BEDC & KPMG’s Effective HR Strategies Seminar
KPMG and the Bermuda Economic Development Corporation [BEDC] hosted a two hour breakfast seminar entitled “Effective HR Strategies in and Ever Changing Environment” on Wednesday [July 10] to help business owners answer questions about effectively managing their human resources. The seminar provided 50 attendees with practical tips to help manage the HR process by providing creative techniques and strategies to help them remain competitive.
Nick Kempe, Deane Trott, Claudia Phillipsz-Jones, Mickey Swindale, Stephen Woodward, David Ash
KPMG Managing Director Steve Woodward opened the seminar by welcoming the attendees and the panel of speakers. He advised that as part of KPMG’s support of Medium Sized Businesses, they have been hosting a series of seminars with BEDC to address the issues that were identified through the Medium Sized Business Survey. He reminded attendees that two seminars had already been held: The Business of Family Business and Bank Financing in Today’s Environment, noting that the seminar today would address another of the areas of focus that came out of the survey – the need to help business owners recruit and retain staff.
Following Mr. Woodward’s introduction, Micky Swindale, KPMG Advisory Regional Head of People and Change delivered a presentation that focused on three topics: Employee Engagement, Talent Management and HR Effectiveness. Mrs. Swindale defined engaged employees as those that are fully involved and enthusiastic about their work.
She noted that engagement links to staff retention and employee performance. In a well functioning organization, Mrs. Swindale suggested that at least 75% of employees should be engaged; however, survey results indicate that only 30% are actually engaged. She quoted the phrase “people join organizations and leave managers” to illustrate the importance of ensuring that the right management team is in place to represent your organization.
Mrs. Swindale referenced the Positive Intent Theory – in which management assume that employees want to do well. By making this assumption an environment is created that helps to ensure that the individuals that demonstrate the highest level of aptitude and desire to perform, your talent, is being managed well. Mrs. Swindale suggested creating a Talent Management Plan to help effectively manager talent which includes recruitment, development and retention.
David Ash, KPMG Advisory Manager reviewed how best to identify a fraudster and protect your organization. Mr. Ash referenced the KPMG survey conducted that included 348 fraud investigations in 39 different countries. Results from the survey indicate that the typical fraudster is: male, between 36-35 years old, commits fraud against his own employer, works in a finance related role, holds a senior management position, is employed by the company for more than 10 years and works in collusion with an external partner.
Mr. Ash indicated that often times what motivates someone to commit fraud is part of The Fraud Triangle: Pressure – this is the motivator, a need to resolve some personal issue that is usually related to money or status; Opportunity – the fraudster will only attempt to commit fraud if they are confident that they won’t get caught; and Rationalization – most fraudsters consider themselves honest and will justify why they had to commit fraud [i.e. my boss never awards my service so I am owed this]. Mr. Ash suggested that business owners may reduce the opportunity to commit fraud by having a clear and open whistle blowing policy which can reduce the perception that the fraudster can get away with the crime and thus make it less appealing to commit fraud.
BEDC Chairman and VP of Bermuda Forwarders, Nick Kempe, moderated a panel discussion which included: Mrs. Swindale; Claudia Phillipsz-Jones, Practice Leader, Consulting Services with Expertise Ltd. and Deane Trott, Operations Manager in the Office of the Tax Commissioner. The panel discussed a variety of topics including: employee retention, creating cost savings, and payroll tax relief for new Bermudian hires.
Mrs. Swindale answered the first question related to improving productivity by suggesting that business owners implement a planning process, discuss this with the employee at the start of their employment and set goals for the year which are measureable and reference the goals of the organization.
Mrs. Phillipsz-Jones provided the answer to a question related to how to compensate good employees when you can’t afford to pay them more. She stated that money is not the number one motivator for most employees, but it is important to find out what the motivator is. Research indicates that employees appreciate flexible work arrangements and this can serve as a motivator, but the key is to understand and re-evaluate the value proposition between the employee and employer.
Mr. Kempe asked Mr. Trott to clarify what if any tax impacts exist for employers as it relates to giving incentive or additional benefits. Mr. Trott advised that any benefits or incentive that have a value and are paid or given, to employees is subject to payroll tax. In response to any incentive that could be offered without being taxed, Mr. Trott gave the example of giving an employee shares in a publicly traded company at an exercise price above the market price, consequently having no value or benefit at the time they are given therefore no value is subject to tax.
Mr. Kempe then led a question and answer session on the hiring process, asking Mrs. Phillipsz-Jones how employers can identify the right person amongst so many qualified applicants. Mrs. Phillipsz-Jones confirmed that we are currently in a candidate rich market which means there are more people qualified to perform the job. She encouraged employers to utilize the interview recruitment process to determine if the candidate is the right person for the job, including advertising for the position. She encouraged considering how you advertise for the job which may attract a different kind of candidate.
In connection with this question an attendee asked what the panel’s opinion was of “try before you buy” with regard to identifying the best candidate. Mrs. Phillipsz-Jones cautioned that in some instances a candidate may not be in a position to work for an employer prior to being offered the position, as they may still be employed, so she suggested that the probation period be utilized to test whether or not the employee is a good fit for the organization.
Following the discussion on hiring, Mr. Kempe asked Mr. Trott if there are any tax incentives that may be available for local companies with regard to incentivizing hiring. Mr. Trott advised of the Payroll Tax Amendment Act 2013 which provides employers who hire Bermudians between the periods 1 April 2013 – 31 March 2015 inclusive eligibility to pay a reduced tax of 5.25% for those Bermudian employees for the first two years of their employment. He advised that this rate would be available from the date of hire.
Mr. Trott also advised of the tax relief for restaurants paying at 4.75% from April 1 2010 and hotel concession which is available Nov-Feb annually. Other concessions include Bermudian training on an approved scheme which will allow the remuneration of a Bermudian to be free of tax while in such training scheme, $600 Special Relief per employee, the retail concession – retail paying tax at 5.25% and lastly he referenced the EEZ scheme which allows an employer setting up in an established Economic Empowerment Zone to pay a reduced rate of 5.25% for nine tax periods. Companies must be in good standings.
The remaining time was spent addressing several questions regarding austerity measures including the reduction of hours, redundancies, and other options. With regard to reducing staff, Mrs. Swindale suggested that employers be honest and create performance criteria. She suggested assessing the employees based on the skills they have compared to what the organization needs and also assess how the employees perform. Mrs. Phillipsz-Jones of Expertise added that employers should not tolerate poor performance and use performance management as a tool to identify and remove employees that are not doing well.
She also suggested having the conversation with employees with regard to the need to save money, stating that many employees would prefer to take a cut in pay instead of losing their job, so the key is to be open and have the conversation early. If the need arises to lay off an employee, Mrs. Swindale recommended employers do what they can to support those who are leaving by helping prepare them to seek employment elsewhere with resume assistance, or providing outplacement assistance.
Mr. Woodward closed the seminar thanking attendees and panelists for their participation. Following the seminar, attendees were invited to continue their discussions and network with the panelists in a more informal setting.
When asked for their opinion of the seminar, one attendee remarked that the information covered in the seminar was timely. Another stated that although it was suggested that companies use performance management to help guide decision making, he is aware that many companies do not, so he was glad to see that the message was being reinforced.
A medium sized business is defined as meeting at least three of the criteria:
- 1]Annual revenue of between $1.0 and $5.0 million;
- 2] Maximum net assets of $7.5 million;
- 3] Annual payroll between $0.5 and $3.0 million;
- 4] Between 10 and 50 employees;
- 5] Bermudian owned and operated; and
- 6] Not dominant in their market sector.
