I S SUE 6 3 • SPR ING 2015

BIZGROWTHS T R A T E G I E S

I D E A S T O H E L P G R O W Y O U R B U S I N E S S

our businessis growing yours

2015Trends in WELLNESS

Executive Compensation Growth & Minimum

Wage Hikes

Are You Too Young to Plan for Long-Term Care?

MINIMIZE Taxes While

MAXIMIZING Donations

PART II

BIG Data Now a Tool

for Small Business

WELLNESS

ROBIN WIDDISCBIZ Insurance Services, Inc. Plymouth Meeting, PA • 610.862.2310 rwiddis@cbiz.com • @RobinRW121

In This Issue…

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@cbz CBIZ BIZ Tips Videos

Wellness ................................22015 Trends in Wellness

Tax Strategies ........................4Minimize Taxes on Investments while Maximizing Charitable Donations

Insurance Strategies ..............5Are You Too Young to Plan for Long-Term Care?

Management & Performance ... 6Business Analytics: Big Data Now a Tool for Small Business, Part II

Human Resources ..................7Compensation Trends at the Extremes: Executive Compensation Growth & Minimum Wage Hikes

CBIZ in the News

For complete articles: cbiz.com/news/in-the-news

US News & World ReportYour guide to tax-efficient investingFebruary 9, 2015

CNBC.comMain Street grapples with idea of higher wages, sick payJanuary 21, 2015

The Wall Street JournalFailure to extend tax breaks takes tollDecember 11, 2014

2 | BIZGROWTH STRATEGIES – SPRING 2015 CBIZ, INC.

Wellness

BY ROBIN WIDDIS

Typically, workplace wellness equates to trying to decrease employees’ health care premiums and maximize an employer’s return on investment. This mentality will take a progressive

turn in 2015 as employers begin to focus on outcomes rather than financial returns.

This year, it’s not so much about investing “X” amount for a greater return three or five years down the road; it’s more about encouraging employees to take their health more seriously. And, employers will continue to show greater interest in healthy outcomes over dollars spent.

As rising premiums continue to drive more premium share to employees, we will see three key trends in wellness in 2015:

1. Employers will take action to create healthier workforces and workplaces rather than simply push information onto unenthusiastic employees. Rather than just providing booklets on the importance of health, many employers will take it upon themselves to create gyms or implement smoker surcharges in an attempt to stimulate action.

2. As employers show greater interest in their employees’ health over ROI, the move toward wearable devices will help measure desired outcomes. Employers are looking to monitor the progress of their wellness programs by determining whether employees have successfully met their fitness and nutrition goals.

3. Employees’ growing interest in health will spark employers’ action. Employers are recognizing this desire and they want to compel team effort and make it fun for their employees. In 2015, we will see employers ingrain health as an aspect of corporate culture. Whether it is through putting in treadmill desks, building gyms, hosting yoga and stress management classes or bringing in lifestyle coaches, employers’ interests in wellness programs are shifting and will continue to do so in 2015.

2015 Trends in

WELLNESS

DISCLAIMER: This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. This information is general in nature and may be affected by changes in law or in the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

CBIZ, INC. BIZGROWTH STRATEGIES – SPRING 2015 | 3

#3. Health will become a part of corporate culture:Employers want to make wellness

fun for their employees and will work on incorporating it into culture by

installing gyms, hosting fitness classes and even putting in treadmill desks.

#2. Employee health is more important than ROI:

Employers are looking to measure employee outcomes through meeting

fitness and diet goals rather than their return on investment.

#1. Employers are taking action over pushing

information on employees:Rather than just providing booklets on the

importance of health, many employers will take it upon themselves to create

gyms or implement smoker surcharges in an attempt to stimulate action.

4 | BIZGROWTH STRATEGIES – SPRING 2015 CBIZ, INC.

BY MARC J. MINKER Originally published in Worth Feb/Mar 2015 (Worth Leading Wealth Advisors section)

In tax planning meetings, we are often asked what the most tax efficient way is to make charitable contributions. One of the most popular and

effective ways is donating appreciated securities. When one makes a donation of an appreciated security to a qualified charitable organization, several tax benefits may result.

Oftentimes, clients worry about significant capital gains and related taxes that they may have in the future. However, if they are already planning on making charitable contributions as it is, it usually makes sense to donate securities with significant capital appreciation, in lieu of cash, to a qualified charity.

For starters, by donating securities instead of cash, the client avoids the capital gains tax (20 percent federal) as well as the net investment income tax (3.8 percent) that otherwise would be due on a sale of the securities. This advantage allows a larger donation to a favorite charity than could occur by selling the security and subsequently donating the proceeds since the tax ramifications for the latter move are nonexistent. The logic here is simple: Why pay tax on appreciated securities if you’re planning on donating money to the charity anyway?

Second, not only does the client get to avoid the capital gains tax on the donated security completely but also gets the benefit of claiming a charitable deduction for the fair market value of the appreciated security. There is no concern for the charity either since it will capture the full market value of the gift by selling the securities on receipt. Because of the charity’s nonprofit status, it will not be liable for any capital gains tax.

Donors should keep in mind that the above discussion refers only to long-term securities (held for more than one year). A gift of appreciated long-term securities is deductible at its fair market value, while a gift of appreciated short-term securities is deductible only to the extent of cost basis. Therefore,

it is clearly better to gift long-term because you get to deduct the appreciation even though you have not been taxed on it.

This methodology of gifting to charity is particularly helpful when clients are looking to trim appreciated securities in their portfolios without having to realize capital gains. Alternatively, if there are securities that have greatly appreciated – but which the investor is still very bullish about – he or she may donate the appreciated security and immediately repurchase it.

When contributing securities, bear in mind that the contribution amount is limited to 30 percent of adjusted gross income (AGI) in the year of the donation. Charitable contributions that are not deductible due to the AGI limitations may be carried forward for up to five years.

The lesson here? When considering donating securities, be sure to consult with a competent tax advisor.

MINIMIZE TAXES ON INVESTMENTSTax Strategies

MARC J. MINKERCBIZ MHM, LLC • New York, NY212.790.5826 • mminker@cbiz.com

@CBIZNewYork

While Maximizing Charitable Donations

CBIZ, INC. BIZGROWTH STRATEGIES – SPRING 2015 | 5

BY HOLLY KIDWELL

Are you too young for long-term care planning? In a word, no. This would be like saying it is too early to start planning for retirement. Just

because many people don’t include the possibility of an extended care event in their financial planning, that doesn’t mean it isn’t a good idea. So, why don’t we plan ahead? We’re busy living life. No one wants to think about the possibility that our quality of life could decline at some point. What’s the solution? Don’t focus on what might happen to you; simply consider the consequences to the wellbeing of those you love long enough to do the necessary planning.

What is long-term care (LTC)? A very common answer to this question is “a nursing home.” The reality is that LTC is a response to an event or condition caused by illness, accident or the natural effects of age in which you need assistance with everyday tasks. An extended care event is triggered when one has cognitive difficulty or needs help with two of the six “activities of daily living” such as bathing and dressing. This oversight can be provided in one’s own home (as most prefer), in an assisted living environment or, if it becomes necessary, in a skilled nursing facility.

Why plan ahead? 1. It’s smart. The sooner you include this in your

financial forecasting, the better position you will be in to create a feasible plan due to favorable age and health factors and the longer any inflation factors built into the policy will have to grow your coverage limits.

2. It’s time sensitive. LTC costs are increasing every year so the time to start planning is now. This way you have something in place, even if a relatively

Insurance Strategies

Are You Too Young

small amount at first, in the event you experience a catastrophic event while young. If you wait until small changes in your wellbeing make you start to worry or your parents begin needing care because of a hereditary issue, there’s a chance carriers will see these as “red flags” and limit your possibilities.

3. It’s loving. Planning for an extended care need protects your family in many ways, not just financially. Ask any person who has provided care for their chronically ill family member. It is an extremely taxing role – physically, mentally and emotionally – that often leaves the caregivers themselves weak and ill. Planning ahead gives you the power to prevent this unhealthy outcome for your loved ones.

Those who are thinking, “I’m no spring chicken; I guess I’ve missed the boat!” should still speak to a LTC professional. There are solutions available for people in various stages of life, just fewer as time marches on. Take the time to research your need and find out what is available. Standalone LTC insurance is just one of many solutions.

There are a lot of myths about LTC floating around out there. Ultimately, the only way to determine accurate, individualized options and costs and to dispel any mistaken preconceptions about extended care is to seek the advice of a certified LTC planning specialist. Additionally, www.lifehappens.org and www.aaltci.org/long-term-care-insurance provide an unbiased overview of many LTC topics, including written and video testimonials, FAQs and statistics.

HOLLY KIDWELLCBIZ Life Insurance Solutions, Inc.Cumberland, MD • 301.784.2394 hkidwell@cbiz.com • @TheHollyKidwell

Long-Term Care?TO PLAN FOR

You may delay, but time will not.

– Benjamin Franklin

Big Data Now a Tool for Small Business, Part II

6 | BIZGROWTH STRATEGIES – SPRING 2015 CBIZ, INC.

BY JAMES BRUMMITT

In our last article we discussed how “big data” has led to advancements in collection, analytics, prediction and visualization. “Business analytics”

focuses on developing new insights and understanding of business performance. It can answer questions like: Why is this happening? What if these trends continue? What will happen next (that is, predict)? What is the best that can happen before we are faced with various challenges? What actions are needed to right the ship?

Perhaps the best way to understand the benefit of business analytics is by example.

Cases to Illustrate the Uses and Benefits of Big Data Case 1: Customer profitability and target analysis.

You have a plan to expand marketing efforts on a product line and want to evaluate the effectiveness of marketing dollars in order to get the biggest “bang for the buck.” With today’s capabilities, you can design a strategy that utilizes a product association model to help you better understand which of your existing customers would be most likely to purchase the new product in addition to or in lieu of an existing product, as well as predict profitability on similarly situated new customers. One specific risk to look out for is self-competition; the last thing you want to do is roll out a new product that costs you existing profits from existing customers. Data Driven Strategy – Identify the highest value marketing efforts with controllable or acceptable risks.

Case 2: Customer scoring model. Many business owners can tell you who their best customers are. But what does “best” really mean? Customers can be measured on various criteria, including profitability, percentage of overall revenue, tenure of relationship, possibility of expansion or referrals, customer creditworthiness, level of customer service burden, payment history, etc. with a focus on identifying high-value and low-value customers. Various weightings can be assigned to each category of scoring to accommodate changes in strategy or personnel. Data Driven Strategy – Assess your customer pricing model based on the burden of specific customers instead of making easier customers pay the same amount as challenging customers.

Management & Performance

Case 3: Operational efficiency analysis and process redesign. Many businesses use only a few vendors for some services (e.g., freight and delivery services). Ultimately, these vendors reflect on the business, reason enough to monitor and manage their activities. A detailed analysis of order-to-delivery time can help identify the responsiveness of vendors to your customers and how each of them affects your customers’ perception of you. Ongoing oversight can help ensure that they continue to think of your customers as their customers and provide them with the service you expect of them. Data Driven Strategy – Develop key performance indicators that allow you to compare the various vendors against your expectations and one another on an ongoing basis.

BUSINESS ANALYTICS:

(Continued on page 8)

Case 4: Acquisition and sell-side due diligence service and support. You are looking to buy or sell a business enterprise and want to build a financial model that will enable you to present risk and opportunity information to your stakeholders. Traditionally, this is done using some level of Microsoft Excel model with charts and graphs summarizing your predictions. By creating a direct link between your accounting information and a data warehouse (as a staging area), you can create a permanent link

CBIZ, INC. BIZGROWTH STRATEGIES – SPRING 2015 | 7

(Continued on page 8)

BY PRIYA J. KAPILA

As we were reminded in President Obama’s most recent State of the Union address, middle class interests remain top of mind. However, when

it comes to employee compensation, it is the high and low ends of the spectrum that currently attract greatest focus.

Executive Compensation TrendsThe second pay-related prominent rule to be

established as a result of the Dodd-Frank Act, following the “say on pay” policy, is the CEO-to-worker pay ratio. The Securities and Exchange Commission (SEC) published a proposed rule on the ratio over a year ago; however, after a lengthy commentary period, during which more than 20,000 letters were received, there has been little progress toward finalizing the rule. The complications highlighted several years ago continue to be the likely cause of the stagnation; namely, there is confusion as to how and if to include part-time employees, international employees and contractors in the calculations and how to calculate the value of equity grants to top executives.

Congress has set no deadline for compliance with this provision of the Dodd-Frank Act, and it is speculated that the SEC’s rule may give companies some degree of flexibility with regard to determining the median worker pay level. Estimates for the CEO-to-worker ratio in 2013 range from 296:1 to 331:1 among the largest 350 U.S. publicly traded companies.

Compensation Trends at the Extremes:Human Resources

Among privately held companies and non-profit organizations, as well as publicly traded companies, executive motivation and retention remain a key objective. While this often results in grants of options or restricted stock in a publicly traded environment, other forms of long-term incentive compensation are more prevalent for other organizations. Deferred compensation programs and other cash-based, long-term incentives have gained considerable popularity among non-publicly traded organizations.

Minimum Wage MovementIt is common knowledge that the Obama

Administration supports raising the federal minimum wage to $10.10 per hour. This initiative is part of a broader push for income equality that also supports the enforcement of pay equity across gender and race.

In the meantime, many states and municipalities have proactively increased the minimum range for their residents. More than half of states have a minimum wage that exceeds the federal level, ranging from $7.50 to $9.47 per hour. Notably, SeaTac, Washington increased the hourly minimum wage to $15.00 per hour last year, and beginning in April, Seattle will implement a six-year plan to increase its minimum wage to the same level. SeaTac’s ordinance has affected approximately 1,500 workers and little impact to workers or businesses has been reported.

Pew Research Center estimates that 24 million American workers receive hourly wages of less than $10.10, and fewer than 15 percent of these earn

Executive Compensation Growth& Minimum Wage Hikes

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Human Resources (Continued from page 7)

$7.25. It is suggested that salary inflation may occur to alleviate compression among workers should the minimum wage dramatically increase. However, given the composition of the 114th Congress, it is not probable that significant adjustments will be made to the federal minimum wage in the near term.

Middle Class CompensationWhile there are public initiatives that could have

significant impact on executives and low wage earners, most American workers will see little change in their compensation this year. The average projected salary increase in 2015 is 3.1 percent, which is within three-tenths of a percent of the average raise observed in 2011 and each year in between. Until the labor market constricts, there is little motivation for businesses to provide sizable increases to the general workforce. Instead, additional payroll funds may be allocated to higher increases for top performers or performance- or time-based bonus awards that are aimed at retaining key employees.

JAMES BRUMMITTCBIZ MHM, LLC • Bethesda, MD301.951.3636 • jbrummitt@cbiz.com

@CBIZMHMBethesda

Management & Performance (Continued from page 6)

to your model in a way that allows you to enhance prediction detail. You can build this detailed “bottoms up” model that can tie into historical reports, analyze components of the business separately, evaluate interdependence of various components, and stress test the model using simulations that are outside of the capabilities of Excel. Data Driven Strategy – Prepare an integrated financial model that allows you to simulate operating results and update the model as time advances, enabling you to set target metrics that will support your recommendations to stakeholders.

Bottom Line Business analytics has become a tool that

both reports on and can influence the outcome of business operations and customer interactions. Using a business’ data gleaned from multiple programs, applications and platforms, business analytics can provide insights that support decision making and predict outcomes. New applications give big data a useful place in any business owner’s toolkit.

PRIYA J. KAPILACBIZ Human Capital Services • St. Louis, MO314.995.5558 • pkapila@cbiz.com

@PJKapila