Creating a great working experience can lower your payrolls and boost staff morale at the same time.
Think your employees are asking for too much money? If so, you may want to think about how you can motivate them without doling out more cash. It's a simple thought exercise that can lead to some practical ideas on how to lower your payrolls and boost employee morale at the same time.

In my frequent interactions with the small-business owners who use our payroll service, employee compensation is a hot topic. The feedback I get is fairly predictable. Salary expectations for workers are too high or out of whack with reality. I hear that healthcare benefits and workers' compensation insurance are huge expenses. To be sure, the costs of these benefits are dragging down small business profitability across the nation.

In these interactions, I often ask business owners whether any of their employees would work for free. I get a puzzled look in response.

"No, really," I say. "If your employees were independently wealthy and didn't need to work to make a living, would they work for you?"

Continue reading "Paychecks Aren't Everything"

A well-structured incentive program can boost productivity and instill a sense of shared responsibility among employees.

Fed up with compensation plans that are fueled by an entitlement mentality, some employers are turning the tables and indexing pay to the one thing that really matters: performance.

It's no big surprise that compensation is the issue that causes the most anxiety in American workplaces. Employees want more of it, but it's becoming harder and harder for employers to justify raises simply on the basis of time served.

Based on my many conversations with small-business owners, I can tell you that most employers don't have a problem giving raises to their employees if the employees are doing their part to ensure business growth and profitability.

However, in many companies that's a big "if." When profitability plateaus, employees generally interpret flatline compensation as a sign of disrespect instead of making the connection between compensation and job performance.

Does your workforce suffer from a unionesque mentality that expects raises regardless of performance? If so, it's time to become more reliant on incentive programs to motivate your workers. A well-structured incentive program can dramatically boost productivity and provide workers with a sense of shared responsibility. A haphazardly designed program, on the other hand, can make a bad problem even worse.

Although the details of incentive programs will vary from company to company, here are some common characteristics I've observed in the ones that are most effective. Here are seven incentive pay best practices:

Continue reading "Performance Based Pay"

Employee retention doesn't happen by itself. It requires a proactive strategy from the business owner and management team.
One of the most enjoyable aspects of my job as a payroll services provider is that I have the opportunity to talk with small business owners on a near-daily basis. It usually doesn't take long for the conversation to turn toward human resource issues, and the topic of retaining talented employees always comes up.

If you've followed my columns in the past, you know I've opined that turnover isn't necessarily a bad thing. A number of you wrote to me that you disagreed. You said that losing skilled employees hurts, especially when they play a central role in the life of a small company. I agree. But the thing that hurts more than losing talented workers is the knowledge that the business owners themselves may have held the power to retain them. Although employees sometime leave for reasons that are completely beyond management’s control, you would be surprised to learn how often the real reason for turnover is because the employee didn't feel valued by the company.

Sobering, isn't it? But fortunately your ability to retain quality workers isn't necessarily dependent on your ability to be the highest bidder. There are several non-financial incentives that can be systematically utilized to communicate value and cement your relationship with your staff. For those of you who want tips on how to retain top talent, here are a few things that work well for me at SurePayroll.

Continue reading "Keeping Top Talent Happy"

Employers can be liable for road accidents caused by worker cell phone use. A strict safety policy can help.

While text messaging, photos, and Internet access have boosted the popularity of cell phones in the workplace, they've also increased the potential headaches for employers. These include everything from productivity and privacy issues, to the risks of legal liability for accidents caused by employees using cell phones for work-related calls behind the wheel.

In 2001, the city of Honolulu agreed to pay $1.5 million to a man who suffered permanent brain damage after being struck by a city employee who was talking on a cell phone at the time of the accident. Similarly, a jury ordered an employer to pay more than $20 million when its salesman killed a motorist while using his cell phone between sales appointments. The large investment firm Salomon Smith Barney paid a $500,000 settlement to the family of a motorcyclist killed by one of its employees making a work-related call after hours on his own personal cell phone. And when a lawyer struck and killed a teenage girl while driving home from a work meeting -- allegedly on a cell phone call with a client -- the victim's family filed a $30 million suit against the employer, claiming the law firm was negligent in encouraging employees to use cell phones without providing a safety policy.

Continue reading "Workplace Cell Phone Policies"

Letting an employee go is never a pleasant experience, but with the right approach it can be done with a clear conscience.

No one enjoys the task of firing employees. But far from being a necessary evil, terminating an ineffective worker can be a very good move for your company, especially if you can do it with a clear conscience.

Almost every business owner I know has a hard time firing employees. It's not the idea of eliminating dead weight that bothers them so much as the negative feelings that are associated with telling someone they are about to find themselves out of a job. On top of that, the boss often bears the burden of insulating the company from later litigation, while at the same time wrestling with his own lingering doubts about whether or not he somehow failed his employee.

Continue reading "Stress-Free Firing"

The Treasury Department is clamping down on tax regulations for deferred compensation plans. Are you in compliance?

Executive compensation plans frequently involve what are known as nonqualified deferred compensation plans, or NDCPs. These plans allow executives and their employers to enter into agreements that essentially defer compensation from the year it was earned to a later tax year, allowing them to spread out tax liabilities over a period of time.

While beneficial for employees and employers alike, it's the kind of tax flexibility that's frowned upon by the Treasury Department. Recently, it adopted stricter regulations on NDCP requirements contained in IRS Code Section 409A that both reduces this flexibility and creates many a trap for unsuspecting employers. After Dec. 31, 2007, plans that don't comply in writing with these new requirements could face costly penalties. Yet, a few important exemptions still remain.

Continue reading "Tougher Rules on Deferred Pay"