So it seems my last post (timely as it was), which mused about the proposed HIRING Act of 2010 was trumped by an announcement that President Obama had decided to jump on the bandwagon with his own proposal.  In his proposal, The Small Business Jobs and Wages Tax Cut, outlined on Jan 29, 2010 is intented to kickstart new hiring by small businesses.  Under Obama's plan, small businesses would receive a $5,000 tax credit for every new employer hired in 2010.  This would be capped at $500,000 per business and $250,000 for start-ups.  The credit would take the form of reimbursement for the increase in Social Security Taxes paid on real increases in their payrolls, creating what was referred to by the White House as a "de facto payroll tax holiday".  Like the HIRING proposal I mentioned in my last post, this credit would be claimed on a quarterly basis but unlike the other proposal, explicitly states the method of renumeration.

President Obama claims that this proposal will be worked into the various other proposals that have already advancwed in Congress, such as the HIRING Act of 2010 and the Jobs for Main Street Bill of 2010 (which was approved by the House on December 16 and would be paid from TARP funds as part of the Emergency Economic Stabilization Act of 2008.  The Small Business Jobs and Wages Tax Cut carries the blessing of Morgan Stanley, the Economic Policy Institute, the Small Business Majority, and a number of leading economists.

What do these mean for us?  First, the President's proposal is specific in that the credit is for "Net Jobs Created".  In other words, if you lay off 10 people and hire 5 in 2010, you are not eligible for the credit.  Your business would be eligible for credit an increase in "Net Gross Pay" as well, providing the proper incentive for you to do so by eliminating the proposed increase in your employer share (6.2% of the Employee's Gross Wages up to $106,800) of the Social Security Taxes.  This proposal seems sound in the sense that the employer cost to bring on a new employee is lowered significantly and if you assume that the employee is hired with the intention of either delivering new revenue, or new growth to the business, then that means that the cost of doing so hs just come down signifcantly for  2010.  As well, if your company has increased revenues in 2009-2010 and you now require new employees to fulfill the obligations created to your clients by that growth, then your cost of labor has decreased significantly, at least for 2010.

But is it sustainable?  What happens if I as a business owner get used to the lower cost of labor, and as a result, must meet the reality of "newly" realized employer taxes in 2011?  Not if we are betting the jobs growth will create economic growth and the resulting increase in employment opportunties.  But if that economic growth does not happen, won't we be back in the mode of trimming headcount again?  Which leads me to my second concern about this plan:  while the cost to employ is decreased in 2010, the risk of hiring does not in the sense that employers still must bear the pain of supporting their State's unemployment burden, which can increase for a business if the new hire "doesn't work out".  In other words, most State Unemployment Agencies are under pressure to grant benefits to the unemployed even if the reason for unemployment was justified.  This means that the burden again, goes to the employer who is funding the unemployment benefit. 

So could this plan be the beginning of the end for the employer Social Security Tax, and potentially a reprieve in unemployment benefits...?  Don't count on it.  And as I have said before, there is still healthcare to deal with.  But all, in all, the idea (and the fact that we are talking about it), is a good start.

      By Cheryl Barbato

So you need to do some hiring.  You want to do it quickly, but at the same time you need full confidence that you are bringing the very best talent into your organization.  Recruiting should be viewed as a business strategy, not just an operational task.   I recommend taking a step back from the constant need to “put out the fires” and examine the engine you have in place for recruitment at your organization. 

Increasingly, companies are turning towards a unique solution, particularly in these times of uncertainty.  Working as an extension of your company, an outsourced recruiting partner is quite valuable.  Whether you fully outsource or augment what you already have in place, they will get to know your culture, take the time to understand your business goals and help you to streamline your process to ensure optimal hiring. 

A properly managed outsourced recruitment solution offers many benefits that can improve your business. 

Decrease Time to Hire

Due to the efficiencies that are brought into the mix with an outsourced provider, you will save time.   You will avoid the need for hiring, training and retaining an internal team.  While streamlining your recruitment process, you will also see the development of best practices which will cut out time in the process, leading to less lost candidates and the ability to bring the most desired talent on board more quickly. 

Increased Candidate Quality

Because contingency fees are not involved when working in this capacity, it automatically sets up a more pleasing scenario for a candidate.  Candidates often say they feel like they are just a dollar sign and being bullied into jobs that just don’t feel right.  Not only isn’t this the case, but because of the approach of many outsourced partners, you will be able to receive honest and open feedback through this unbiased intermediary. 

Reduce Cost

Outsourced recruitment decreases not only your direct recruiting costs, but also can save on recruitment search tools and advertising.  Additionally, you will be able to cut back or even completely eliminate those skyrocketing third party agency fees. 

Flexibility and Customization

Often, outsourced recruitment programs can be customized and offer flexibility.  As your needs evolve, many programs can usually be adjusted to coincide with changes.  A solid recruiting partner will not be static.  They will provide continuity of the team and at the same time be able to bring on professionals with varied subject matter expertise as needed.

Whether you are an emerging company, a mid-sized firm or a Fortune 500 organization, you have options!  I encourage you to take a look at your current situation and don’t be afraid to get creative on your approach to strategic and effective hiring.

About the Author

Cheryl Barbato is a founder of Talent Retriever, a recruitment consulting firm. She can be reached at 781-425-5571 or cheryl.barbato@talentretriever.com.