The topics of fraud, hiring and employee compensation were discussed at a KPMG Advisory and Bermuda Economic Development Corporation (BEDC) breakfast seminar entitled “Effective HR Strategies in and Ever Changing Environment”.
The seminar this past Wednesday was to help business owners answer questions about effectively managing their human resources.
This informative seminar provided 50 attendees with practical tips to help manage the HR process by providing creative techniques and strategies to help them remain competitive, the BEDC said.
KPMG Managing Director Steve Woodward opened the seminar by welcoming the attendees and the panel of speakers.
David Ash, KPMG Advisory Manager reviewed how best to identify a fraudster and protect your organisation.
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 ten 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 measurable 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 among 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 utilise 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 utilised to test whether or not the employee is a good fit for the organisation. 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 incentivising 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 percent 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 percent from April 1 2010 and hotel concession which is available November-February 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 percent 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 percent 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 organisation 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 panellists for their participation. Following the seminar, attendees were invited to continue their discussions and network with the panellists 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.
l 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 ten and 50 employees; 5) Bermudian owned and operated; and 6) Not dominant in their market sector.
l Bermuda Economic Development Corporation (BEDC) is Bermuda’s premier source of free confidential business advice for entrepreneurs. The mission is to serve Bermuda’s local business community with the highest degree of professionalism by providing, authoritative business advice; counsel and loan guarantee support.
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