In today’s extremely competitive business environment, it is essential for any business to critically analyse where it stands in relation to its strategic goals. By failing to do so, they may be gradually deviating from the desired goals over a period of time, ultimately finding themselves in a situation where they are not likely to achieve the desired goals at all. Among such capability gaps of an organization, shortage of skilled resources is a major area for consideration. This happens because creating a world class team of individuals and high performing work teams takes time, training costs and patience and commitment from the company’s senior management. This is where in many cases, they resort to the help and guidance of an external recruitment agency to bridge this particular capability gap.

But just how effectively are these agencies assisting these companies and its business leaders to bridge the capability gaps concerned? According to a recent survey in 2015 named “Talent Acquisition 360” conducted by CIELO Inc. USA involving 700 Global organizations and their business leaders, there seem to be significant gaps in delivering certain key expectations. The results are useful in highlighting where recruitment consultants seem to fall short of meeting the expectations of business leaders today. From 12 key result areas examined, the below 04 significant gap areas existed.

1) Provide Strategic Thinking to shape business decisions (current expectation gap level is 35%) – It is a well-known fact that recruitment consultants need to have insights about what capabilities new talent can potentially bring in to the organization. Effectively communicating these insights to business leaders is a very useful tool for them to formulate appropriate business strategies. The fact that there is a 35% gap between management expectation and what is delivered is a key shortcoming that needs to be bridged.

2) Delivering Quality hires with consistency (current expectation gap level is 33%) - While it is of paramount importance for a recruitment agency to deliver superior quality talent, the consistence with which is does so, differentiates the great recruiters from the others. The reason for such consistency is because world-class recruitment agencies maintain a strong pipeline of high quality candidates at any given time to fulfil the needs of their clients. As such they never have to forward to a client, a candidate which does not entirely meet their high standards. Excellence is deeply embedded in the recruitment agencies culture and is a non- negotiable attribute.

3) Having the agility to meet changing demands (current expectation gap level is 32%) – World class recruitment agencies have in their possession a meticulously built and robust data base of talents with a range of potential candidates across diverse skills, job levels and geographical segments. When required to source new talent under pressure, they can draw from this database with relative ease without compromising quality or cultural fit for the client organization.

4) Simplifying the Recruitment Process (current expectation gap level is 31%) – Great recruitment agencies simplify the process of recruitment and the steps involved as well as the speed of acquiring the right talent. This applies both to the candidates as well as the client organizations which require them. Also they never forget to make the recruitment process a pleasurable one for all parties concerned.

According to business and industry research website www.ibisworld.com.au, there are close to 7,000 recruitment agencies in Australia today. Therefore the key question that arises for business leaders would be how to select and engage a great recruitment agency which has understood and addressed the above areas and who can successfully bridge the gaps while being cost effective at the same time. What is ideally suited to them would be a recruitment agency which is ready to provide them a “solution” rather than just offer a product or a service at a premium price with a popular brand name. The following brief questions may also assist in this selection process:

The job related expertise & diverse nature of the candidates which they provide.What pricing mechanisms do they have on offer and the level of transparency do they offer you in quoting a price for you and how efficiently this process is carried out.The level of flexibility they offer in the recruitment process itself, and the professionalism of the staff in key positions as well as the senior managers involved.To which extent of on-going support they are willing to provide once you have engaged them as recruitment consultants?. Is it necessarily a case of “hire and forget” or are they willing to regularly communicate with you as the client as well as interact with the new employee to guide them through the initial phase of employment where necessary?

Global organizations such as Google, Apple and Microsoft who rely very much on their human capital to deliver their strategic goals is a good example of just how important it is to have the right pool of talent on your team. Engaging the right recruitment consultants is a big step in the right direction of creating such a talent pool for your organization.

Talk to one of our experienced business consultants today at Execom Personnel and see how we can be a key strategic partner for your business for the future.

Disclaimer

Execom Personnel as the Authors and facilitators of the contents published on this information blog are not responsible for the results of any actions on the basis of information contained there, nor for any errors or omissions. Furthermore, Execom Personnel expressly disclaims all and any liability to any person or entity in respect of anything done or omitted to be done by such person or entity in reliance in whole or part of the contents of this publication. Further as laws change frequently, all readers, users and viewers are advised to undertake their own research or to seek expert professional advice to keep abreast of any developments in the topics discussed, especially the ones covering the areas of law and taxation.

This is a key decision that most organizations today are faced with, whether they are big or small in size. Whatever your ultimate decision is, the benefits should always outweigh the costs. And by benefits it is not only adequate to consider the financial benefits in dollar terms, but there are many qualitative (non-financial) factors to be considered as well. If the decision is to have your payroll function internally within your organization, then the following characteristics may be relevant and important for the management of the company to consider carefully.

Essential characteristics of a good payroll admin system should be:

It should be working harmoniously with the Finance function of the company (even if they are not directly reporting to Finance but to HR instead) and interacting or exchanging information frequently where necessary.Be subject to timely reviews by senior management, internal payroll reviews performed quarterly / at least half yearly. Have technically competent and also highly trained staff. Extensive experience is also a plus point here.These staff members should be sent on Payroll related training sessions regularly to keep up with changes in legislation from time to time.The Payroll function should be sufficiently large in size to match with increasing organizational volumes. Simply putting more pressure on limited staff is not an acceptable practice as costly mistakes may be made which may go undetected for months before they come to light and fixing them can be very costly.Should be process driven as well as all activities clearly documented to enable key staff members taking leave of absence, or perhaps even cater to situations of key staff members leaving the organization on short notice. Investment in new technology where necessary and to make sure that such IT systems are valid and up to date. Data protection and daily backup must be available at all times as a risk management procedure.

The decision to insource or outsource the payroll function – major factors to consider

According to a Payroll benchmarking survey conducted by the Australian Payroll Association in 2014, the majority of Australian companies run an in-house payroll function. This is different when compared to countries like USA or European countries where the trend is more towards outsourcing. The Australian Payroll Association tends to believe that this could be because of the complexity of payroll related legislation in Australia. According to the findings of the survey, 25.4% Australian companies outsource to external payroll experts while 74.6% still prefer to do it in house. Also, having an outsourced payroll function is more prevalent in small and mediums sized companies (SMI) with less than 200 staff or large entities with over 10,000 staff. The survey also indicates that the average salary paid to an in-house payroll services professional has gone up to $78,856 while for a more senior level payroll manager it is high as $127,166.

However, if companies carefully consider and examine the strong industry which is has emerged for companies which provide expert payroll services, they would also come across many possible scenarios where the same or perhaps even superior level of services can be obtained at a fraction of the costs of performing it in house. The below reasons maybe areas which stands out as positive ones in the comparison between in-house payroll vs. the outsourced payroll option.

1. Cost Saving – outsourcing to an expert payroll services agency maybe substantially cheaper than hiring an internal team, training them, purchasing payroll software etc. As this is their main area of business it will take them considerably less time and cost to process your payroll on a regular basis.

2. Efficiencies through industry expertise – The payroll agency may have extensive expertise in conducting and executing payroll activities. This means your company will not experience any down time or be affected by staff absences either. You will essentially be paying only for tasks performed directly related to your payroll activities.

3. Reliability and peace of mind – The more experienced the external payroll services provider is, you can expect them to do a thoroughly professional job all the time. Even with regards to periodic queries from the ATO or other authorities, they might be able to represent your company and quickly resolve the matter. What this means is as senior management of a business, you can concentrate more on the core activities of your business while you can also rest assured that your employees are getting paid correctly and on time – every time.

Hence if you are considering an external agency to outsource your payroll at some stage, it is important to consider how many years they have been in the industry as this is a key differentiator with other payroll service providers.

Save time, money and human resources by outsourcing financial services to the experts. For more details on how your organization can benefit from outsourced payroll services, contact us at Execom Personnel today and find out how our team can assist you in the process from start to finish.

Disclaimer

Execom Personnel as the Authors and facilitators of the contents published on this information blog are not responsible for the results of any actions on the basis of information contained there, nor for any errors or omissions. Furthermore, Execom Personnel expressly disclaims all and any liability to any person or entity in respect of anything done or omitted to be done by such person or entity in reliance in whole or part of the contents of this publication. Further as laws change frequently, all readers, users and viewers are advised to undertake their own research or to seek expert professional advice to keep abreast of any developments in the topics discussed, especially the ones covering the areas of law and taxation.

Innovation is a much talked about word today especially in the business context. Although it is a vast area by itself to be discussed, stated in simple terms Innovation is the act of introducing something new. This could be a new product, a new service, process etc. which could lead to increased productivity and efficiency of the organization as well as adding value to its portfolio of customers.

As much as the concept of innovation is important for an organization, what seems most important is how the organization encourages and involves its employees towards the process of innovation. There are quite a few examples of globally recognized companies successfully reaping the benefits of such an ‘innovation supportive’ culture. At the same time there are companies which did not embrace such an open attitude towards innovation, and paid the ultimate price because of it.

According to a recent article which appeared in the Australian Financial Review magazine, In Kodak Company of USA, a young engineer named Steve Sasson who joined as a newcomer, had developed a prototype digital camera way back in 1975 and presented it to the technical, marketing and business development departments of Kodak.

At this particular time in 1975, Kodak had a virtual monopoly of the US photography market and made huge sums of money in every step of the photography process. It was a very successful business model suitable for those times. But the senior management at Kodak simply refused to look forward to the future, even when they had the innovative technology with them. Their response was that “Print had been with us for over 100 years, no one was complaining about prints, and they were very inexpensive, and so why would anyone want to look at their picture on a television set?"

By the time Kodak entered into the digital cameras market almost three decades later in 2003, there was already a lot of competition. They just couldn’t generate enough money from it and the losses kept piling on. Yet for his contribution towards the field of technology, Steve Sasson was awarded the USA National Medal of Technology and Innovation Award in 2009. Ironically, a few years later in 2012, his former company Kodak filed for Bankruptcy.

Looking at the more positive experiences of innovation supportive cultures, for example Wal-Mart is such a company that provides support and encouragement to its employees to come up with innovative ideas. Global conglomerate 3M allows its employees 15% of their working hours to do what they like in order to encourage innovative and creative thinking. At Google this is supposedly as high as 20%.

Also innovation can be in the form of ‘breakthrough innovation’ or ‘incremental innovation’ as well. In making this choice, incremental innovation is less costly in comparison and most organizations can implement it quite easily. One could also perceive it simply as continuous improvement of products or processes.

It is also a commonly know

Therefore simply by leveraging existing staff skills, any organization can identify staff members who possess the necessary capabilities in research and assign them a dedicated task of performing such market and industry research activities from time to time and to update the management with the findings on a periodical basis. The key then, is to have such versatile talent as a part of your work teams as well as managers and supervisors who identify, encourage & reward such innovative minds at work. That is what ultimately creates ‘a culture that supports innovation’

The revolutionary Steve Jobs who was the founder of Apple Corporation once quoted saying that “Innovation distinguishes between a leader and a follower”. So if your organization also wants to have innovation as a key strategic goal for the future, then you need to make sure you have the right team of professionals working for you. However, this process of attracting and retaining world class professionals may be harder thank you think. Which is why, at times you may need to engage a specialist firm of recruiters to give you the right help at the right time.

In times such as these, the "Executive Recruitment Solutions" at Execom Personnel may be exactly what you need. Call us today for a free consultation and see how we can assist you to create your ideal team of professionals spearheading your company's Innovation initiatives.

We continue our discussion on payroll administration by further examining the provisions of three other extremely important areas .These are namely Superannuation, the Fair work Act and Payroll tax. All of these areas have considerable impact for a business from an operational and legal perspective and therefore has to be administered with due care and diligence.

(1) The Superannuation Guarantee – All Australian employers are supposed to contribute a minimum amount towards superannuation for their workers. At the present point of time the minimum percentage of super guarantee contributions that need to be made by employers is 9.5%. Ordinary Time Earnings (OTE) must be used to calculate the minimum super guarantee contributions required for your eligible employees, thereby ensuring that all eligible employees are treated the same way for super guarantee purposes. Again the below ATO guidelines and tools will be a useful reference to determine what constitutes OTE.

https://www.ato.gov.au/printfriendly.aspx?url=/Business/Super-for-employers/In-detail/Calculating-and-paying/Using-ordinary-time-earnings-to-calculate-the-super-guarantee/

One common option which many employees are looking to have with their employers with regards to Super is to have the option of Salary Sacrifice. This is an arrangement under which employees agree to sacrifice (forego) part of their total earnings in return for the employer providing benefits of a similar value to them. Then the expectation is that employees are taxed only on the reduced wages. Superannuation is one such type of benefit provided under a salary sacrifice agreement. Other benefits might include motor vehicles, expenses fringe benefits etc. The salary sacrificed component of the employee’s salary package is not assessable income for the employee in the eyes of the ATO. Salary Sacrificed super contributions are classified as employer super contributions. As such there are limits up to which an employer can make employer contributions to a super fund before the super fund taxes the excess at the employee’s highest marginal tax rate.

Finally the ATO prescribes that all employers must pay super guarantee contributions at least every quarter. Due dates for super guarantee contributions are as below as prescribed by the ATO:

1 July - 30 September - Due date of payment is before 28 October

1 October - 31 December - Due date of payment is before 28 January

1 January - 31 March - Due date of payment is before 28 April

1 April - 30 June - Due date of payment is before 28 July

of the NES are :

Maximum weekly hoursFlexible working arrangement requestsParental leaveAnnual leavePersonal, carers and compassionate leaveCommunity Service leave (such as jury duty)Long service leavePublic holidaysNotice of termination and redundanciesFair work information statements

For example, as per the NES An employee's minimum pay rate can come from an award, enterprise agreement or other registered agreement or the national minimum wage. Employees have to be paid the right pay rate for all hours they work, including time spent on training, meetings etc. The term “reasonable” is often seen to be used throughout the NES. For example, as far as maximum weekly working hours are concerned, the NES mentions that an employee cannot be required or requested to work more than 38 hours per week plus “reasonable” additional hours in a week. In determining what is “reasonable” the following factors may be taken into account:

Any risk to employee’s health and stately from working such additional hoursEmployee’s personal circumstances including family responsibilitiesThe needs of the workplace in which the employee is employedAny notice given by the employer to work such additional hoursWhether the employee is entitled to receive overtime payments, penalty rates of pay for such additional hours

All in all, this term “reasonable” seems to indicate the application of fairness for both parties i.e. the employer and the employee in any given situation.

More information on these National Employment Standards are included in the below link:

https://www.fairwork.gov.au/

It is of critical importance that any HR or Payroll administrator has referred to these sections in correctly applying the pay rates, working hours, leave and other conditions for employees. It is also important for Senior management to be familiar with such provisions as they are often involved in setting such standards and employment contracts for their employees from time to time.

(3) Payroll Tax - Payroll tax is a self-assessed, general purpose state and territory tax assessed on wages paid or payable by an employer to its employees, when the total wage bill of an employer (or group of employers) exceeds a threshold amount. The payroll tax rates and thresholds vary between states and territories. Currently (2016/14) for Western Australia the rate for payroll tax is 5.5% and the threshold is $850,000 annually or $70,833 monthly.

Payroll tax returns need to be lodged on a basis which is pre-agreed frequency (monthly, annually etc.) with the state authorities where the wage payment is usually made. For WA usually the due date for lodgement and payment of payroll tax is on or before the 7th of each month. Their on-line Payroll tax Portal which is called “Revenue on-line” is the easiest way to perform this task. A link to this website & portal is given below:

https://www.finance.wa.gov.au/cms/State_Revenue/Revenue_Online/Revenue_Online.aspx

Additionally, the next link below is for a common Payroll tax website which the State Revenue commissioners of each state have jointly launched and provides all users with easy access to various information, legislation, forms, contacts and details of educational seminars on payroll tax.

http://www.payrolltax.gov.au/

The Department of State Revenue WA conducts various seminar sessions to explain the finer points covering many areas of payroll tax law throughout the year. These topics cover the below main areas:

Payroll Tax OverviewPayroll Tax and WagesPayroll Tax and ContractorsRevenue On-line usage and administrationPayroll Tax and rules for Labour Hire Agencies

As these trainings are free of charge, it provides a great opportunity for any organization to send in their key payroll admin staff to participate in these sessions. This also enables them to establish a point of reference with the Department of State Revenue for clarifying any questions related to payroll tax. Referring to the monthly Payroll tax electronic newsletter is also a good way to keep up with the legislative changes taking place from time to time. All members receive this newsletter by e-mail once they register for payroll tax and its on-line services.

Disclaimer

Execom Personnel as the Authors and facilitators of the contents published on this information blog are not responsible for the results of any actions on the basis of information contained there, nor for any errors or omissions. Furthermore, Execom Personnel expressly disclaims all and any liability to any person or entity in respect of anything done or omitted to be done by such person or entity in reliance in whole or part of the contents of this publication. Further as laws change frequently, all readers, users and viewers are advised to undertake their own research or to seek expert professional advice to keep abreast of any developments in the topics discussed, especially the ones covering the areas of law and taxation.

A sound payroll administration system is an integral part of an organization aiming to instil industry best practices and maintain a reputation in the market as being “an employer of choice” that people love to work for.

One of the most important aspects for an employer or an organization to know about a sound payroll administration system is to know that it is a specialised area and the payroll function’s complexity cannot be over simplified or its contribution underestimated. This is because on certain occasions some companies only have a temporary team for payroll who may necessarily not possess the required level of skills and industry knowledge to operate in that capacity. The results can be very damaging to the bottom line of the company in terms of penalties and fines as well as having the potential to tarnish its reputation.

The aim of this article is to highlight at least in brief what are the most important areas to cater to in terms of proper compliance as an employer. Demonstration of the fact that your organization has acted with reasonable and due professional care in regards to implementing & operating these important areas on employee payroll may be highly beneficial in the long run and also result in the relevant government authorities being more lenient to the company even if a mistake was made inadvertently.

In general, the below main areas fall under the larger overall function of payroll administration:

The Pay As You Go (PAYG) With holding systemThe Superannuation GuaranteeThe National Industrial Relations System (Fair work)Payroll TaxEmployee Fringe Benefits and Fringe Benefits Tax (FBT)Workers CompensationEmployee Termination Payments (Redundancy, Long service leave etc.)Payment Summaries and Australian Taxation Office (ATO) reporting requirement

Each year, the Australian Taxation office conducts random audits on companies which they refer to as “Employer Obligations Audits”. These would typically cover the above areas and perhaps the area which is of paramount importance to the ATO in terms of compliance is The Superannuation Guarantee. There are clearly laid down guidelines for what constitutes wages and salary related payments which are liable for superannuation (referred to as Ordinary Time Earnings or OTE) as well as deadlines for payment to superannuation funds. The failure to comply carries strict penalties levied by the ATO. Company directors can be directly held liable in such cases and fined for non-compliance.

Of all the above areas listed, perhaps the one which is the most essential to comply with from a Taxation point of view is the Pay As You Go (or PAYG) withholding tax system. This system or process concerns with registering your employees with the ATO, whereby their earnings are taxed on a regular basis by your company and remitted to the tax authorities in due course.

Under the Pay As You Go (PAYG) With holding system of taxation, the business for which an employee works withholds tax from that employee’s salaries and wages and submits it directly to the ATO. To do this the ATO has provided different tax tables such as weekly, fortnightly, monthly basis as well as tax tables for individuals with government Higher Education Loan Program (HELP) debts.

All Salaries and Wages income are taxable in the financial year in which it is actually paid, regardless of it was actually earned. Perhaps the most important aspect under the PAYG with holding system is the distinction between an employer and an independent contractor.

While an employee is a part of your own business, a Contractor runs his own business and is providing a service to your business. As such if the relationship in question is that of a contractor, the employer does not need to withhold tax from the remuneration paid. It is very important to get this aspect correct at the beginning in engaging someone for work, because if you get it wrong there is always the risk of penalties and back payment of super in arrears etc. on behalf of the worker.

Hence to assist in this all important decision, the below tool is made available in the ATO website :

https://www.ato.gov.au/Calculators-and-tools/Employee-or-contractor/

The below YouTube video published by the Department of Finance Western Australia, may also be of use in identifying the key factors differentiating an employee for an independent contractor. This is mainly from a payroll tax point of view.

https://www.youtube.com/watch?v=0fm26yETTOA

What is also evident from some of these factors is that the distinction of employee Vs Independent contractor as per the ATO may slightly differ with that of the Department of State revenue which is in charge of payroll tax.

Therefore the relevant factors need to be applied on a case by case basis for the correct determination between an employee or an independent contractor for PAYG purposes or for Payroll tax purposes.

SOME OTHER USEFUL LINKS (PAYG Withholding system) :

Tax withheld from Individuals – ATO Calculators

https://www.ato.gov.au/Calculators-and-tools/Tax-withheld-calculator/Individual-Non-business-Calculator.aspx

Therefore as many organizations would have encountered already, it is quite a challenging aspect to set up and maintain a well-functioning internal payroll administration system which involves a substantial investment in costs and time. The on-going complexity of having to keep up with regular changes required by the ATO also adds to these challenges. That is why it is always best to seek the assistance of professional agencies having the necessary expertise in Payroll administration to give you correct guidance when it is required. Contact us at Execom Personnel today for a free chat with one of our expert consultants and find out how we can assist you to get things right from the very beginning.

Disclaimer

Execom Personnel as the Authors and facilitators of the contents published on this information blog are not responsible for the results of any actions on the basis of information contained there, nor for any errors or omissions. Furthermore, Execom Personnel expressly disclaims all and any liability to any person or entity in respect of anything done or omitted to be done by such person or entity in reliance in whole or part of the contents of this publication. Further as laws change frequently, all readers, users and viewers are advised to undertake their own research or to seek expert professional advice to keep abreast of any developments in the topics discussed, especially the ones covering the areas of law and taxation.