Employee compensation can be a sensitive subject, and people get very passionate when trying to determine the most appropriate compensation plan for any business. Many human resource-related concerns need to be addressed, but equally important is understanding the financial aspects of employee compensation. Employee compensation is much more than just the direct amount you pay an employee. There are other costs that need to be incorporated in the overall payroll budget. Here are five areas to consider when figuring out how to compensate employees:
1. Incentives and bonus plans need to have clear guidelines to minimise any confusion
They shouldn’t be seen as a guaranteed payment, but instead should be measured by performance of the individual, team or company. If end-of-the-year bonuses are given every year regardless of performance, they no longer serve as a motivating factor; they are expected payments. Incentives and bonus payments should be reserved for employees who go above and beyond their everyday performance to help the company exceed its profitability goals.
2. Understand the costs of a benefit plan before you offer it
Offering benefits is a nice incentive for employees, but they can be a very costly burden to the company. When assessing what benefits to add, consider not only today’s direct costs, but also long-term expenses. Adding and removing benefits can be very demoralising to your staff. Don’t add anything you don’t plan to continue long-term. Of course, unexpected situations can always arise that may affect your ability to continue offering a certain benefit, but employees will become disgruntled when benefits are added and removed frequently.
3. You also need to calculate employer payroll taxes into your overall payroll budget
Employers incur expenses, such as PAYE, UIF unemployment insurance, and workers’ compensation insurance.
4. What type of position will the individual hold?
Does it best correlate with direct payment on an hourly or salaried basis or is commission a better arrangement? Employees in sales-related positions should have commission as a part of their compensation package. Whether they’re 100% commission or some other combination depends on the circumstances. These types of positions are most successful when their compensation is tied to their performance. It’s a win-win for the company and the employee.
5. Payroll budgeting is a necessity
There are many aspects to budgeting for a company, and a payroll budget is one component that should be done as well. Payroll budgets need to include direct wage and salary payments, commissions, bonuses, incentives, payroll taxes and insurance, along with any other directly related costs the business incurs in the payroll function. There will only be so much money that can be allocated to the complete compensation package and knowing that upfront will help you in setting your commission, incentive, bonus and raise strategies upfront.
Compensating employees is a delicate balance between meeting the employees’ expectations and the company’s financial goals. Assessing these five areas when putting together or evaluating your compensation programme will help you ensure you’re proactively moving your company in the right direction. Our employees are our most valuable assets and we should make sure we’re treating them that way.
Wilting Away – How To Boost Your Financial Management Team After The Big Financial Year-End
Is your finance team wilting after a gruelling financial year end? Here are some great ideas to help them bounce back.
Your finance team has put in long, back-breaking hours lately to ensure your business could close off the financial year. Aside from saying ‘thanks a lot’ here are some great ideas to breathe some fresh life into them, reconnect them with each other and with the business, and let them have some much-needed fun in the process.
Before we start, let’s clear up some misconceptions around team building events. When you think of team building, you probably think of awkwardly passing an orange squeezed between your chin and your neck at school, or awkwardly falling backwards into the arms of an embarrassed colleague at work.
This is why most people shy away at the thought of doing team building, because they fear embarrassment, or even worse, wasting their time. The source of the problem is that most HR departments and management view team building days as an activity-based agenda that will have a productivity-based ROI. Almost like a once-off fix – play games equals 12% increased productivity. However, they are mistaken.
According to the University of California: Team building is an ongoing process that helps a work group evolve into a cohesive unit. The team members not only share expectations for accomplishing group tasks, but trust and support one another, and respect one another’s individual differences.
So, we understand now that team building is:
- A regularly recurring thing, not just a once-off activity
- A combination of work, leisure, collaboration, problem solving and projects
- Can be anything from a small picnic at work, to a weekend retreat.
When done well, team building is shown to make employees more co-operative, collaborative and, generally, more engaged in their work. According to Gallup’s findings on employee engagement in America, only 34.1% were engaged – which means a shockingly high percentage (nearly 70%) just couldn’t care less about their work.
While team building has its flaws, it is still one of the best ways to drive employee engagement. With that in mind, here are some great ideas to improve your finance team’s engagement for the remainder of 2019.
1. Accounting game show
Use a popular game show format to share and quizz information in an engaging format.
1. Split the department into teams.
2. Use questions that the team can use in their everyday work. You can even throw in interesting facts about employees (with their permission of course), particularly positive stories about their finance careers or accomplishments.
2. Idea-sharing lunches
Dial it down a notch and take the team out to a restaurant of their choice, or – if you are choosing – to a place that serves good food, for a casual staff lunch.
Use this time as a general catch-up session as well as a platform for creative conversation. You can also use this time to have a SME (subject matter expert) share some insights into relevant topics that will empower the team, but this should not be the sole purpose of what is meant to be a relaxing lunch.
3. Shape it up
In this fun exercise team members need to arrange themselves to form shapes as they are called out.
- Divide the team into groups of 10 members.
- A game coordinator shouts out a shape (for example, a diamond) and the teams must form the shape quickly within a limited time frame (eg 5 seconds).
Begin with simple shapes get everyone comfortable, then start calling for more complex shapes like “an oval on top of a rectangle” or “square inside a triangle.” Communication and cooperation are vital here to successfully form the shapes.
Ofcourse, the team that forms the shape first wins. The larger the group the more challenging the game is.
4. Guess the word
This tried and trusted game is where team members must guess a word that is pinned on a hat that they are wearing and cannot see, while the other members of the team try to explain it to them without saying the word.
- Bring a hat or cap, slips of paper, tape, marker.
- Write several mystery words on slips of paper, each word big enough to be read from two meters away.
- Split the teams into two.
- Start with the first team. One member wears the cap with the word taped onto the front.
- The one wearing the cap must guess the word by asking a series of questions within a minute.
The ones who know the word can only answer yes, no or maybe.The one wearing the cap must be able to deduce the word within the allotted time.
The team that gets to answer a mystery word fastest wins. Mystery words can be related to the company’s business, staff or completely random items.
5. Game of possibilities
Laughter, bonding and problem solving are all part of the team building experience. This game is ideal for both.
But first, it’s the rules of this game that make it fun! They are:
- The person may not speak while making his or her demonstration
- The person must stand while demonstrating
- The demonstration must be original
Here’s how it works:
- Give a paperclip to groups of 5 to 10 participants.
- A person from each group takes turns to demonstrate a novel way to use the paperclip that has nothing to do with its intended purpose.
As you can see, this game can be used with other office items as well, instead of a paperclip (e.g., pen, water bottle, telephone, etc). Hopefully, your team will think up new and unusual uses for everyday objects and translate this experience to creating new ways to solve problems, use resources or motivate a team.
6. Campfire stories
This classic activity inspires storytelling and improves team bonding. Storytelling is at the heart of the community experience, and can get a large group to loosen up and share their experiences, and know each other a little better. Here’s how:
- Gather teams of 6 – 20 participants into a circle.
- Use a set of trigger words to kickstart a storytelling session, words like “first day”, “work travel”, “partnership”, “side project”, etc. Add these to sticky notes.
- Divide a whiteboard into two sections and stick all the sticky notes from above on one side of the whiteboard.
- Invite a participant to choose one trigger word from the sticky notes and use it to share an experience. They then stick their sticky note on the other side of the whiteboard.
- As the participant is sharing his/her story, ask the others to note words that remind them of similar work-related stories. Add these words to sticky notes and paste them on the whiteboard.
- Repeat this process until you have a “wall of words” with interconnected stories.
Always have a clear ‘why’
Whether you take your team away for a retreat, or simply do an on-site breakaway, be sure to have a clear understanding as to why you are doing this, and what goals you want to achieve through these activities. Otherwise you might fall into the ‘doing activities simply for the sake of activities’ trap. Remember, it’s always about making your team feel more connected to each other, and to the business.
You could consider involving some team members in the planning process, and over time, you’ll find which strategies are the best fit with your team. Schedule team-building exercises on a regular basis to maintain a more content and productive team. These activities will become a part of your office culture, and can help to promote retention.
How To Strategically Minimise Accounting Costs As A Start-up
“Financial Compliance can be a costly exercise when approached carelessly”.
As a practicing accountant one of the most common phrases uttered by clients is that “I will get to my accountant when I can afford one”. The reality is your accountant costs can be minimised when you applying some simple tricks to avoid being charged an arm and a leg.
I have compiled a few areas where you can streamline your business to minimise your businesses accounting fees. Please bear in mind these are guidelines and a consultation with your accountant will still serve you best.
1. The ‘Shoe Box’ strategy is dead and gone
The shoe box is a box filled with all your company and supplier invoices jumbled into one box. As an accountant when faced with the shoe box we smile because now we get to charge our hourly rate doing admin that could have been done by either you the business owner or one of your employees. Accountants make a large portion of their turnover from doing admin that could have been avoided if business owners had more foresight.
2. Separate personal from business transactions
Nothing is more time consuming for an accountant then having to comb through a business income and expenses only to realise through consultation with the client that personal items were accounted for as business income or expenditure. As a rule of thumb remove all personal income and expenditure from your business in totality.
3. Record keeping! Record keeping! Record keeping!
Simple record keeping can be your best friend in reducing costs. Here are a few guidelines to live by:
- As pointed out in Number 3 have a separate bank account for business and another for personal
- Date and Number your invoices, sounds simple but very few start-ups put emphasis on this administrative function.
- Provide complete statements for the period requested by your accountant for your credit card and bank statements.
- Keep supplier statements as this will aid your accountant especially during the financial year end of your business.
- When submitting your debit/ card receipts and there is no accompanying invoice list on those receipts what was purchased.
4. Ask your accountant for a Retainer Agreement
A retainer agreement is a great way to ensure your monthly accounting costs do not fluctuate. With a traditional agreement your fees may spike when it is your company’s financial year end or when your taxes are due. With a retainer agreement your able to budget for a set figure payable monthly. This also translates to an attractive for your accountant who can now rely on a guaranteed cash flow injection monthly.
The bases for an accountants pricing will involve what their hourly rate is , the longer they spend on doing record keeping and deciphering what activities took place in your business the more you will be charged. Remember regardless of how close you are with your accountant or how simple you feel your business structure is your accountant will need as much information as possible to represent your business activities accurately on your financial records.
Technology In Accounting – Race For Relevance
Change is not just coming, it’s already here and the rate of change is growing exponentially.
Change is not just coming, it’s already here and the rate of change is growing exponentially. The recent research from ACCA around the race for relevance talks of six key technologies (Analytics, Artificial intelligence, Cloud computing, Cyber, Social and Robotic process automation), likely to present opportunities that challenge our traditional ways of working to all businesses, including SMEs – as well as their finance function.
The report explains that whatever the size of the business, technology change is having an impact.
It is imperative for SMEs to understand these technologies and start to, at least, plan. Failure to capture opportunities runs the risk of businesses being marginalised.
Technological advances provide finance functions with significant opportunities to play a valued role in maximising the organisation’s strategic ambitions and in how it is evolving. Not of all the key technologies may be relevant to all immediately, however, understanding which of them apply and can deliver value, is important.
In this corporate race for future relevance, recognising the opportunity is essential. Organisations are in a race to remain relevant to their customers and communities. Adapting and embracing technological changes in business is critical. Companies who leverage new technology well are going to win big in business. If CFO’s are to remain in decision making roles the need to understand the importance of data analytics is crucial. Businesses need forward thinking CFO’s who:
- understand how to use the information available to them to provide strategic insight in real time;
- capture, measure, report and predict future performance in a much more agile manner to support better and quicker decision making;
- ensure they have in place effective and efficient processes that satisfy the overall business requirements of finance.
This is not to say that there is one approach. No single model fits all finance teams but there is an overall direction of travel. However, its not enough to become more efficient, but finance function must assist businesses to make decisions based on the right data. To achieve the goal of transforming the finance function, the CFO needs an understanding of the emerging technologies and the opportunities available. The CFO must ensure that there is sufficient governance of the data sources, be these internal or externally generated, to provide insights based upon ‘one version of the truth’.
In realising the finance technology strategy, it should be remembered that this is often a partnership between the Information Technology (IT) team and the finance function. As business partnering has affected the relationship between finance and its customers so the same process can be replicated in the relationship between finance and IT.
By 2020, organisations are expected to gain $1.2 trillion in business from their slower-to-adapt peers. How do you, as the accounting professional, influence this today? How do you work with IT to thrive in this age of change?
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