John A. Beyer, CLU
P.O. Box 4020
25200 Crenshaw Blvd., Ste. 202
Torrance, CA 90510-4020
Fax: 310-534-1159

License # 0294220

Volume 17, Number 6

Online Recruitment Strategies for Business Owners

Many growing businesses face the ongoing challenge of recruiting qualified employees for open positions. When it comes to identifying and screening potential workers, business owners typically rely on strategies ranging from tapping informal networks or outsourcing their company's hiring needs to a staffing agency. The Internet has also become an integral part of recruitment.

The Internet offers efficiency because it reaches a wide audience and is popular with many job seekers who sign up for daily e-mail job alerts from recruitment websites. Electronic job postings generally allow employers to post detailed job descriptions for long periods of time. In an online ad, you may also be permitted to include a link to your company website, where you can post more in-depth information about the position and your organization.

While posting jobs online is only one of several recruitment channels available, you may find that posting on job boards and emailing targeted candidates is faster, more efficient, and less expensive than placing print ads or paying a new hire fee to a staffing agency. Depending on the size and scope of your recruitment needs, you may want to explore recruiting software with tools for posting online ads, scheduling interviews, evaluating applicants, getting job referrals, and communicating with candidates.

Getting Started

Before you begin the recruitment process, regardless of your strategies, it's important to clearly identify the needs of your business and how new employees can best contribute to your company's success. For example, you may be inundated with paperwork and phone calls, and decide to hire an administrative assistant. You would make a detailed outline of all the responsibilities required of an assistant and how the tasks should be completed. You would also need to consider the skills and experience a qualified candidate should have to do the job well. Simply wanting help isn't enough—create a list of the performance expectations that you can use as a starting point in your search for the right candidate. You may find that recruiting software can help you analyze your needs and write an appropriate job description for an ad.

To start, make the most of your own website. If hiring new employees is a priority for the growth of your business, prominently feature employment information on your home page. At the very least, be sure that visitors can easily locate your career opportunities page. Be sure to use descriptive language that will attract potential applicants. Include information about whom to contact for further details and how to submit resumes. Recruiting software can also help you design and manage the recruitment function of your website.

Internet Job Boards

Determining which third-party Internet recruitment sites would be the most appropriate can be challenging. There are countless job posting sites, and more are added every day. While posting ads on well-known national job sites may allow you to reach large numbers of applicants, you may end up being overwhelmed with more resumes than you can read—let alone respond to—particularly if the job is entry level.

To reach a more targeted group of job seekers, look for employment sites based in your geographic area or sites dedicated to your type of business. If the position you are seeking to fill requires specialized skills, advertise on sites that are frequented by workers in that field. If you belong to any professional or industry associations, check out their websites to see if they have a section for job posting. You may also be able to post positions at little or no cost on the job boards of educational institutions or state and local employment agencies.

To get the best results from your electronic posting, take advantage of the keyword and location filters supplied by the website. These filters help ensure that your ad is seen by the type of job seekers you are targeting.

Be aware, however, that not all Internet employment sites offer the same level of service. Spend some time browsing potential sites, making sure that the posted information is up to date, the site is easy to navigate, and the search engine operates smoothly. To find out if the job seekers who use a particular site are likely to meet the required qualifications, you can purchase access to the site's resume database. The site may also be able to provide information about the number of visitors it receives and how much time they spend on the site. If you are still uncertain about whether to post an ad on a particular job board, ask yourself if you would use the site if you were job hunting.

Using Social Media

Besides using job boards, take advantage of the speed and convenience of posting job openings on social media sites, such as LinkedIn and Facebook. Qualified candidates who may not necessarily visit online job boards may be more inclined to check out social networking sites for job openings.

In addition, you may want to email your job description directly to your network of professional contacts, and ask them for referrals. This can be a very effective way to find good candidates. Some recruiting software packages also scour the web for potential candidates, and can automatically email people whose posted résumés match the job description.

Whatever recruitment strategies you choose, it will be well worth the time, effort, and resources to find and hire the right person. Taking on a new employee is an investment in your business—choose carefully and that investment will deliver impressive returns. As Internet job boards become a mainstay for job seekers, you may find that online recruitment strategies can be a faster, more efficient, and less expensive way to recruit top candidates.

ESOPs – Giving Employees a Stake in the Company

Profit-sharing plans have long been popular with employees because of the opportunity they provide to share the profitability of a growing firm. Many business owners look beyond shared profitability to shared ownership through employee stock ownership plans (ESOPs).

ESOPs are essentially "defined contribution" benefit plans. However, unlike most defined contribution plans, ESOPs invest primarily in the sponsoring company's stock. This can help motivate employees, since they have an ownership stake in the company and may directly benefit from an increase in value of the company's stock. On the other hand, the level of benefits paid to plan participants is not guaranteed, and employer contributions to the ESOP can vary.

How They Work

The amount of employer and (in rare cases) employee contributions, company profitability, and administrative expenses of the plan determine the level of benefits received by participants. Employer contributions are allocated to individual employee accounts according to a specified formula. These contributions are tax deductible to the employer within certain limits.

To qualify for deductions, an ESOP must be in writing, and the sponsoring employer must establish a trust for employer contributions. Furthermore, the plan must have fiduciaries who are responsible for setting up and maintaining separate employee accounts. When properly established and maintained, the trust incurs no current income tax liability, and plan participants are not taxed on ESOP income until distributions are received. Taxation is based upon increases in the value of the stock.

Although the anti-discrimination rules of the Employee Retirement Income Security Act of 1974 (ERISA, as amended) apply, limited groups of employees can be excluded from ESOP participation. Moreover, participants can be required to satisfy a minimum period of participation before their interests in trust assets become vested (in other words, nonforfeitable). The ESOP vesting schedule specifies the percentage of assets each participant will earn upon completion of periods of service or plan participation, and the vested portion of the participant's assets is distributed as outlined in the trust document.

A Viable Option

While ESOPs may not be for all companies, their flexibility makes them a viable option for many businesses. ESOPs are often preferable to alternative forms of employee stock ownership (such as, stock purchase or stock option plans) due to their preferential tax treatment.

To promote the concept of employee stock ownership, Congress has granted a number of tax incentives to employers adopting ESOPs, including deductible ESOP contributions and dividends, tax deferrals on distributions to employees, tax-advantaged rollovers for owners selling stock to employees, and estate tax advantages.

Beyond benefits as a profit-sharing plan, the "leveraged ESOP" can be used as a financing tool to raise money for companies. In one scenario, an ESOP borrows funds from a bank to buy additional securities in the sponsoring company. Alternatively, the employer could borrow money from a bank, lend it to the ESOP, and then have the ESOP use the funds to purchase stock in the company. Business owners who are nearing retirement can also use ESOPs as a means of selling the company to employees.

When considering ESOPs, business owners are advised to analyze the potential drawbacks, including the complexity and cost of implementation. These plans may not be appropriate for every business. It is also important to consider the potential for dilution of stock value and ownership control.

When leaving the company, employees may cash in their stock or request that their share be paid out in the form of stock. Moreover, the value of an ESOP as an employee benefit may be diminished if the company's stock fails to rise according to expectations.

If these issues are properly addressed and protective measures are taken, ESOPs can offer a viable means of giving employees a stake in the company, while also providing innovative opportunities to address financial challenges.

Family Business – Laying the Groundwork for Success

Is your growing business still a one-person operation? As your company continues to grow and the workload increases, it is easy to find yourself wearing too many hats and not having enough hours in the day to accomplish everything that needs to be done. At such a turning point, many small business owners turn to their families for help.

Explore the Possibilities

Involving family members in your business isn't a course of action to take lightly. If you are considering this option, it is best to approach it as seriously and professionally as you would any other business venture. Begin by exploring the following questions with your family and key advisors:

  • Do family members want to be involved in the business?
  • What are their individual interests, talents, and areas of expertise?
  • What positions would they hold within the company?
  • How would they be compensated?
  • How well do they interact with one another?
  • Who would be best qualified to succeed you if you were to step down or something unexpected were to happen to you?
  • What ownership shares would both participating and non-participating family members receive?

Elements of a Succession Plan

Once you've determined that family members are interested in becoming involved in the business and have the skills and talents to contribute, consider developing a succession plan that details strategies for transferring business assets or selling the business. With the help of your advisors, consider such factors as your age and health; the ages of your spouse and children, as well as their interests, talents, and expertise; and the expected growth rate of your business.

Next, formalize your succession plan with a funded buy-sell agreement. This legal contract will obligate family members or other parties to buy out your share of the business for a predetermined price should you die or become disabled. Buy-sell agreements are typically funded with life insurance. If left unfunded, family members or the company (depending on the type of your agreement) may not have the cash or the borrowing ability to buy out your interest. This could put an end to your company.

Ownership can also be shared with family members through a gifting strategy. You may be able to reduce gift and estate taxes by using your annual gift tax exclusion ($14,000 for single filers and $28,000 for joint filers in 2015 and 2016) and your lifetime applicable exclusion amount of $5,430,000 in 2015 and $5,450,000 in 2016. Careful planning is essential to help ensure that these gifts aren't drawn back into your estate.

Ideally, a succession plan should also include a business plan with short-, medium-, and long-term goals. The business plan must be based on realistic budgets and financial forecasts that are compared to actual results on a consistent basis and adjusted for changing conditions.
Remember, business advisors and other non-family members can also play a key role in the success of your company. Inviting non-family members to serve on your board of directors can open the door to fresh ideas and new perspectives. Non-family members may also be more objective, allowing them to help mediate family disputes involving the business.

Ensure Your Legacy

A well-designed succession plan can help lay the groundwork for the successful development of your family business. It can support your company's growth and help ensure its continuity. Consult your qualified life insurance professional to help ensure that your plan meets your overall objectives.

The information contained in this newsletter is not intended as tax, legal, or financial advice, and it may not be relied on for the purpose of avoiding any Federal tax penalties. You are encouraged to seek such advice from your professional advisors. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for any insurance or financial product.

Financial Business Edge is written and published by Liberty Publishing to help keep you up-to-date on the issues which may affect your financial well-being. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. For specific advice on how to apply this information to your particular circumstances, you should contact your insurance, legal, tax, or financial professional. Copyright © 2015, Liberty Publishing