Business Plan HR Factors

[Guest Jeffrey E. Walker]

I am writing a business plan for a small Calif. software venture and need HR data. Would you be so kind as to refer me to where I could find simple California industry HR standards such as a salary mark-up factor that would cover the extra costs of benefits/Healthcare/Retirement.

[GBurns]

The Health Plans message board would probably be a better site for this question. But, I dont think I understand the question. Why a mark up. Any increase in salary is going to be taxable income. Why not implement a 105 or a 125 plan for medical and health, and a 401(k) or PS for retirement?

[Guest Robin Flaherty]

My company is currently with a Professional Employer Organization (PEO). We are considering leaving this arrangement. Does anyone have general advice as we bring back our HR, payroll, benefits, risk management,etc. functions "in-house"? We have approximately 360 employees. Advice in any area/topic is appreciated and will ensure that we do not overlook anything. Thank you.

[Guest mariogiganti]

I am wondering if someone can furnish me a citation, case or ERISA documentation for a profit sharing plan of a company that was unincorporated and now is incorporated. I assume we would just have to file an ammendment because the Tax ID number changed. Can someone give some direction on this.

[Greg Judd]

Whoa, one question at a time here! This "thread" doesn't seem to track very well. Is everyone reading the same messages? This response addresses the initial post.

Hi Jeff,

Re: benefits markup factor,

There's not a standard factor, nor a very useful range to apply, because items like "health benefits" (a term interpreted in surprisingly varied ways) usually account for a large share of the factor and can be so different from firm to firm.

If your calculations permit a variation in TOTAL compensation (cash pay + benefits) of +-10%, you're probably safe with a 35% midpoint, which would take into account statutory items (SS, UI, WC) health benefits, 401k, etc. So, for projecting benefits costs, multiply base earnings X 0.35. As for recruiting costs (another potentially major HR cost element), firms vary widely in their strategies/tactics here, too.

The HR/staff ratios I've seen for Valley startups is in the range of 1/75 - 1/90 -- "richer" than "average industry" ratios, but probably sensible for firms in the fast growth stage.

Pay for time not worked can be a wildcard if your firm would be generous with it, but frequently gets factored into base compensation budgets.

[KIP KRAUS]

Robin:

The answer to your question regarding what you need to consider when bringing your HR, benefits, payroll and risk management in-house depends largely on the experience of your HR and accounting personel. I would assume that your PEO has been providing the expertise with regard to all of these matters? Are you going totally in-house with the payroll using your own in-house systems? Do you have a benefits Broker/Consultant? Do you have a Property Casualty broker?

You are bringing in-house a lot of functions that will require more than a passing knowledge of their applicablity to your organization. If you do not have the qualified personel to handle all of these functions, you will probably need to continue to use outside consultants.

Are you prepared to add a staff person?

Sorry, I can't provide more info, but without knowing more about your in-house expertise it's diffult to assess and answer your question with any kind of detail.

[This message has been edited by KIP KRAUS (edited 12-22-1999).]

[Guest Robin Davis]

Robin, I would agree with Kip in that you need to assess your in-house expertise in each matter individually.

I might suggest that you transition bringing all of your HR functions in-house by going through a period where you outsource the work while maintaining responsibility for the functions. This will provide your company with the time to hire the staff necessary to handle these functions as well as allowing this staff to learn the inner workings of each function.

For example, do you currently have someone on staff that is fully trained in administering your benefit plans, whether health or retirement? Are they trained to enrolled new employees and provide in-depth explanation of those benefits? Do you have anyone on staff that is fully trained in payroll? Do you have a financial advisor trainer in risk management and an insurance broker licenesed in property/casualty? These are all important aspects to determining the best way to bring your HR functions in house.

I hope this helps!

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Robin Davis

D&D Benefits, L.L.C. www.dndbenefit.com

[This message has been edited by Robin Davis (edited 01-04-2000).]