Employee Incentive ESOPs: An Equity Tool to Promote Engagement and Performance

Employee stock ownership plans (ESOPs) are experiencing renewed interest in America. In recent years, new ESOP formation was largely driven by the aging of the Baby Boomer generation (widely defined as those born between 1946 and 1964), and their desire to liquify their ownership in closely held businesses while rewarding their employees. There are other new forces driving this trend—the quest for equitable solutions for the growing divide between have and have-nots, the need for employers to retain and reward employees in a competitive talent market, and succession planning. In this article, I will discuss how an Employee Incentive ESOP can be used to promote performance and engagement in a broad-based manner.

The Tax Cuts and Jobs Act of 2017 and the Gig Economy: Why the Employee vs. Contractor Debate Matters More than Ever

The issue of whether workers are independent contractors or employees has become even more relevant with recently enacted and proposed legislation and court cases in many jurisdictions seeking to impose employee status on many Gig economy workforce participants, such as ride-share drivers. This article emphasizes that the U.S. income tax rules, especially after tax reform effective in 2018, makes employee status extremely tax-inefficient for these workers. This article explains the relevant tax law changes and provides various examples of typical settings to confirm that workers with even small relative work expenses are often better off as contractors from a tax point of view.

Strategic Human Resource: Enhancing Performance With Six Sigma Approach

Human resource (HR) is the backbone of an organization and hence, there is need to build its underlying capabilities for effective service delivery. Six Sigma aims at improving the effectiveness of processes by collecting data and then using advanced statistical analysis tools to solve the problems. Six Sigma deployment in HR provides consistency in operations and leads to quality excellence by providing better services at lower costs. Six Sigma approach adds more science to the art of HR, which is used to measuring outcomes it can control, rather than those it can influence. Six Sigma deployment in HR transforms typical HR practices with a proactive approach and leads to better, faster and more cost-effective services; improve internal customer satisfaction and greater motivation and job satisfaction of employees. The research develops various framework for Six Sigma deployment in HR and provides case studies of successful Six Sigma deployment in various areas of HR.

The Impact of Compensation Structure on Salesperson Perceptions and Behaviors: Insights From the Sales Literature

Compensation is one of the most effective methods used to align and motivate salespeople to accomplish sales and organizational objectives. For this reason, sales researchers have made considerable strides in understanding the impact that compensation structure has on salespeople and salesforce performance. In this article, we examine the theoretical foundations of the sales compensation literature. We then perform an extensive review of this literature to identify the perceptual and behavioral outcomes associated with incentive- and salary-based compensation. Finally, the limitations of the sales compensation research are identified, and future studies are proposed.

Missing Participants and Beneficiaries From Private-Sector Pension Plans

This article examines the problem of missing and nonresponsive participants and beneficiaries from defined-benefit (DB) and especially defined-contribution (DC) pension plans, mainly in the private (for profit) sector of the United States. It focuses on the current search requirements of the three government agencies involved in finding missing participants and beneficiaries: the Pension Benefit Guaranty Corporation (PBGC), the Department of Labor (DOL) and its Employee Benefit Services Administration (EBSA), and the Internal Revenue Service (IRS). The article also reviews the efforts of the Social Security Administration (SSA) in this area. It then reviews proposed legislation, the Retirement Savings Lost and Found Act of 2020 (now S. 1730; RSLFA). The issue of missing participants and beneficiaries often becomes critical when an employer goes out of business or for some other reason stops sponsoring a pension plan. The missing participants are owed their earned retirement benefits. They, not the employer, own them.

From Stand-Alone Pensions to Alternative Retirement Plans: Examining State and Local Governments

Defined benefit (DB) pension plans are the dominant retirement program for state and local governments in the United States. However, in the last 15 years, some have given new employees a choice of alternatives to stand-alone DB pension plans such as cash balance (CB), defined contribution (DC), and hybrid retirement plans. This article examines this shift through survival analysis using panel data of 190 state and local pension plans across the United States. From 2001 to 2019, we modeled five change factors found in the pension reform literature, namely, financial constraints, interest group influence, plan membership, and liability, along with other state factors. Our analysis shows that all five of these factors impacted the shift to alternative retirement plans from stand-alone DB plans. Notable findings are that well-funded pensions were more likely to shift to alternative retirement plans, and interest groups such as police, fire, and teachers were more likely to keep stand-alone plans.

Selecting the Right Evidence to Inform Compensation and Benefits Decisions

It is important that managers make well-informed, evidence-based decisions about employee compensation and benefits. As a field, evidence-based management recognizes four primary sources of sound evidence: scientific research, personal expertise, specific organizational data, and stakeholder perceptions. This article walks the reader through each so that compensation and benefits practitioners may make better informed, evidence-based compensation and benefits decisions.

Single-Employer and Multiemployer Pension Plans: Problems and Prognosis

This article examines the state of single-employer and multiemployer pension plans for the period 1980s to 2020 with particular attention to funding, Pension Benefit Guaranty Corporation benefit guarantees and intervention procedures, financial status, participant experience, employer premiums, and benefit payments. It then shifts to congressional efforts to save the plans beginning with the Multiemployer Pension Reform Act of 2014 and continuing through the complex development of the HEROES Act with its conflicting EPPRA and GROW Act provisions. Due to an unresolved conflict between the Senate Republicans and the House Democrats, the pension provisions were removed from the compromise legislation that was signed into law at the very end of the Trump Administration. The matter will be further addressed by the new Democratic-controlled Congress and the Biden/Harris Administration. However, that may take a while. The issues are complicated and the Congress may be busy with more pressing matters for some time to come.

Hybrid Cash Balance and Pension Equity Plans: Origins and Development

It is widely recognized that there has been a massive shift from defined-benefit (DB) to defined-contribution pension plans. However, the full extent of that shift from fully functioning DB plans is generally understated. This article measures and relates the extent of that understatement and its importance for retirement income. It then discusses the increasing importance of cash balance and pension equity plans and their legality. It then conducts an in-depth discussion of large (Fortune 500) employers, small- and medium-sized employers, and then very small employers (25 or fewer active participants). It concludes that retirement income plans in the United States are far from static. Indeed, they have evolved throughout the era and will continue to do so in the future.