the extra workload was placed on existing staff during this period. By contrast, just 18% of respondents said their firm brought in temporary professionals to assist with heavy workloads while in the process of replacing a bad hire.

However, the survey results also suggest that there are several ways businesses can address deficiencies with their hiring process and minimize risks of making a bad hire. More than half (58%) of respondents said the best new hires come from referrals, including employees, friends, recruiters, and others in their network.

Researchers also observed that companies tend to be more successful in hiring the right person when they go beyond simply posting a job opening and hoping the right person will apply: among the respondents who reported using recruiters, 76% said a recruiter was able to find a candidate they would not have found on their own.

In addition, the survey showed that 45% of owners and managers believe that the most challenging hiring step is evaluating candidates based on their skills and potential fit, with 26% admitting that it takes them too long to fill open roles. The findings indicate, however, that delegating these duties to an outside resource can cut hiring timelines and save money: 43% of respondents reported that working with a recruiter saved the firm time because the recruiter did most of the work, while 36% said that using a recruiter saved them money by finding the right candidate more quickly.

Paul McDonald, senior executive director at Robert Half, noted that several factors can complicate hiring in smaller organizations. "Some firms lack dedicated recruiting staff or a human resources function altogether," he said. "Multiple demands on a business owner's time also can pull attention away from recruiting and cause it to fall to the last priority."

 

Most Employers Support the Use of the E-Verify System


Although many human resources professionals report that they are experiencing challenges with both the mandatory electronic verification system and the Form I-9 employment verification process used to assess the employment eligibility of individuals seeking to work in the U.S., employers continue to express strong support for the "E-Verify" system, according to the findings of a survey conducted by the Society for Human Resource Management (SHRM) in collaboration with the Council for Global Immigration (CFGI).

The survey, which was conducted between October 11 and November 18, 2016, polled 453 HR professionals from a randomly selected sample of SHRM's membership. According to researchers, the current employment verification process, the Form I-9, uses paper documentation to verify the employment eligibility of people seeking work in the U.S., and is mandatory for all employers; whereas the E-Verify system relies on Social Security Administration and Department of Homeland Security databases to confirm that individuals are authorized to work in the U.S. They further noted that the use of E-Verify is mandatory for Federal contractors and subcontractors, and that 21 states and localities require the use of E-Verify for some or all employers.

The survey found that of the HR professionals polled, 83% said they would support a mandatory electronic verification system in general. However, the findings also indicated that the respondents' levels of support would be even higher if such an electronic verification system helped employers avoid allegations of employment-based discrimination (95%), included a strong safe harbor to protect employers (95%), authenticated identity (94%), and eliminated the need for Form I-9 (89%).

The respondents reported experiencing a number of challenges when using the Form 1-9 verification process, including having to maintain records when keeping track of documents with an expiration date (37%). But the poll results also revealed that the respondents had encountered problems when using the current E-Verify system. Among the most frequently reported challenges were that the E-Verify system does not replace Form I-9 (25%), and that it has an unclear process for resolving issues when a worker's eligibility for employment in the U.S. is not confirmed (22%).

Researchers emphasized, however, that the survey results point to opportunities for improving participation in E-Verify: of the respondents who said they do not participate in E-Verify, 37% reported that their reason for not participating is that use of the system does not eliminate the requirement to complete Form I-9. Researchers also pointed out that these survey results are timely, as the Trump Administration's Fiscal Year 2018 budget proposal includes funding to support the mandatory use of E-Verify.

 

Employers Report That Providing Financial Education Pays Off Over Time


Observing that most employers agree that personal financial issues affect the job performance of their employees, a report published by the International Foundation of Employee Benefit Plans advised employers to counter the detrimental effects of these money worries on productivity by offering their workers access to a range of financial education programs.

The findings of the report, released on March 28, are based in part on the results of a survey conducted in January 2016 among 406 employers in the U.S. and Canada. The survey found that 96% of the employers polled believe that employees' personal financial issues have some sort of impact on their overall job performance.

Two-thirds (66.3%) of the organizations polled said they provide financial education to employees, with one-third of those employers reporting that they had started providing education in the past five years. Of the employers who offer a financial education program, 61% reported that their employees have become more financially savvy, and 71% said that their employees have become better prepared for retirement since the programs were implemented.

Of the respondents providing financial education, two-thirds (67.3%) said they believe their programs/initiatives have been somewhat or very successful, while the remainder rated their programs as relatively unsuccessful. The results suggest, however, that the benefits of financial education can take a few years to emerge: of the employers with successful programs, 23.8% said the program had been in place for six to 10 years, and 49.2% said the program had been in place for more than 10 years; while the corresponding figures for employers with unsuccessful programs were 11.4% and 42%.

It also appears that executive support is an important factor in the success of financial education programs: when asked about their biggest obstacles to offering financial education, half (50%) of the employers with unsuccessful programs, but only one-quarter (25.4%) of those with successful programs, cited a lack of leadership support.

The report noted that customization is another important component of successful financial education programs. For example, the survey showed that the successful employers were more likely than the unsuccessful employers to have assessed which financial education topics are most needed (29.3% vs. 0%), to have a budget devoted to financial education (27.1% vs. 5.7%), to have customized education for specific groups (32.6% vs. 13.6%), to provide education to retirees (28.2% vs. 12.5%), and to provide education to spouses (45.3% vs. 28.4%)

Similarly, successful employers were more prone than unsuccessful employers to report that they had customized education for specific groups based on age or income level (33% vs. 14%), and that they had targeted education by life stage (12% vs. 2%).

In addition, the survey indicated that the employers with successful programs were more likely than those with unsuccessful programs to offer education using a wide variety of formats, including free personal consultation services (61.9% vs. 36.4%), voluntary classes and workshops (91.2% vs. 68.2%), and web-based online resources and courses (63.5% vs. 40.9%). Finally, the results showed that the successful employers were more likely than their unsuccessful counterparts to use plan record-keepers or administrators (60.2% vs. 45.5%) and financial planners (30.4% vs. 15.9%) for education.

 

A Late Career Job Change Is Associated With Staying In the Workforce Longer


While changing employers at a later career stage involves risks, older workers who change jobs voluntarily are significantly more likely to remain in the labor force until reaching age 65 than workers who stay with the same employer until retirement, regardless of their educational level, according to a study recently released by the Center for Retirement Research at Boston College.

Published in February 2017, the study brief, "How Job Changes Affect Retirement Timing by Socioeconomic Status," was written by Geoffrey T. Sanzenbacher, Steven A. Sass, and Christopher M. Gillis. The authors noted that the question of whether a late-stage job change lengthens or shortens a worker's career is important because workers generally need to remain in the labor force longer than they have in the past to gain a secure retirement. The study also pointed out that this issue is especially acute for workers with less education, who face an elevated risk of having an inadequate retirement income, in part because they tend to retire early.

The authors observed that since workers presumably change employers to improve their well-being, moving to a job that they consider better could lead them to work longer. The researchers also noted, however, that moving to a new job could reduce workers' job security, because tenure protects older workers against involuntary job loss, and workers who change jobs risk a bad match. Thus, changing jobs could be associated with an increased risk of a layoff or an early labor force exit.

The brief presents an analysis of how voluntary job changes made by workers in their fifties affected their retirement timing, and of how these patterns differed by socioeconomic status, as measured by educational attainment. The analysis was based on data for the 1992-2012 period from the Health and Retirement Study (HRS), a biennial survey that follows respondents when they first enter the survey at ages 51-61 until they reach age 65.

The final estimates indicated that voluntarily changing jobs was associated with a statistically significant increase (9.1 percentage points) in the likelihood of remaining in the labor force until age 65, with this effect being slightly larger among workers with at least some college (10.9 percentage points) than among less educated workers (7.5 percentage points). The authors described this effect as large, given that only 44% of all workers in the sample were still in the labor force at age 65.

The findings further indicated that certain characteristics were associated with staying in the labor force longer, such as having a mortgage to pay off or having a later planned retirement age. The analysis also showed, however, that other characteristics were associated with earlier retirement, including having a long tenure at a job with a defined benefit pension, having more adverse health conditions, or having initially held a blue-collar job.

 

 

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

 



 
2205 Point Blvd. Suite 200 | Elgin, IL 60123
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