The publication of the second Irish Finance Bill on 20th November generally made bad news for employers and employees alike. Much of the focus has been on the introduction of the income levy and some pundits estimate that increases in taxation will amount to approximately 2,500 Euro for the average family next year. But as we approach the time for annual pay reviews, what last-ditch efforts can employers make to sweeten the bad news to employees?
The Bill brings in the various measures announced in the Budget, the principle change being the introduction of an income levy. For lower-paid workers it may be appropriate to lower gross income so that it falls below the limit of €18,304, thus avoiding the one per cent levy altogether. The drop in income might be made up by using some of the processes below.
Is now the time to buy your employee a new car or van? Existing fleet vehicles will maintain the current method of calculating the assessable benefit in kind which is based on a percentage of the original market value of the car, with a reduction in the percentage assessable where the employee has incurred high business mileage in the tax year. But the BIK rules are changing so that new cars with lower CO2 emissions will be those with lower Benefit in Kind payments. In the case of one sales representative, for example, her employer is thinking of replacing a three year old, 2 litre, petrol-engined car (with an original market value of 25,000 Euro) with a new, 1.4 litre, diesel-engined car that has the same power and performance and an original market value of only 20,000 Euro. The company is availing of the competitive prices being offered by car retailers (lower original market value); lower fuel, insurance, motor tax and NCT costs; and contributing positively to the environment. It is also rewarding the employee with a new car, reducing the overall cost of BIK payments they have to make at the same time.
That same employer is located in Dublin city centre where it is affected by the introduction of a Benefit In Kind of €200 for car parking (or €100 in certain cases of shared car parking spaces) in the main urban areas. One way the company is thinking of offsetting this cost to employees is to arrange a car-sharing scheme so that the 50 car parking spaces provided become shared. Under the Bill shift work employees starting or finishing work after 9pm or before 7am will have the part of the year during which they are on shift work disregarded for the purposes of the levy, so the employer is also looking, as part of a move to promote more flexible working, at requesting more employees to do shift work and night-time working.
The Bill confirms the introduction of the new scheme for the provision of bicycles and safety equipment up to a maximum cost of €1,000 (in a five year period) by employers. The exemption applies to expenses incurred by an employer on or after 1 January 2009 where employees agree to use the bicycle to cycle to and from work and between work places. Employers can use this to reward employees in lieu of salary.
A Salary Sacrifice scheme for employees who purchase annual commuter tickets for public transport is already in existence and this might encourage some employees to leave the car at home and take the train, bus or tram instead. Salary sacrifice arrangements are where the employee agrees to forego part of their salary to cover the costs associated with the purchase of the annual ticket. With the new Bill, bicycle/safety equipment may also be purchased using a salary sacrifice scheme. This scheme is particularly useful for those employees already cycling to work and to support the green environment.
There are increases in the mortgage interest relief for first time buyers, yet for many young employees, the main problem is obtaining mortgages and loans in the first place. Is your business in a position to offer employees better guarantees to help them persuade mortgage lenders to give them a mortgage? In one case we are aware of an employee had been refused mortgage approval because their partner was on an on-going, seasonal contract. The couple asked the employer to change this to a fulltime contract in exchange for a small drop in pay. The fixed contract enabled the couple to obtain mortgage approval.
In another case, an employer acted as guarantor for a credit union loan to enable an employee purchase a motorbike to get to and from work.
For more information on coaching training in how to carry out annual reviews and pay reviews call us on 01-296-1578 or email admin@peoplematters.ie.
Friday, November 21, 2008
Friday, November 14, 2008
Performance reviews
A recent study by Mercer highlighted the fact that managers in the public service have been rewarding civil servants with positive performance appraisals and rewards that are well above average. While this is costing the tax-payer a substantial sum, poor practices in employee reviews are not restricted to the public sector: many employers end up over-paying because managers and supervisors are not trained in how to run performance reviews and how to use them for positive effect.
One of the outputs of the Government Benchmarking process of recent years has been the introduction of the PMDS (Performance Management Development System). Put simply, the system uses a combination of interviews and a written questionnaire to evaluate the performance of workers in the civil service and other public sector bodies. Workers are then given an overall rating on a five point scale, with a score of one allocated to the worst performers and five to the highest performers. The Public Service’s PMDS highlights what goes wrong in many performance management processes. Of 19,000 workers’ performances reviewed in its initial operation, only 18 scored a one, and 285 scored a two, on the five point scale. Those who score a one do not normally receive a pay increment, but those who score a two receive a pay rise and are denied the opportunity for a promotion for a year. This leaves the vast majority of civil servants (those rated 3 – 5) earning increments of between 500 Euro and 6,000 Euro on top of the five per cent pay award given under the social partnership agreement this year. A review by the designers of the PMDS found that the system was not being implemented properly. As designed, between 20 and 30 per cent of employees were expect to be graded a four, for example, whereas more than 50 per cent of civil servants were assessed at this level in practice. In one Department, 40 per cent of staff were awarded a score of five.
Anecdotal evidence suggests that many managers in both the public and private sectors have not being properly trained in how to use performance management systems. Many feel embarrassed and unprepared when carrying out performance interviews. Often, they score performance low in confidential written statements, but then give positive reviews during face to face interviews and appraisals. Usually, if an employee ‘deserves’ a lower grade, the manager awards a three or four and counter-balances this by sending the employee on a training course to reskill in the area they are performing badly in. The net result is a confused and unmotivated workforce, and a significant over spend on rewards. So how can you avoid this happening with your performance management system?
Employers need to have invest in Performance Management and Staff Appraisal training. An important first step is to get managers and supervisors to explore staff appraisal, its benefits and the types of systems available. These managers and supervisors then need to take control of the performance management and appraisal meeting by knowing the steps to take before, during and after the meeting. This leads to identifying what really motivates staff to perform and involves them learning how to recognize that there are different personality types who can be managed in different ways. Where staff are underperforming managers need to learn how to close the performance gap through coaching using the GROW model. They also need to equip themselves with appropriate communication techniques for positive performance management including active listening, appropriate questioning, constructive feedback and positive body language. Allied to the review process is the importance of recognising when appraisal and positive performance management is not enough, and knowing when to activate the disciplinary process.
For more information on coaching training in how to carry out performance evaluations call us on 01-296-1578 or email admin@peoplematters.ie.
One of the outputs of the Government Benchmarking process of recent years has been the introduction of the PMDS (Performance Management Development System). Put simply, the system uses a combination of interviews and a written questionnaire to evaluate the performance of workers in the civil service and other public sector bodies. Workers are then given an overall rating on a five point scale, with a score of one allocated to the worst performers and five to the highest performers. The Public Service’s PMDS highlights what goes wrong in many performance management processes. Of 19,000 workers’ performances reviewed in its initial operation, only 18 scored a one, and 285 scored a two, on the five point scale. Those who score a one do not normally receive a pay increment, but those who score a two receive a pay rise and are denied the opportunity for a promotion for a year. This leaves the vast majority of civil servants (those rated 3 – 5) earning increments of between 500 Euro and 6,000 Euro on top of the five per cent pay award given under the social partnership agreement this year. A review by the designers of the PMDS found that the system was not being implemented properly. As designed, between 20 and 30 per cent of employees were expect to be graded a four, for example, whereas more than 50 per cent of civil servants were assessed at this level in practice. In one Department, 40 per cent of staff were awarded a score of five.
Anecdotal evidence suggests that many managers in both the public and private sectors have not being properly trained in how to use performance management systems. Many feel embarrassed and unprepared when carrying out performance interviews. Often, they score performance low in confidential written statements, but then give positive reviews during face to face interviews and appraisals. Usually, if an employee ‘deserves’ a lower grade, the manager awards a three or four and counter-balances this by sending the employee on a training course to reskill in the area they are performing badly in. The net result is a confused and unmotivated workforce, and a significant over spend on rewards. So how can you avoid this happening with your performance management system?
Employers need to have invest in Performance Management and Staff Appraisal training. An important first step is to get managers and supervisors to explore staff appraisal, its benefits and the types of systems available. These managers and supervisors then need to take control of the performance management and appraisal meeting by knowing the steps to take before, during and after the meeting. This leads to identifying what really motivates staff to perform and involves them learning how to recognize that there are different personality types who can be managed in different ways. Where staff are underperforming managers need to learn how to close the performance gap through coaching using the GROW model. They also need to equip themselves with appropriate communication techniques for positive performance management including active listening, appropriate questioning, constructive feedback and positive body language. Allied to the review process is the importance of recognising when appraisal and positive performance management is not enough, and knowing when to activate the disciplinary process.
For more information on coaching training in how to carry out performance evaluations call us on 01-296-1578 or email admin@peoplematters.ie.
Thursday, November 13, 2008
People Matters Ltd.
People Matters Ltd. was established in 1999 by Sue Mulhall and Mark Campbell. Sue’s background is in Human Resources and she worked in both the public and education sectors. Mark’s background is Marketing and Communications and he has worked in both the professional services and education sectors.
The company provides human resources, marketing and communications consulting, training, coaching, research and writing services to organisations and individuals.
Based in Dundrum, the company provides services mainly in the Dun Laoghaire Rathdown area, but has also expanded into providing services nationally and internationally (mainly in the UK).
The company provides human resources, marketing and communications consulting, training, coaching, research and writing services to organisations and individuals.
Based in Dundrum, the company provides services mainly in the Dun Laoghaire Rathdown area, but has also expanded into providing services nationally and internationally (mainly in the UK).
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