Sometimes the government passes legislation with big promises attached that never come to fruition. That’s been one of the main knocks against the $850 billion, 1588 page, Stimulus Bill of 2009. A lot of money, a lot of pages, a lot of press, but my wallet didn’t get that much fatter – how about yours?

Maybe you’re experiencing the same thing with the Hiring Incentives to Restore Employment (HIRE) Act, but YOU SHOULDN’T BE! I’ve talked with controllers from three staffing companies that use our staffing software, and they’ve all reported saving thousands of dollars through this legislation. For more on the specifics of the HIRE Act and how to take advantage of it in your staffing industry software check out:

• For the Staffing Industry, To HIRE Act or WOTC – that is the Question.
• Updating Your Staffing Software and Processes for the Federal Hiring Incentives to Restore Employment (HIRE) Act.

One Florida-based staffing firm reported thousands of dollars in savings since tracking and reporting on employees who qualify under the HIRE Act. Candidates, who have not worked more than 40 hours over the previous 60 days, sign an affidavit that the company developed to keep on record that these employees qualify under the HIRE Act. You can either develop your own affidavit or use the IRS’ Form W-11. Then they scan the signed affidavit and attach it to the candidate’s record in our staffing software. They also flag the candidate as qualifying for the HIRE Act within our fully integrated front and back office staffing software system, so that employer social security taxes aren’t calculated on these wages during Payroll.

I also got some hard numbers from two mid-Western staffing firms. One company is paying 69 people per week who qualify for the HIRE Act out of the 638 people they pay each week. During the first quarter they saved $11,000 on employer social security taxes. And this was just for two pay periods since the HIRE Act did not kick in until March 19th. At this rate, they will be saving $71,500/quarter ($11,000 * 6.5 pay periods) for the last three quarters of the year. With such substantial savings, they are pushing their staffing coordinators to be more proactive in getting qualifying candidates to sign the Form W-11. They have built in a strict “audit” process to make sure that candidates who sign the affidavit truly qualify for the HIRE Act. This results in some employees getting paid a few times before they flag them in our staffing industry software as qualifying for the HIRE Act, which means that they’re paying employer social security tax on wages that could be exempt. However, we did provide a process and report within our staffing software for them to recoup these savings, Use Your Staffing Software to Save Every Possible $ on the HIRE Act.

Another mid-Western staffing firm, which places many industrial workers, has been more proactive in getting qualifying candidates to sign the Form W-11, resulting in them not having to pay employer social security on 258 out of the 517 checks they cut each week. They also don’t have as strict of an audit process as the previous company mentioned, so they are able to flag employees as qualifying for the HIRE Act earlier on in the process – before the candidate receives their first or second check.

The key lesson from these three staffing companies is to make sure staffing coordinators are being proactive in determining if candidates have qualified for the HIRE Act. Here are three ways to do this: 

• Make sure they are armed with an affidavit or form W-11 for employees to sign.
• Make sure they know your company’s “audit” process, where to store the affidavit, and how to flag qualifying employees within your staffing software system.
• Make sure they know how much money your company can save by employing people who qualify for the HIRE Act.  Potentially consider incentifying this by offering staffing coordinators/recruiters a percentage of the total HIRE Act savings at the end of the year. 

Contact us if you have any HIRE Act related questions, or would like to see other ways we’re helping staffing companies make and save money through our fully integrated front and back office staffing software.

Everett Reiss
Director of Marketing and Communications
Applied Systems Technology
845-534-7100 X1102
ev@astusa.com
Connect with me on:
Linkedin: http://www.linkedin.com/in/everettreiss
Twitter: http://twitter.com/everettreiss

The Benefits of the HIRE Act for Staffing Firms

It’s been about 5 months that the Hiring Incentives to Restore Employment (HIRE Act) has been in place. The HIRE Act encourages employers to hire people who have been unemployed for 60 or more days by exempting their wages from the related employer social security taxes. For new hires to qualify for the HIRE Act and for their wages to be reported on the 941 as tax exempt from employer social security taxes, you need to get them to sign the form W-11. 

The Challenges that Staffing Firms Face

Our clients who use our staffing software are reporting the following challenges:

• Recruiters and staffing coordinators are not disciplined in asking applicants if they’ve been unemployed for the past 60 days (haven’t worked more than 40 total hours) and giving Form W-11s for qualifying applicants to sign.
• Applicants who are getting put on jobs are not returning their signed Form W-11s before receiving their first few paychecks.
• Staffing firms with a more stringent verification process to make sure all Form W-11 sign-ees truly qualify for the HIRE Act, do not start reaping the benefits from the legislation until the second or third paycheck.

These challenges, if not addressed, spell one thing for staffing firms: lost savings on money that is rightfully theirs through the HIRE Act due to uncollected or tardy Form W-11s.  

The Remedy to Take Full Advantage of the HIRE Act

For the previous quarter on the form 941, you can report the money that should have been saved on wages that should have been reported as exempt from employer social security taxes, but the key is that you need a report that can show you these wages. 

One Report You Should Run Out of Your Staffing Software

Here’s a report we were able to produce for our clients using the built in report writer that comes with our fully integrated front and back office staffing software system. The report prints the paycheck history of all employees who are flagged as qualifying for the HIRE Act and shows whether or not employer social security taxes (ER OASDI Cost, column I) were calculated for the employee’s paycheck. You can run the report for a range of check dates.  

In the example above, BERGER’s payroll record must not have been flagged in our staffing software when her 7/14/2010 check was cut. However, she turned in her Form W-11 in time for her 7/21/2010 check to be employer social security tax exempt. Nevertheless, with this report or a similar report a staffing firm can claim on the 3rd quarter’s 941 the $11.86 savings plus any other money they paid in exempt employer social security taxes. 

Other Staffing Industry HIRE Act Related Information

Here are some past informational staffing industry blog posts we’ve done on the HIRE Act: 

• For the Staffing Industry, To HIRE Act or WOTC – that is the Question
• Updating Your Staffing Software and Processes for the Federal Hiring Incentives to Restore Employment (HIRE) Act

Be sure to talk to your staffing software provider to see if they can provide you with a similar report that shows you the wages on which you’ve paid employer social security taxes that should have been exempt because of the HIRE Act.  Contact us if you have any HIRE Act related questions, or would like to see other ways we’re helping staffing companies make and save money through our fully integrated front and back office staffing software.  

Everett Reiss
Director of Marketing and Communications
Applied Systems Technology
845-534-7100 X1102
ev@astusa.com
Connect with me on:
Linkedin: http://www.linkedin.com/in/everettreiss
Twitter: http://twitter.com/everettreiss

“Are you creating value?”

The first person who needs to answer this question in every staffing organization is the owner operator.  Here are some related questions:

• Is your staffing firm producing value in the marketplace?
• More specifically, are you creating value for your clients?
• Can you define what that value is and is it measurable?

By its nature a business is an economic entity and is sustained only as long as it makes economic sense to itself and its client-base.

Create value to reverse falling margins and other negative staffing industry trends

Over the last 20 years, one of the most significant trends in the staffing industry has been the shift from being a small supplemental workforce agent to being embraced as a key component to businesses’ workforce strategy.  The fallout is the relegation of staffing to procurement due to the increased spend in dollars each year.  Many of our clients who use our staffing software deal with procurement people in contract renewal or bid processes.  They have discovered that the primary goal of the typical procurement professional is to diminish the true value of the staffing service so they can achieve the lowest per unit cost.

It’s nothing new but this complaint of many staffing operators is still fresh: my peers and competitors are not helping the situation by low balling contracts and further diminishing the perceived value of the staffing product.  Therefore, making the economics of doing business even more challenging.

A number of staffing firms have successfully pushed back against these staffing industry trends by moving up the value chain in their clients’ organizations.  Often these firms have focused on niche markets and developed a level of expertise elevating them above the procurement office into the operational areas of the firm where managers are interested in outcomes such as performance and production product quality.  As these staffing operators do the hard work to be embedded as a value-added solution into their clients’ business processes they achieve such profitable results as:

• Better margins
• Consulting fees
• Long term relationships
• Barriers to competition

Email me to share ways you’ve fought falling margins by adding value to your staffing services?

Contact us to discuss how we’ve helped staffing companies improve their margins and move up the value-chain in their clients’ organizations with our staffing software.

Dave Reiss
Founder and CEO
Applied Systems Technology
845-534-7100 X1102
dave@astusa.com
Connect with me on:

• Linkedin: http://www.linkedin.com/pub/dave-reiss/4/37b/218
• Twitter: http://twitter.com/dave_ast

The most simple and disarming answer that people receive regarding the stock market is buy low and sell high. If we were all prophets and could foretell the future, we would all be putting a lot of money into the market. Sometimes opportunities like these are staring us in the face even when we do not realize it. Many executives in the temporary staffing industry have gone through substantial cost cutting measures to survive the severe economic downturn. Going hand-in-hand with dropping revenue, slashing operating expenses has been one of the leading trends in the staffing industry. In essence, many of you have achieved a low cost of operating the business – you have achieved a low entry point to be doing business at this time in the life of the company.

Leveraging undervalued stock - a simple strategy for the temporary staffing industry.

What if you could leverage that cost against growing revenues similar to the way an investor leverages an undervalued stock against future growth?

Building on this strategy, you want to build an operating model that keeps your operating costs to a minimum during an uptick in the economy and your business. This might seem obvious, but in reality it takes good planning and execution to implement this type of strategy. Few staffing operators spend the necessary time on process improvement during down times for improved operating ratios when the temporary staffing industry trends up. Operators were willing to use older inefficient models because profit margins and economic “V-shaped” rebound hid the waste. This recovery is looking very different then past downturns – more “L-shaped” than “V-shaped”.

This will mean that staffing operators will have to find profits in places that they historically ignored. Margins will be as tight as ever… maybe even tighter forcing executives to recalibrate their business finding more and more profit dollars below the line.

What the Temporary Staffing Industry Can Learn from the Manufacturing Industry?

Manufacturing companies have used automation to increase the output per worker by 300 times over the past 30 years. The independent staffing operator needs to embrace similar types of process reengineering strategies to move from financially surviving to thriving. This means whole new levels of operational discipline and efficiency to achieve high levels of productivity – imagine the rewards if this became the staffing industry’s #1 trend!

The challenge for every operator will be to buy the cost of operations low and sell/leverage that low cost of operation at acceptable sales prices in the marketplace.

Contact us if you want help identifying areas of inefficiency that could be improved to achieve a scalable low cost of operation.

Dave Reiss
Founder and CEO
Applied Systems Technology
845-534-7100 X1102
dave@astusa.com
Connect with me on:

• Linkedin: http://www.linkedin.com/pub/dave-reiss/4/37b/218
  
• Twitter: http://twitter.com/dave_ast