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FROM
THE PRESiDENT
As we look beyond
the holiday season, many of us will enter a new fiscal year. Each year we
dutifully prepare budgets and projections as we look with eager
anticipation to a 'new year of opportunities'. Something often forgotten as
we forecast income, profits and capital requirements is the human capital requirement.
In addition to
more basic items such as pay rates and benefits, it is a good time to think
about the depth of our organizations. If you construct a simple
organization chart, look at all the incumbents and then ask yourself about
each one, "what would happen if he/she left"? The answer begins
to suggest the depth of the organization. Don't be overwhelmed by the
answer; even if the result is disagreeable, it is better to know than to be
surprised. The next step involves asking a series of questions about each
incumbent. Is this person promotable to another job? Which one? When? Would
he/she be promotable with specific training or mentoring? The deeper we get
into each of these questions, the more our human resource plan will
develop.
Armed with this
information, is the projected growth and profit realistic? Has enough money
been budgeted for training? Will additional headcount be necessary? If so,
during which month of the year and at what cost? If your overheads aren't
in the area of 22% to 30% of gross pay, it may indicate the need for a
reality check! Remember budgets and forecasts need to be grounded in
reality to be useful.
Lastly, remember
that if we can promote from within we can hold on to the specific knowledge
that employees have accumulated in their tenure in our organizations.
Additionally, training and upward mobility are always among the top five
motivators, we find in every employee survey.
To learn more
about this planning exercise contact Jena Weigel, Client Services Manager
at 410.451.4202.
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Greetings!
Welcome
to the November edition of DiRECTIONS. This month we cover a range of
topics focused on planning for the upcoming year.
In his
feature article, Tim discusses the concept of budgeting with respect to
"human capital". Then, we study current compensation trends in
the corporate world and investigate some economic and social causes.
Next,
we introduce HRi team-member, LaKisha Hill, in our Meet HRi feature.
Later, we remind employees that the Flexible Spending Account plan-year
is quickly approaching its end. Remember, you can now submit claims for
various Over-the-Counter medications! Finally, we include reference
information concerning payroll changes in 2005.
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Deflating
Compensation
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If your 2005 salary increase budget
exceeds 3%, you are probably over-spending. According to an article by
Fay Hansen in the October 2004 edition of Workforce Management, the
average 2005 salary increase for large corporations will hover around
3.5%. This will mark the fourth consecutive year of average increases
below the 4% threshold that characterized the labor market before the
economic downturn.
Across all sectors, wages followed
profit downturns through the 2001 recession, but have failed to pursue
them into recovery. What factors are driving the current uncoupling?
According to Steven Gross, a Mercer Human Resource Consultant, one
reason is that "There's no war for talent". Add to that the
lingering concerns about labor costs, and many companies, find
themselves tying salary increases with top-line revenue growth as
opposed to bottom line profitability.
Continued...
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Meet HRi
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 It is our
pleasure to introduce LaKisha Hill, our new Administrative Assistant.
LaKisha has been with working with HRi as a temporary employee since
July. She has performed various functions including payroll and unemployment
claims processing. She recently joined HRi as a permanent member of our
staff. Please join us as we welcome her to our team!
LaKisha Hill
Interview...
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Flexible
Spending Account Plan-Year Approaching End!
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Remember that in order to take the
flexible spending benefit on a pre-tax basis it must follow certain IRS
guidelines. One of these guidelines, called the "Use it or Lose it
Rule", mandates that employees lose any money left in their
flexible spending accounts at the end of the plan year.
With this in mind, remember that
employees can now submit claims for Over-the-Counter medicine. For
examples of approved OTC medications, please click the link below.
If you have further questions
regarding your flexible spending account, contact HRi's Benefits
Department at 443.321.7700.
Over-the-Counter
Examples...
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Payroll
Changes for 2005
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The following outlines a few key
payroll changes for the year 2005:
- FICA (OASDI) wage basis up from $87,900
(2004) to $89,700 (2005).
- 401(k) deferral max up from $13,000 (2004) to
$14,000 (2005)
- 401(k) Over 50 Catch-Up deferral max up from
$3,000 (2004) to $4,000 (2005)
- Dependent Care deduction amount remains at
$5,000
- Medical Flexible Spending deduction amount up
from $2,500 (2004) to $3,000 (2005)
- Retirement Age will increase from 65 (2004)
to 66 (2005)
If you have further questions or
require more information, please contact the payroll department at
441.321.7702.
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