It’s every boss’s goal: Hire the right person for the job. To achieve this goal, you need to put more time and energy into a job analysis. With this tool, you can match an applicant’s skills and qualifications to those of the opening you are trying to fill.
Let’s imagine you’re hiring telephone service representatives to take orders on incoming toll-free lines. Here’s how a job analysis helps in your hiring decision:
Allowing employees to work from home can provide significant benefits for your staff and your company. It can improve morale, reduce real estate and facility costs. It can even reduce traffic congestion and make the environment cleaner.
However, appropriate oversight is necessary to avoid potential fraud and abuses that can wipe out many, if not all, of the benefits associated with a work-from-home program.
Having employees work from home can reduce demand for office space and cut facility operating and parking costs.
|Not for everyone.Some employees
fear less “face time” will reduce chances for promotion. Others need an office environment.
|Work/ life balance.
There is more time for employees to care for their loved ones and address home emergencies.
Without a system to record hours, disputes may arise over the time actually worked.
Reducing the number of commutes to the workplace saves fuel, reduces vehicle carbon emissions and traffic congestion.
|Performance fears.Managers may equate remote work with lower performance and may need to adjust to a culture oriented more to results than processes.|
Working from home may mean that at least some of your company’s operations can continue during a snowstorm, natural disaster, terrorist attack or other emergency.
The IT infrastructure must be properly designed. Some jobs may simply not be able to be performed at home for security reasons.
Working from home can better accommodate individuals with disabilities.
Staffers in the workplace may resent remote workers.
Remote workers may exceed their performance in the traditional workplace. Many report that they convert the old drive time into productive working hours. There may be fewer interruptions andabsenteeism may drop.
Outside a traditional structure, some employees may lose productivity by cleaning house, watching their young children, watching television or being otherwise distracted.
Working from home can increase personal freedom and flexibility, improve morale, and decrease stress.
There may be liabilities if employees are injured off-site. Consult with your attorney.
|Retention and recruitment.
Offering a work-at-home option can boost your company’s attractiveness in the job market and lead to reduced turnover.
|Equipment cost, loss and damage.
You must address who pays for equipment, how it is to be used and what to do if it is lost, stolen or damaged.
|Staying in touch.
Using instant messaging, conference calls, webinars, collaboration software and other technology can help employees feel less isolated.
|Team conflicts.Relationship problems among remote teams can be harder to resolve than those among on-site employees.|
Before allowing employees to commute to their home-based desks, answer the following questions to help ensure that you minimize the risks and maximize the returns of the program:
There are numerous positions within a company that, despite pleas to the contrary from employees, are not suitable candidates for a work-from-home program.
For example, allowing a manager with a broad span of control to work at home is typically not a good idea. Managing by phone is far less effective than being physically present. Also, employees are likely to resent that their manager works from home while they are stuck in the office.
Before announcing a work-from-home program, identify all of the positions that will not be allowed to participate. Be sure to engage your company’s legal counsel to ensure that the process does not violate employment law or create employee relations issues.
For employees that are underperforming or have a track record of discipline issues, working from home may be viewed as an opportunity to “hide out” and avoid the scrutiny that comes from working in an office. Together with your human resources department, develop criteria that employees must meet in order to be considered for the program.
For example, you might require candidates to earn a “meets expectations” rating in their performance reviews and have no outstanding discipline issues.
There is an assumption that once employees are allowed to work from home their productivity will at least be equal to their “in office” performance — or may even be better. This may be true, but for employees who have never worked from home before, the distractions of home life (including a significant other, young children, noisy next-door neighbors or just plain loneliness) may be too much to bear and their productivity may actually decline.
This begs the question: Once an employee is out of sight, how will their performance be monitored? There are a number of technology solutions that can track keystrokes, periodically capture pictures of the employee’s computer screen as well as record activity within specific software systems. Regardless of the approach used, there must be some mechanism to track productivity and ultimately performance.
An employee’s personal computer may not have the most up-to-date virus software in place and that raises the risk that the person could download a virus that could affect both the home computer and the company’s entire network. It is also conceivable that the employee’s computer can be accessed by other members of the family. That raises a real concern of data loss or theft, as well as disclosure of customers’ private information.
There can also be problems if an employee is working on a personally owned computer and the employer receives an e-discovery request. Electronically stored information is routinely requested in civil and criminal proceedings. Complying can be difficult if, for example, an employer doesn’t know what files or records employees have on their home computers or if an employee alters files or destroys them after an e-discovery request is received.
If at all possible, remote employees should only be allowed to use company-issued computers. Doing so ensures that the employee’s computer is subject to the same virus and system upgrades as the rest of the company issued devices and less likely to contract an infection that could bring the company’s information technology infrastructure to its knees. Mandating that employees use company computers also reduces the risk that your business will be unable to comply with an e-discovery request.
Allowing employees to work in their home offices can give them the false impression that no one is watching what they are actually doing with the company’s data. Before your company launches a work-from-home program, think about the data that remote employees can access as well as what would happen if that data were lost, stolen or misplaced.
For example, if an employee working from home decides to steal confidential data, how would your company know? If the employee was the victim of a home invasion and the company laptop was stolen, several issues arise:
1. How much of the company’s data is stored on that laptop?
2. Is it encrypted?
3. What could your company do to limit or mitigate the potential damage?
The potential for expense fraud and abuse by remote employees should be a major concern. One of the simplest ways to combat expense fraud by work-from-home employees is to ensure they are appropriately identified in the company’s expense reimbursement system as remote employees.
For example, most expense reimbursement systems require that an employee include their home office or base on their expense statement. For remote employees that designation could appear as Remote or VE (virtual employee) or WFH(work from home). The actual naming convention is not important. What is important is that your company can periodically target expense reimbursement requests from remote employees to ensure that expenses are reasonable, consistent with their remote status and consistent with company policy.
With appropriate policies, management and safeguards in place, you can help ensure that your company reaps the benefits of a work-from-home program and that employees perform at their best, whether they are working down the hall in the workplace or in their home, or in an off-site office far away.
Despite our best efforts to combat white-collar crime, dishonest people continue to find novel ways — often exploiting technology — to steal from businesses and not-for-profit organizations.
And honest people continue to report suspected fraudulent activity, also using technology. In a new development, fraud reporting was more common through the Internet than by telephone at companies that have hotlines or reporting systems. Email accounted for 34.1% of tips, while Web-based or online forms accounted for 23.5%. This suggests that if your company has only a telephone hotline, it should consider adding more electronic channels.
These insights are pulled from the 2016 Report to the Nations on Occupational Fraud and Abuse. This survey is published every two years by the Association of Certified Fraud Examiners (ACFE). This year’s report covers more than 2,400 cases of white-collar crime, occurring in 114 countries.
Consistent with previous studies, the 2016 report estimates that the typical organization loses 5% of its revenues each year to fraud. The total loss from cases in the study exceeded $8 billion, with an average loss per case of $3.5 million. In Canada, the median loss was $190,000 from 86 cases of reported fraud, compared to $155,000 for just over 1,000 reported cases in the United States.
That calculation can be sobering for many small business owners who think they’re immune to fraud — it happens to organizations of all sizes and in all types of industries.
The ACFE study exposes only the tip of the iceberg, however. Many frauds go undetected or unmeasured. Plus, there are additional indirect costs, including lost productivity, damage to a company’s reputation and loss of stakeholder relationships. As well, fraud investigations can be costly. Some organizations simply opt to cut their losses by terminating — but not fully prosecuting — white-collar criminals.
The median loss for all for-profit companies, regardless of whether they’re publicly traded or privately held, was roughly $180,000. By comparison, the median losses for government and not-for-profit entities were approximately $109,000 and $100,000, respectively.
The median loss for the smallest organizations was the same as the median loss for the largest organizations ($150,000). But there are some subtle distinctions between the types of fraud schemes and the anti-fraud controls employed at small and large organizations.
Top 5 Fraud Schemes by Size in All Countries
|Rank||Less than 100 Employees||100+ Employees|
|1||Corruption (29.9%)||Corruption (40.2%)|
|2||Billing (27.1%)||Billing (20.9%)|
|3||Check tampering (20.1%)||Non-cash schemes (19.3%)|
|4||Skimming (19.9%)||Expense reimbursement (13.9%)|
|5||Non-cash schemes (18.8%)||Cash on hand (10.3%)
Although corruption is listed as the top fraud scheme for both small and large organizations, it’s more common outside North America. Corruption includes bribery, illegal gratuities and economic extortion. In Canada, billing schemes outnumber corruption schemes. Billing frauds were reported in 29.1% of Canada cases while corruption was reported in 26.7% of the U.S. cases.
The following occurred more than twice as frequently in small businesses as in larger organizations:
Additionally, the 2016 study showed that larger organizations generally dedicate more resources toward deterring fraud.
Frequency of Anti-fraud Controls by Size
|Rank||Less than 100 Employees||100+ Employees|
|1||External financial statement audit (56.2%)||External financial statement audit (94.2%)|
|2||Code of conduct (53.8%)||Code of conduct (91.3%)|
|3||Management certification (43.2%)||Internal audit (88.3%)|
|4||Management review (40.4%)||Management certification (83.7%)|
|5||Internal audit (38.6%)||External audit of internal controls (79.9%)|
The ways fraudsters were caught varied by region. In Canada, tips accounted for 32.6% of cases, followed by management review (20.9%) and internal audits (16.3%). Small and large organizations also differ in how they catch fraudsters. Globally, tips were the detection method in 29.6% of the cases involving small entities compared to 43.5% of the cases involving large ones. This could be because reporting hotlines are more common at larger companies than small ones with more limited resources.
Honest employees are an organization’s first line of defense against white-collar crime, so it makes sense that you consider some of these ways to encourage employees to join the fight:
Invest in training. Educate staff on the red flags associated with fraud from within and outside the company. This sends a powerful message about your company’s intention to fight fraud no matter where it originates. Employees must perceive a high probability that fraudulent activity will be detected.
Set up a hotline. Fraud reporting hotlines can be an effective method of obtaining tips about unethical behaviors. Unfortunately, many small businesses shy away from hotlines, because they think they’re too expensive and difficult to administer. But as we mentioned above, emails and Internet forms accounted for more than half of reports. If your company already has a website, this is a potentially reasonable solution.
The study found that employers were much more likely to be tipped off if they offer hotlines. The study showed that tips led to the detection of fraud in 47% of the cases involving organizations with reporting hotlines, but only 28% of the cases involving organizations without them.
The fact that more than half of all tips involved parties other than confirmed employees emphasizes the importance of cultivating tips from various sources. So it’s also advantageous to educate vendors, customers and owners on how to report suspicions of fraud.
Highlight management involvement. Managers must be seen and heard reviewing controls and urgently correcting weaknesses. If your organization’s managers are perceived to be unwilling or unable to take the time to review the controls, they may inadvertently be sending a message that it’s safe to commit fraud.
Weak internal controls often provide dishonest people with the opportunity to steal assets or cook the books. The study cited a lack of internal controls and the ability to override them as the leading contributors to fraud, accounting for nearly half of the cases.
Your accounting and legal advisers can help reinforce your internal controls and investigate suspected fraud. Doing so can potentially save your company thousands, if not millions, of dollars in losses and put everyone on alert that fraud won’t be tolerated.
The 360-degree feedback mechanism for evaluating employees has been in use for decades — long enough for a battery of academic studies to highlight its benefits and drawbacks.
First, consider the limitations of the traditional supervisor-only evaluation, particularly for employees who work in teams or who have subordinates of their own. In this environment, direct supervisors:
A 360-degree feedback system can help you overcome those obstacles.
Before you jump into it, it might be more prudent to start a 360-degree system in conjunction with an ongoing development process, simply to pinpoint areas where an employee might benefit from additional training. Why? This allows you to gain confidence in your ability to evaluate the feedback you get from the process.
With some experience, you should be able to weed out comments that amount to complaints from disgruntled subordinates or colleagues. Also, employees are more likely to warm up to the process if they know that you’re giving it a trial run. Keep in mind that ideally people need at least six months of working with a person to be able to make valid evaluations.
If your organization is large enough, you might consider starting off with a 360-degree-feedback performance-rating pilot project in one department or division, before launching the program company-wide.
These programs aren’t always anonymous. One school of thought holds that it’s better for all raters in a 360-degree program to identify themselves in order to:
Still, most 360-degree programs are based on anonymity. That allows those providing the feedback to give more than bland or favorable comments out of fear of negative repercussions. Anonymous or not, a side benefit to a well-managed 360-degree program is that those giving the feedback get the message that their opinions matter.
Advocates of these systems encourage employers to avoid launching a 360-degree program until they’ve identified a specific purpose for it. That way, they can also establish a basis or benchmark for evaluating the success of the program. An example of a valid purpose might be to change an organization that has developed a rigid hierarchy into one with a culture that emphasizes continuous feedback and improvement.
Keep in mind that when you’re identifying a purpose, this type of system shouldn’t be viewed as a way to address poor employee job performance. Employees might become more self aware through the process, but it isn’t a substitute for direct communication between a supervisor and an employee.
If you’re designing your company’s program in-house, a critical element is the outline of the survey, which should include:
It’s also a good idea to use a dual-rating scale that includes both quantitative and qualitative performance questions. For example, you could ask:
1. To what extent does this person exhibit a behaviour?
2. Given the person’s role, to what extent should the person exhibit the behaviour?
By comparing the answers, you basically perform a gap analysis that helps interpret the results and reduces a rater’s bias to score consistently high or low.
Here are some pointers for implementing an effective 360-degree program:
Of course, there’s no guarantee that a 360-degree feedback system will accomplish the goals you set for it. But, as this method of review was pioneered in the 1950s and rose to popularity in the 1990s, its longevity alone suggests it might be worth a try.
Family trusts are not just for the rich and famous. If your family runs a small business, owns rental properties or holds investments, it, too, may benefit from these trusts.
Other Family Trust Benefits
Setting up a trust while you are alive offers several advantages, including:
1. By making yourself a trustee, you can keep control of the trust assets (such as shares of your business).
2. By getting the assets out of your estate, you can reduce probate fees.
3. Because the assets will not be in your estate, they will not form part of the public record that anyone can examine in the court office.
To understand why family trusts have been used extensively in tax and succession planning, you should first have a clear grasp of how the Income Tax Act treats them. Family trusts are inter vivos trusts, perhaps more commonly known as living trusts. In other words, they are between living people and distinct from testamentary trusts, which are formed by wills and executed when an individual dies.
All income in family trusts is taxed at the highest personal tax rate — with no personal exemptions — if the money the trust earns isn’t distributed to its beneficiaries. When the money is distributed, however, the trust pays no tax.
Then, the beneficiaries include the distributions on their income tax returns, pay their (presumably) lower tax rates and claim any credits and deductions that are available to them. The family trust reports the distribution to the Canada Revenue Agency (CRA) on a T3 information slip and a copy is sent to the beneficiary.
The paid-out income retains its character. For example, if the distribution is dividend income, then the beneficiary can claim available dividend tax credits. If the income is from a capital gain, the beneficiary reports it as such and only half is included in income.
This concept should be familiar to anyone who owns mutual funds outside a registered retirement savings or income plan. Mutual funds are actually trusts and, like family trusts, issue T3 slips to their holders.
It is in the distributions that the flexibility and power of family trusts becomes apparent. The income earned by assets in the trust can be split among the beneficiaries as desired, if the trust is properly set up. This means that all of the beneficiaries can utilize their personal exemptions and benefit from the graduated income tax rates available to individuals.
However, over the years, the Department of Finance has imposed restrictions on the use of family trusts to close loopholes and end abusive practices related to two major provisions of the Income Tax Act:
1. The Tax on Split Income (more commonly called the “Kiddie Tax”). This applies to income a trust pays out to a child under the age of 18, where the money comes from a private corporation owned or operated by a related person. Essentially, the owner of a business is prevented from splitting income with a related minor through a trust. This tax does not apply to mutual funds or dividends from publicly traded companies.
2. The Attribution Rules. There are two sets of attribution rules that may apply to family trusts. The first set covers attribution related to income from property. This includes rental income, investment income and interest, but not business income. When income from these sources is transferred or lent to spouses, minor children, nieces and nephews, it is attributed back to the person who transferred it.
The second set of attribution rules applies to capital gains after disposal of property transferred to a spouse — but not a minor child. In this case, any capital gain is attributed back to the transferring spouse who must report it.
If you think you may benefit from a family trust, talk to your tax accountant and lawyer.