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The Beginner’s Guide to Captive Insurance

by | Jan 10, 2020 | Business Insurance, Captive Insurance

Captive insurance programs have been popular among business’ largest corporations since they were first created in the 1950s. As we enter 2020, however, captives are enjoying a resurgence as a growing solution for businesses of all sizes trying to think outside the box.

Captives allow businesses to maintain direct control of their insurance programs, creating a fully personalized experience with its own unique challenges and opportunities for reward.

Even though captive insurance programs can help businesses navigate the challenges of employee benefits management, reduce costs, and build a more useful experience for employees, there’s a major lack of understanding about what they are and how they work.

Moving forward, we will:

  • Define captive insurance for beginners
  • Explain the difference between a captive and traditional commercial insurance
  • Review the main pros and cons of captive insurance
  • Provide guidelines to help determine if a captive insurance program might be right for your business

What is Captive Insurance?

A “captive” insurance company is an organization that exists only to meet the specific insurance needs of its member/owners. That means the business or businesses insured by the captive are its sole and total owners.

Captive insurance can help a business fulfill all its insurance needs, from employee benefits and general business insurance to worker’s compensation, product liability, auto insurance, and so on. That’s why captives have historically been popular with Fortune 500 companies and major corporations: they provide complete independence and allow businesses to circumvent many of the inefficiencies of the commercial insurance market.

When you have an insurance company whose only focus is the support of your business, you can achieve some pretty impressive stuff.

  • You can get your employees the benefits plans they need while controlling expense for them and the business
  • You can scale your coverage to your exact needs to minimize overspend
  • You can eliminate the offerings you don’t need while finding the best version of what you do need

In order to gain that independence, however, you must assume the possibility of greater financial risk. When you make the switch to captive insurance, you’re gambling with your own money, and no longer have your insurance provider to fall back on because you are now the provider.

Different Types of Captive Insurance

It’s important to know that there’s more than one kind of captive. Let’s take just a minute to define the main types of captive insurance programs out there.

  • Single-Parent or Pure Captive: A captive that is owned by and works exclusively for its parent company and its subsidiaries (as for a corporation)
  • Group or Association Captive: A captive insurance program created by multiple small or medium-sized companies pooling their resources and risk to access the advantages of a captive
  • Rental Captive: An existing, independent captive operated by a business entity that other organizations can opt into temporarily
  • Protected Cell Captive: A captive in which each organization’s assets and liabilities are kept separate, allowing access into the captive but minimizing the biggest possible financial gains and losses
  • Agency Captive: A captive managed by a specific agent, who is empowered to reinsure the company by contracting with traditional carriers based on their assessments

How is Captive Insurance Different from Commercial Insurance?

Now that we’ve defined “captive,” let’s explore how captive insurance is different from many of the other models you might be familiar with.

What’s the Difference Between Captive Insurance and Being Fully Insured?

In short, a captive is the complete opposite of being fully insured.

When you’re fully insured, you pay a set monthly fee to your insurance company and they assume all financial risk. Being fully insured is most useful if you don’t have the capital available to cover anticipatable risks.

A captive is only possible if your business has more than enough capital available to cover anticipatable risks or if you partner with other organizations to pool resources.

What’s the Difference Between Captive Insurance and Being Self Insured?

Captive insurance is a form of self-insurance, but the two terms are not interchangeable.

A self-insured business maintains a specific savings account for unforeseen insurance costs and uses that “rainy day fund” to cover losses or fill gaps in coverage. However, that coverage is still purchased through the traditional insurance marketplace.

A captive is far more complex than basic self-insurance because it involves an organization creating its own insurance entity, not simply socking away money to pay for insurance-related costs.

What’s the Difference Between Captive Insurance and Mutual Insurance?

In a mutual insurance company, the provider is owned by its policyholders, acts on their collective best interests, and distributes any profit through either lower rates or payouts.

That sounds pretty similar to captive at first, but there’s one key difference: a mutual company, although owned by its policyholders financially, acts as an independent entity. Policyholders buy in and then trust the provider to do good by them.

In a captive, the insurance company is part and parcel of the greater organization which it serves and is steered according to identified business needs.

Advantages of Captive Insurance

We’ve laid out a lot of information about what captive insurance programs are, how they work, and how they can transform an organization’s approach and identity. Let’s pause to reflect on the positive potential of captives.

A captive insurance program can help you:

  • Reduce insurance costs – When you own the insurance company, there’s no mark-up for services and no need to purchase any coverage you don’t want or need. Captives offer businesses the best and most granular control over their costs compared to any other insurance model.
  • Reward yourself for good planning – Captives provide the most benefit to businesses with great self-knowledge. If you understand your assets, risks, needs, and scale well, you can create a captive that protects you with minimal overspend in a bad year and generates difference-making profit in a good year.
  • Create ideal employee benefit packages – Each workforce has its own specific, identifiable healthcare and employee benefit needs. Unfortunately, even with a great broker, it’s tough to create bespoke coverage that meets everybody’s needs and saves everybody money. A captive allows businesses to get creative and find new ways to get their employees exactly what they need without having to spend a dime on things they don’t.
  • Insure outside-the-box risks – Sometimes an organization needs to take a big risk and gamble on itself to take the next step. Finding insurance to protect investors and keep the core of the business whole should one of those major strategic gambles fail is more difficult than ever on the open market. If you have a captive insurance program, however, you can create whatever coverage you need and avoid needing to “sell” a carrier on your business plan.
  • Specific tax benefits – There’s a misconception that all the tax benefits of captive programs have been eliminated over the last few years, but that’s actually not true. First of all, all premiums an organization pays to its own captives are tax deductible. Furthermore, in down years, he captive’s status as an insurance company can earn its parent organization loss reserve deductions.

Disadvantages of Captive Insurance

Of course, as we’ve seen, the captive program approach isn’t right for every business. Let’s pause briefly and reinforce the main reasons and organization would not want to create a captive.

Unfortunately, with a captive insurance program, you:

  • Assume increased risk – When you form a captive program, you are your own support system. There’s nobody else paying into the pool of funds that’s used to bail you out in a pure captive, and even in a group captive, if multiple partners have bad years, it can lead to major financial complications. If your business is risk-averse by nature, a captive might not be right for you.
  • Take on up-front expense – Establishing a captive is a time-consuming process that requires creating an insurance company from scratch.That means, as you’re planning and building your program, you’ll need to take on more hires, acquire new licenses, and bring in some consultants who are captive experts. At the same time, you need to allocate capital to underwrite your plans.
  • Create new management responsibilities – People sometimes misunderstand that a captive can be managed by a human resources department’s employee benefit expert. That’s actually not true, as the captive is a full-time, constantly operational insurance company. That means either bringing in new managers to operate the division or creating new responsibilities for other members of your core team.
  • Risk taking a step back –It’s possible that, in its initial years, your captive might not do as good of a job as a traditional provider. If you’re not comfortable taking one step back to take two steps forward, a captive probably doesn’t fit your leadership style.
  • Don’t get the tax benefits you would have in the past – While captives still deliver some tax perks, they’re definitely not the shelter and deduction powerhouses they used to be. With that said, if your main motivation for creating a captive is tax protection, you’re likely not a good candidate for a captive program in the first place.

How to Know if Captive Insurance is Right for You

In general, captive insurance is best for businesses that are:

  • Large and stable (or medium-sized and stable, backed by a group of similarly stable partners)
  • Comfortable taking risks with the potential for high reward
  • Thinking and operating in an open-ended, creative way
  • Recruiting a diverse workforce with varied medical needs and preferences
  • Dissatisfied with traditional corporate and business insurance
  • Confident in their ability to improve over time

On the other hand, businesses should keep away from captives if they are:

  • Small or in an early developmental stage
  • Risk averse or unable to raise significant capital
  • Relying exclusively on outside companies and contractors to identify and manage their insurance needs
  • Completely satisfied with the pricing and coverage they get through traditional insurers
  • Unwilling to take one step back in the short term in order to take many steps forward in the long term

Key Takeaways

Captive insurance programs are unique, complex, and create brand new challenges for the businesses who decide to leverage them.

At the same time, however, captives remain underappreciated as ways to meet all of your business’ total insurance needs while controlling costs and connecting with your ideal coverage.

There’s no “right answer” when it comes to whether captive insurance programs are effective or not; the approach’s potential for success is directly tied to an organization’s desire to think and work beyond the limitations of the traditional marketplace and commitment to getting things right.

If you’re wondering if a captive program could benefit your organization, remember:

  • Captive insurance companies support only the organizations that own them
    • A “pure” captive involves just one company or corporation
    • A “group” or “association” captive involves a group of businesses banding together to share risk and support one another
  • Starting a captive insurance program is basically the opposite of being fully insured – you assume all risk
  • Captives can help organizations build bespoke insurance plans, both for business needs and employee benefits
  • Captives aren’t for small or risk-averse businesses

What it Means to Be Driven at Launchways

by | Dec 20, 2019 | Employer Brand, Employer Branding

Here at Launchways, we take our core values very seriously. They aren’t a list of aspirational ideals that we wrote up on a wall. For us, they really are the soul of our company and are at the heart everything that we do. This is largely because our team members own the values as much as company leadership does. We take the time to review the values every year and allow our employees to shape the values and hold leadership accountable to live up to the values.

One of our most important values is the idea that Launchways is driven on an individual, team, and company-wide level. We aren’t content to just show up and do the minimum. We’re determined to win big for our clients, our team members, and for ourselves too. This sense of drive has ripple-effects throughout our organization. It is a cornerstone of our vibrant company culture and employee community and the foundation for our innovative people-focused solutions. Without our drive, we wouldn’t be able to fully live our other core values.

So what does being driven look like as an employee at Launchways and how does it set our experience apart from working at other professional service firms? In today’s post, we’ll cover how we:

  • Own our work and are dedicated to professional development
  • Fuel collaboration through shared purpose
  • Foster mutual trust and a sense of community
  • Respect each other’s intentions, empowering diversity and growth

Owning Your Work and Professional Development

One of the most significant impacts of living our “Driven” value is the extent to which it allows us to own our work and development as a person and as a professional. We don’t do what we do because someone higher in the organization tells us to. We don’t do it to impress our coworkers. Rather, our drive comes from within and is nurtured by our peers who value the same.

That might sound a little idealistic but it really boils down to the Launchways principle of putting the right people in the right seats. We carefully vet potential employees so that our team is made up of similarly driven and dedicated individuals across all departments. And we know that no one is going to be good at everything – but that everyone is good at their own areas of expertise. So we take the time to identify aptitudes and put people in the roles that let them take advantage of their skills. And our employees have a unique amount of leeway to shape their roles to suit their personalities, work styles, values, and talents so they can do and be their best.

Because we get to work on what we’re passionate about and good at, it’s much easier to build and maintain our drive. There is so much room to grow within the organization that there is no limit to our ability to grow ourselves and our careers as we work on many different types of projects to serve unique client needs. As our Senior HR Consultant Christine Lewis put it,

“Something that is really unique about working at Launchways is the ability that each of us has to explore different areas in our career and participate in projects that we would not be able to at another company. Our roles are not very siloed so we get to work with many different teams. Tackling HR issues in so many different environments has allowed me to grow my career much faster than I could working in-house.”

It also means that we get to take ownership of our projects. We feel comfortable and encouraged to come forward with ideas for projects or solutions and we help each other realize those ideas. Our mutual drive allows us to have more control over our work and a greater impact on the results we deliver for our clients. Our driven team is the key to Launchways’ innovative solutions.

Fueling Collaboration Through Shared Purpose

At Launchways, we’re not just driven on an individual level. There’s a sense of energy as soon as you walk through the doors and become immersed in the team environment. We’re each passionate about our own projects but we also get to work together to realize the goals on an individual, departmental, company, and client level.

This mutual drive gives us a sense of shared purpose. And because we openly acknowledge our different strengths and backgrounds, we can easily reach out to coworkers to fill in any gaps we might have and deliver our solutions to the client. There’s no foot-dragging or complaining about diverting resources from other projects – people are happy to get involved and help each other succeed. One of our Client Success Advocates, Hannah, said it best when she told us,

The team atmosphere is my favorite part of working at Launchways. There is always a sense of support and there is a lot of trust. You can really trust your teammates to back you up and we are all in it together. It makes me feel really safe, capable, and ready to be myself. 

Earning Trust and Respect to Foster Community

At Launchways, we all have a shared passion for always doing what’s best for our clients while growing and learning new things. And no one questions each other’s dedication. We know how much our work means to every single person on the team and how hard we all work to make great things happen for our company and our clients.

And when you get so many passionate people together in an office and give them the resources they need to take ownership of their work and do what they know how to do best, something truly remarkable happens. You don’t just build a company culture. You create a community.

Our mutual drive creates the kind of genuine trust and respect that is necessary for deeper connections and an organic community. All of the realizations and benefits of our “Driven” value we’ve covered so far add up to make Launchways a special place to work. Launchways is where people are comfortable sharing their true selves and appreciate each other for who we really are. And this environment isn’t just individually rewarding, it also gives us the space to forge meaningful relationships. As our long-time team member Maribel Espinoza says,

“Everyone here gets along so well that I call it my second family. Coming to work with great people in a great atmosphere makes my work even more rewarding.”

Respecting Intentions Empowers Diversity and Growth

Working in an environment in which every person is driven and passionate about their work allows us to avoid many of the kinds of miscommunications that can derail teamwork, growth, and innovation. Because it creates the trust and respect that allows for community, it also lets us have full trust in each other’s intentions. This means that we listen to each other seriously without taking anything personally: enabling us to realize one of our other core values of being “thoughtfully candid.”

Once you trust your coworkers’ intentions implicitly, you open up a whole new world of possibilities for productive collaboration and personal growth. Everyone is comfortable to be themselves and share their genuine opinions and perspectives even if, and sometimes especially if, they differ or conflict with those of others. Having so many diverse perspectives at the table allows us to think outside of the box and truly innovate as a team and as a company. It fuels our individual and mutual drives and allows us to push each other to help us do and be our best. All without causing hard feelings.

And this diversity, equality, and willingness to push each other applies at all levels of the organization. Our CEO, Jim Taylor, had this to say about how our team drives his work:

“What I like about the Launchways team is that, simply put: they’re good at what they do. They make me driven because they hold me responsible to be the best I can be and there is a level of mutual respect that exists that has taken me to a place that I have not been before in my career. We’re not afraid to disagree on things and know that these different opinions will take us to the best possible place. And our relationships are authentic and rewarding, so we don’t take disagreements personally.”

Key Takeaways

Here are some of the key takeaways of what being driven means for us at Launchways:

  • We own our work and our professional development, which makes it easy to be passionate about what we do
  • Our mutual drive helps us work together to accomplish goals on an individual, team, and company-wide level
  • Common purpose and dedication to our work does more than facilitate productive collaboration: it builds vibrant and meaningful community
  • With everyone sharing the same sense of drive and purpose, we trust each other’s intentions, which lets us share our diverse opinions to maximize our outcomes and growth

The truth is that the core value of being Driven defines who we are and what we do at Launchways. It makes our office somewhere that is full of passionate, dedicated individuals who are hell-bent on being successful and really making a difference in the work that they do. And it builds a community based on trust, respect, and deep relationships.

Are you interested in joining the Launchways team? Learn more about our career opportunities here.

Mighty Hook Saves Big on Business Insurance with Launchways

by | Dec 5, 2019 | Customer Stories

Mighty Hook is the largest manufacturer of hanging solutions and masking products for industrial finishing and powder coating processes. Mighty Hook has on-site engineers to improve efficiency through custom solutions. Their mission is to provide customers with high-quality, innovative, cost-effective products to improve their hanging efficiency and productivity in paint, powder, and e-coat processes.

Mighty Hook relies on its highly-skilled employees to innovate customized solutions for its clients, so the company takes employee compensation and engagement extremely seriously. For Scott Rampala, Mighty Hook President and CEO, it’s all about balancing offering competitive employee compensation and competitive rates for customers. The key to meeting the needs of employees and clients alike is to minimize human resources overhead, optimize employee compensation packages, and reduce business insurance costs so he can allocate resources where they matter most.

Scott first turned to Launchways when he decided to conduct an employee compensation audit eight years ago to better compete for talent while keeping costs low. The Launchways team facilitated the audit by ensuring that the auditor had the payroll information they needed to accurately assess Mighty Hook’s employee compensation. This included payroll data and departmental allocation to guide the auditor in determining the correct total payroll investment and compensation for individual employees depending on their employee classifications.

The audit successfully aligned Mighty Hook’s compensation strategy with their talent acquisition and business goals. Scott also decided to bring in Launchways to manage the company’s payroll processing so he could be sure that his employees were being taken care of without draining valuable internal resources. As he describes the value of Launchways’ payroll services,

“Payroll can be a touchy subject and Launchways does a great job of tracking the vital sensitive information and limiting access to key stakeholders. Best of all, I can rely on Launchways to make sure our employees are paid on time, which is a huge peace of mind for me and my team. It means that I can focus on reaching our business goals rather than the details of employee compensation.”

But the most lasting effect of Mighty Hook’s partnership with Launchways has been the reduction of business insurance costs across the board year after year. Before working with Launchways, Mighty Hook tended to renew their plans with their existing business insurance providers. Launchways brought a new approach to Mighty Hook’s insurance, taking the plans to the open market each year to find the best deals. This approach allows Mighty Hook to be much more flexible, as Scott explains,

“Every year our Launchways representative comes in and takes our worker’s comp, general liability, and property and casualty and moves it to the open market. In some instances, we’ve sourced our plans from a range of providers, although most recently we discovered that shopping our entire business insurance operation to a single provider generated the biggest savings.”

This flexibility has paid off for Mighty Hook year after year. As Scott describes, Launchways’ proactive approach to reevaluating insurance carriers annually has helped him cut costs so he can provide greater value for his customers while providing competitive employee compensation.

“The approach to taking our insurance to the open market every year is far preferable to our old model of just renewing with our existing carriers. It allows us to remain competitive and get the best value year after year. On average, we’ve probably seen a 4-5% decrease in costs each year and in the last year alone we saw an impressive 10% decrease in our insurance costs. Those savings are good for our bottom-line, our clients, and our employees.”

Beyond the concrete savings that Launchways has delivered for Mighty Hook, Scott values Launchways’ role as HR consultants. No matter what payroll, benefits, insurance, or HR challenges Mighty Hook faces, Launchways provides streamlined and cost-effective solutions without the Mighty Hook team having to dedicate valuable resources to addressing the challenges internally. This matters because the less time they spend on business insurance or human resources, the more time they can spend on their business.

Creating a Culture of Constant Assessment & Feedback

by | Dec 5, 2019 | Performance Management

Performance management and assessment are fundamental to running a successful business at any scale. When you know who is creating organizational gains and who is causing challenges, you can lead much more effectively.

Unfortunately, however, most organizations still assess performance on a yearly basis. That means formalized feedback for employees only comes at the end of long terms, and any discussions about performance in between are seen as scary or punitive.

If your organization is still using the traditional annual appraisal model, you’re missing out on the opportunity to have better, more productive conversations with your employees and create a more data-driven approach to performance and talent management.

Moving forward, we’ll explore:

  • Why a continuous feedback system is better than yearly appraisals
  • What a continuous feedback system actually looks like
  • How to build buy-in for the transition toward constant assessment

Why Continuous Feedback is So Powerful

In general, continuous performance assessment is the best way to support your employees and keep your organization healthy. When you’re constantly deepening your understanding of not just what’s working but why it’s working and how you can extend that success to new arenas, you have the power to transform your organization into its best self.

Transform Managers into True Leaders, Not Just Bosses

Much of the strife surrounding performance assessment (and talent management in general) is rooted in the fact that the average worker and manager don’t have a strong, productive enough relationship to meaningfully discuss performance.

The yearly appraisal model simply perpetuates that disconnect, as team members rarely sit down with their immediate supervisors to discuss goals, performance, achievement, and so on. When those conversations are so spread out, it’s difficult for them to feel authentic – both for the assessor and the worker. Everybody grits their teeth to get through it; nobody actually gains anything.

When you encourage your supervisors to lead ongoing conversations about strengths, areas for improvement, and achievement with each of their team members, you’re creating an environment where assessment can be both less stressful and more useful.

Continuous performance assessment takes that nebulous role of “boss” and defines it in a way that fosters better, more productive relationships and the kind of mentorship and coaching that drives everyone to get better.

Become More Responsive to Talent Needs & Create Opportunity for Improvement

If you’re assessing employees on a yearly or even quarterly basis, you’re leaving yourself open to disaster. The wrong employee or team underachieving in the incorrect position for months at a time can lead to financial disaster. On the other hand, if your best talent is laboring for 11 months at a time without recognition, they’re probably looking for somewhere else to work.

By embracing continuous assessment, you create an agile culture in which it’s easier to:

  • Recognize problems or challenges in their early stages
  • Strategize adjustments or corrections
  • Design actionable improvement plans much more quickly, creating opportunities for employee turnaround.

That responsiveness makes assessment feel more supportive and less punitive. In this way, you can set underperforming talent up to save themselves, rather than letting them go in December because they struggled for an entire year.

How to Design and Anchor a Constant Assessment System

It’s important to start by saying that any business’ performance management and assessment system should be custom-built to address the company’s specific organizational system, goals, and employee culture. With that said, there’s a few pillars that should inform any approach.

Identify Goals, Competencies, and KPIs for Each Position

For your continuous assessment system to be successful, it needs to be grounded in structure, objectivity, and a deep understanding of how you want to do business. That means working with HR and department-level leaders to create a profile of each individual role on your organizational depth chart.

For each position within the organization, you should have a clear sense of:

  • What skills and knowledge someone needs to be highly successful in that role
  • How their job success will be gauged or measured (projects completed, revenue generated, etc.)
  • Which tools or applications will provide assessors with the data they need to assess that person
  • What the professional journey might look like for someone in that position (i.e. “If this person is highly successful in this role for two years, what might be next?” or “How long can we afford for someone to underperform in this position?”)
  • How that person’s direct supervisor or team leader can guide their professional development to build success for all

Allow Employees to Grow in Ways Most Relevant to Them & Their Work

That strong understanding of your depth chart is crucial to great performance management, but it’s only half the puzzle. Your team members are individuals, and that means you can’t manage them like numbers in a spreadsheet.

When a continuous assessment system accounts for employees’ individual needs, strengths, and quirks, it greatly increases buy-in and builds better business results.

A great continuous feedback loop isn’t just standardized for company use; it’s also personalized to maximize its value for each worker. Upon hire or the completion of each identified assessment term, employees should work with their direct supervisors, coaches, and other relevant professionals to discuss:

  • Individual knowledge and skill goals (“What can you do in the next six months to become even more knowledgeable or talented in this role, and how can we support you in that?”)
  • Workplace engagement and employee cultural goals (“What can you do over the next term to increase or maintain your participation in or maintenance of our great team, and how can we support that work?”)

To maintain two-way accountability, it’s important to always think about and discuss how work toward these goals will be measured, how success will be assessed, and what success or failure means in terms of next steps.

Foster Two-Way Communication and Reflection

One of the biggest mistakes organizations make when it comes to performance management is making it an entirely one-way system where supervisors review their team members individually. That just perpetuates old fears about the workplace power dynamic and makes employees feel voiceless.

An excellent performance management system ensures each employee has a strong voice that’s heard and richly documented throughout their professional journey. Managers should encourage each worker to reflect on their own work and provide self-assessments to accompany supervisor feedback.

At the same time, each worker should have a voice in assessing the functionality of their teams or departments and the success of their manager or supervisor. That way, everybody is empowered with a voice and everybody is kept honest.

Focus on Data

Qualitative feedback about people’s impressions, personal experiences, and reactions is an important part of any assessment, but it can’t be the whole emphasis. In order to win buy-in with your discerning employees and stand up as fair and objective in court, your continuous feedback system must be data-centric.

Thanks to the incredible variety of tech tools and software applications we use on a daily basis, supervisors actually have access to more workflow data than ever – they just have to know how to get it and how to analyze it. With a little training from IT and assessment experts, your supervisors can guide conversations about performance by discussing data points like:

  • Job or task completion rates
  • Ticket turnaround times
  • Campaign success
  • Success of accounts managed
  • Impact on team-based or departmental goals

When you build your assessment system around data, you’re creating something that’s actually gauging employee success, not just providing observations about work style or personality. That means you’re creating something more authentic, more useful, and more resistant to criticism.

Setting Your Employees Up to Embrace Change

Continuous performance assessment and management are best for business, but they can still be a tough sell at first. That’s because when people hear “continuous assessment,” they think that means more work and more awkward conversations.

In order to dispel those fears and build buy-in for your assessment system, you need to provide your workers and their supervisors/assessors with the support they need to see the value in the new approach and make a smooth transition.

Provide Clarity & Employee Education from Day One

From the day you make the decision to transition towards an ongoing feedback loop, you need to be transparent with your employees about what that means and what they system is going to look like.

You need to provide your ground-level workers with employee education that helps them understand the philosophy of the model as well as how it will affect what they do from day to day or week to week.

For managers, supervisors, and other assessors, you need to bring in talent and performance assessment experts to teach them how to be impactful coaches, use the system right, and get the most out of it.

If you drop ongoing performance assessment into your employees’ laps, you risk significant damage to morale and company culture. If you create a well-explained, well-scaffolded transition, however, you’ll gain the buy-in you need to make such a drastic change.

Make Strong Performance a Core Value Organization Wide

For any initiative to truly change a business and its culture of work, it has to be baked into daily life within the organization. If you want employees to reflect honestly, improve earnestly, and dedicate themselves to maximizing performance, it’s fundamental that you make great performance a highly visible organizational value.

That requires crafting messaging for display around the office, bringing in the right presenters to get your team motivated about performance, and even revisiting things like meeting protocols to make sure that discussions about performance are voiced in every context.

When performance and achievement are key daily values in your workplace, you greatly increase the chances that your employees will engage deeply in the process, strive for excellence, and work to better the environment on the whole.

Honor Your System Through Promotions & Raises

There needs to be an endgame anytime you’re assessing or judging something. If employees don’t understand how your continuous assessment system can be of benefit to them, it’s simply an externalized structure that they’ll engage with exactly as much as they need to in order to keep their jobs.

For people to really honor and value your assessment system in a way that leads to workforce maximization, you need to make it real for them. That means there must be real benefits and real rewards for those who exhibit high performance and take their role as part of the overall evaluation system seriously.

Raises and promotions are the most obvious and classic ways to make that happen.

At the same time, however, it’s important to honor the improvement aspects of your system. For example, if an under-performing employee exhibits a great turnaround, there should be some recognition that motivates them to continue growing.

Takeaways

When you have a strong, continuous feedback loop for every member of your team and each of those team members values and cares about the process, you have the power to maximize your workforce for business and cultural wins.

Just remember:

  • Continuous feedback is more powerful for everyone
    • Management gains a better understanding of talent company-wide
    • Struggling or under-performing workers gain the time, structure, and clarity they need to improve in a timely manner
    • All-star talent gains access to a system that helps them feel appreciated and build a documentation trail to support promotions, raises, and so on
  • Any constant assessment system must be rooted in data
    • Qualitative observations are never enough
    • Embracing data analysis significantly reduces assessment workload for managers
    • Emphasis on data shows that everything is fair
  • You need buy-in from employees at all levels for a continuous assessment system to work
    • Be sure you demonstrate the value of the system and clarify expectations across the board

How to Learn More

If you’re a business leader looking to build an impactful, forward-facing performance management strategy, be sure to join us on Wednesday, December 11th to learn about The Future of Performance Management! 

This free webinar from Launchways will be packed with actionable insights about emerging best practices for performance assessment including…

  • How to assess the impact of your current performance management program and get started on building something even better
  • How to recognize the common pitfalls of performance management
  • How to replace an annual assessment system with a continuous feedback loop
  • How to deliver actionable, powerful feedback, even when it’s difficult
  • How to build a step-by-step procedure for handling employee underperformance

The hour-long learning experience will feature presentations and Q&A time with an all-star panel of veteran business leaders who know what it takes to build, manage, and continuously improve a great team. Presenters will include…

  • Paul Pellman, CEO of Kazoo, who specializes in creating employee engagement and performance management strategies that build purpose and success in the workplace.
  • Jodi Wellman, Co-Founder of Spectacular at Work, a leading executive coach who specializes in helping business leaders maximize their teams to build success and balance.
  • Adam Radulovic, President at XL.net, an experienced entrepreneur and small business leader with a track record building and managing profit-driving teams at many different scales.
  • Jon B. Howaniec, SHRM Certified Professional and VP at Clark Dietz, who oversees talent acquisition, staff development, and employee compensation at a multi-state engineering firm and specializes in strategic planning.

Any business leader, HR director, or manager hoping to improve their skills as a coach, mentor, or accountability partner should make time to check out The Future of Performance Management: How to Modernize Your Approach and start the process continuously improving their team this December!

Payroll Outsourcing: Ultimate Guide For Beginners

by | Dec 2, 2019 | Uncategorized

Payroll is a key driver of your business, so it’s important to get it right. Organizations with proper payroll processes in place are free to thrive, while companies with flawed payroll systems can be susceptible to significant legal risks, fines, and employee relations issues.

However, payroll and regulations are extremely complex. With payroll rules and regulations constantly changing, it’s almost impossible for the average business to keep up.

There are upwards of 10,000 federal, state, and local tax regulations that affect the way employers process payroll. And failing to follow these properly can result in large fines from the IRS. According to the IRS, more than 1.8 million tax returns were audited in 2016 for businesses with income between $200,000 and $1 million. In 2016, 978,564 businesses of all sizes were assessed civil penalties.

Growing businesses want to avoid these potential risks but find it nearly impossible to keep up with the wide range of laws pertaining to employment. This is why more and more businesses are turning to outsourced payroll companies to bridge this gap in expertise. Recent research by Robert Half indicates that 39% of U.S. companies outsource payroll services. 

Outsourcing Payroll: Three Reasons Why Businesses Should

  • Save time (time that can then be used to focus on growing your business) 
  • Gain access to the technology and expertise to perform payroll (management services) well
  • Reduce costs and risks associated with failing to follow tax and employment regulations

Ultimately, as your business evolves and grows, your team will become larger and your payroll (management processes) will become increasingly complex. As an employer, you’re expected to understand all hour, wage, and employment laws. Mistakes in these key areas can lead to audits and penalties, something a growing business simply doesn’t need.

For many growing businesses, outsourcing payroll prevents a good opportunity to streamline operations and reduce risk. However, each company must decide if (the benefits of outsourcing payroll) is right for them. We put together this ultimate guide to help you explore the pros and cons of outsourcing payroll, so you can make an informed decision about how to handle your business’s payroll.

This Outsourcing Payroll Guide Will Teach You:

  • Advantages of outsourcing payroll  
  • Disadvantages of outsourcing payroll 
  • What to look for in  payroll outsourcing companies
  • Why leverage a payroll provider’s HRIS 
  • Questions to ask a potential payroll outsourcing provider

Benefits of Outsourcing Payroll

Time Savings

Payroll is a time-consuming process. From keeping track of benefits deductions, wage garnishments, new hires, terminations, PTO, and state and federal regulations can be challenging. Outsourcing payroll allows you and your team to focus on core business functions that drive revenue and help you grow.

Reduced Risk

Penalties for errors, omissions, or late payroll tax filings can be very costly. The IRS estimates that 40% of small businesses pay annual penalties for incorrect filings. Beyond tax risks, your organization must also comply with all state and federal wage and employment laws. Failure to comply with these laws can lead to audits and fines. However, working with a payroll outsourcing provider can ensure that your business has all compliance bases covered. This will give you the peace of mind knowing your business won’t be susceptible to these risks and fines.

Access to Experts

As your business continues to grow, you’ll have to comply with more and more state and federal regulations. Have a team of HR and compliance experts by your side to help you navigate these complex changes can be invaluable for your organization.

Data Security

Payroll outsourcing services use secure online portals to store and protect your employees’ sensitive information.

Reduced Payroll Costs

For many small-to-mid-sized businesses, completing payroll in-house can be a money burner. Of course, actual cost is company-specific, but you can calculate how much time your team currently spends calculating payroll, preparing w-2’s, onboarding new-hires, producing reports for accounting, etc. Paying a salaried team member (or doing it yourself) can end up costing your organization a lot more than working with a payroll outsourcing company. For most growing businesses, working with a payroll outsourcing provider is a cost-effective option.

Disadvantages of Outsourcing Payroll