Category: Management & Leadership

We’ve previously discussed how the U.S. presidential election may impact U.S. businesses’ financial plans. However, after November, we will also see the effects of Congressional contests realized. The composition of key committees may be altered next year, which could have wide-ranging implications.

There are a number of Congressional committees that are of particular importance for financial professionals and the businesses that they serve, such as the powerful Appropriations Committees, which play a key role in controlling the funding of government operations.

The Senate is seen as a major battleground. With 23 seats currently occupied by Democratic lawmakers and 10 held by Republicans being contested in elections this year, it is very possible that control of the Senate will shift from one party to the other. Democrats currently hold a thin 53 to 47 majority, including two independents who caucus with the party.

The House of Representatives, meanwhile, is likely to stay under Republican control. The party currently holds 242 seats, but needs to retain only 218 to maintain its controlling majority. Anything is possible, however, as the entire 435-member body is up for reelection this year.

Of course, the results of the presidential election will also be critical. The president has the authority to appoint many of the regulatory officials who oversee the nation’s economic system. This is especially true when you consider the additional regulatory bodies and policies created as a result of the 2010 Wall Street Reform and Consumer Protection Act, which commonly referred to merely as “Dodd-Frank.”

However, the implementation of Dodd-Frank is far from complete, and a major shift in the control of key Congressional committees could result in an alteration of the law.

Regardless of the outcome of the election, it is clear that times will continue changing and businesses will need to adapt. This requires ongoing analysis by fiscal experts. Recruitment firms can help companies conduct a fast, effective financial professional search that equips them to study their situation and make solid business decisions going forward.

California Governor Jerry Brown has led a high-profile effort to close the state’s budget gap since taking office in 2011.

Earlier this year, Brown signed a budget that contains deep cuts to public services. At the time, Brown said the budget “reflects tough choices that will get California back on track.”

The budget also assumes voters will approve $8 billion worth of temporary tax hikes when they hit the ballot box in November. Brown has campaigned heavily in support of the tax increase, calling it necessary to close the state’s $15.7 billion budget deficit.

However, on September 20, the State Budget Crisis Task Force – an independent organization dedicated to studying states’ fiscal problems – published a report indicating that California’s outstanding public debt is much greater than officials previously believed. The group’s researchers uncovered a significant amount of financial liability that did not show up in the state’s earlier tallies, putting California’s total debt level between $167 and $335 billion.

Much of this “hidden” debt stemmed from pensions and healthcare coverage promised to public workers, as well as delayed highway maintenance and a project to bring local drinking water up to federal standards.

All private businesses and public organizations have an obligation to ensure that their spending plans will align with their ability to generate revenue. Working with the interim professionals at a financial project consulting service can help companies, nonprofits and even local governments determine how to move forward in a way that lays the foundation for future success. Whether this requires belt-tightening or the gathering of additional resources, qualified financial professionals will be able to help an organization thrive.

As the U.S. trade deficit – the difference between the amount of goods and services purchased from abroad and the amount exported – has expanded, many Americans have expressed frustration at what they see as using the nation’s wealth to support jobs in other countries. The trade imbalance between the U.S. and China is particularly troubling for many people.

However, the real relationship between international trade and domestic employment is more complex.

Many imports are either raw materials or component parts that go on to become critical inputs for manufacturers based right here in the U.S.

This makes the overall impact of expanded global trade on domestic employment difficult to calculate with any level of precision. Trade agreements create new jobs as a result of expanded export opportunities or access to cheaper industrial inputs. However, free trade can also eliminate U.S. jobs, as some companies give in to the temptation to capitalize on the availability of cheap labor in other countries.

In reality, jobs are constantly being created and destroyed by market forces, and this would be the case – albeit, on a lesser scale – even without the rapid expansion of international trade in the last few decades.

Companies that are interested in evaluating international opportunities still have to contend with a variety of obstacles, despite the widespread implementation of free trade agreements and expanding membership in the World Trade Organization. The professionals at a financial project consulting service can help a company capitalize on opportunities while mitigating risks.

For instance, an international tax consultant can help a company determine any unusual liabilities it may be subject to as a result of opening a subsidiary in a foreign company. It is critical to act carefully in unfamiliar markets, which is why access to financial expertise is so valuable for firms pursuing opportunities abroad.

The U.S. Small Business Administration (SBA) is currently seeking public input on two new proposed rules that it unveiled on September 14. The changes would revise the definition of “small business” for three sectors in the North American Industry Classification System (NAICS).

For the Agriculture, Forestry, Fishing and Hunting sector, the SBA has proposed raising 11 size standards, which would increase the number of U.S. firms with access to SBA loans and other programs by up to 7,500.

The agency also reported that it wants to increase 32 revenue-based standards and five asset-based standards for companies in the Finance and Insurance sector, as well as two size standards in the Management of Companies and Enterprises sector. In addition, the SBA proposed the use of average revenues, rather than average assets, to measure the size of international trade financing firms.

SBA officials estimate that if all of the proposed changes to the latter two sectors are implemented, it will allow over 7,400 more firms access to SBA programs.

These proposals are part of a comprehensive review of all size standards currently being undertaken as a result of the 2010 Small Business Jobs Act. The intention behind this effort is to enable enterprises to retain their small business status while growing, ensuring that they are eligible to benefit from the SBA’s loan programs and federal agencies’ small business procurement opportunities.

However, some business owners may not be entirely clear on what these classifications mean or what effects they may have. Any companies interested in finding out how they can benefit from related programs or any other government incentives should consider contacting a financial project consulting service. Working with interim financial professionals can help a company capitalize on opportunities as they arise.

A recent study conducted by the National Association of Colleges and Employers (NACE) posits that many young people are now leaving college without the tools they need to start making their way up meaningful career ladders.

Ed Koc, a research director at NACE, asserts that there is simply a lack of preparation and more students should take advantage of their schools’ career centers and other resources.

“In a competitive job market, new graduates must be prepared to present themselves in a way that translates their academic accomplishments and knowledge to the skills and experience employers are seeking,” said Koc.

However, a separate study – performed by Harris Interactive on behalf of CareerBuilder – highlighted several differences evident in younger generations, specifically pointing to evolving attitudes regarding communication and general work styles.

One of the main findings of this research was that younger workers are more likely to have a mindset that encourages them to “seize any opportunity,” rather than find a defined career ladder and commit to climbing it. This may help explain why graduates’ efforts are less geared toward the “traditional” employment experience.

However, with the much-discussed retirement of the Baby Boomers now in progress, it will clearly be critical for young workers to begin integrating into the corporate world more effectively.

Every business has unique needs as well as its own established organizational culture. New hires must fit in a company’s staffing situation while contributing to its success with their talents and ambitions.

However, finding a perfect fit can be challenging. Partnering with a recruitment firm can help a business assess its specific needs, contact and evaluate candidates and, ultimately, hire qualified professionals that will add value to the company and aid it in achieving current and future goals.

On September 13, the U.S. Federal Reserve Board of Governors announced that the country’s central bank is beginning a new program of asset purchases – dubbed “quantitative easing” by analysts and media commentators – with the goal of fostering an increase in economic activity and employment.

The program will focus on mortgage-backed securities (MBS), with the Fed purchasing $40 billion per month. Reactions from politicians and other public figures have been mixed. Some say they believe the central bank has already overstepped its bounds with earlier easing programs, while others insist that more action is necessary, due to the slow pace of the economic recovery.

In contrast to its previous asset-purchase programs, the Fed has indicated that this time, its commitment to monetary expansion will remain somewhat open-ended.

In a press release announcing the decision, the Board of Governors stated that “if the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved.”

This may be due to decreasing effectiveness of the asset purchases. Testifying in June before a Joint Economic Committee of the U.S. Congress, Federal Reserve Chairman Ben Bernanke admitted that there may be “diminishing returns” as the central bank continues its efforts to stimulate economic growth.

The Fed also announced that the federal funds rate will remain “exceptionally low” – between 0 and 0.25 percent – until at least mid-2015.

It is unclear exactly what effect these actions will have on the economy, but with $40 billion dollars being injected into the system each month, it seems certain that some businesses will see an impact on their operations or outlook.

Companies that are looking to gain insight into how they could be affected may be best served by partnering with a financial project consulting service to analyze areas of concern.

On September 11, Moody’s Investor Service issued an update on its outlook for the credit rating of the U.S. federal government, indicating that rising public debt and Congressional intransigence in budgetary negotiations may lead the agency to downgrade the U.S. rating from its current AAA status.

Last year, Standard & Poor’s (S&P) downgraded its rating of U.S. credit due to “political brinksmanship” surrounding the raising of the statutory debt limit established by Congress. Failure to raise the limit would have forced the government to default on its financial obligations.

At the time, Moody’s upheld its AAA rating of U.S. credit, but changed the outlook to “negative” – indicating that it may consider a downgrade in the future if high spending and political gridlock continued. Fitch, the other major ratings agency, maintained its AAA rating and a stable outlook.

Moody’s cited ongoing negotiations regarding the 2013 budget as the key consideration in its assessment of U.S. creditworthiness.

“If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable,” Moody’s explained in a press release.

It is unclear exactly what consequences would stem from a downgrade by Moody’s, especially given that the projected effect of the S&P downgrade – substantially higher borrowing costs for the federal government – failed to materialize.

However, businesses must analyze the situation and account for the potential effects of a downgrade in order to plan their long-term strategies accordingly. Working with the experts at a financial project consulting service can help companies assess external risk factors and ensure that they are positioned to succeed in the future.

According to new data from the U.S. Labor Department’s Bureau of Labor Statistics (BLS), the country’s economy added 96,000 nonfarm payroll jobs in August.

This number contrasted sharply with the estimates contained in a report released on September 6 by Automatic Data Processing (ADP). The ADP National Employment Report suggested that the U.S. economy added 201,000 jobs in August.

Meanwhile, a group of economists surveyed by CNNMoney had predicted the Labor Department would announce an increase of around 120,000 jobs. One thing this wide divergence between different forecasts shows is that a significant amount of uncertainty continues to surround the trajectory of the economic recovery.

This uncertainty, in turn, is a factor in limiting job growth, as businesses remain unwilling to make substantial long term salary and benefit commitments to new workers without reasonable confidence that future economic growth will uphold a level of demand that justifies investment in expansion.

With businesses electing to keep their headcounts limited, each new hire that a company does make will have an elevated level of importance for the organization. The success of a smaller staff will naturally depend more heavily on the performance of each member.

This means companies need to put an extra emphasis on ensuring that they are reaching top talent in each executive or financial professional search.

Utilizing project and interim resources through a recruiting and interim services firm is another way for organizations to achieve cost savings by adjusting staff sizes up and down based on current business requirements and controlling professional staff costs by using variable cost interim and project professionals.

Corporate recruiters can help a company assess their staffing needs, identify candidates and select the right person for the job. In addition to evaluating prospects’ technical qualifications, recruitment firms can also help businesses hire professionals that will provide a good fit with the established corporate culture, which can be an important factor in achieving high performance levels.

In recent years, a number of U.S. states and the federal Internal Revenue Service (IRS) have begun adopting an increasingly sophisticated array of tools to aid in the identification of companies that attempt to evade taxes or flout other regulatory requirements.

Several states, including Washington and Louisiana, have employed technology developed by software firm SAS. The company first developed the fraud-detection program in the 1990s to help banks discover accounting irregularities that suggested malfeasance.

After implementing SAS’s software, Washington officials increased their identification of companies not complying with the state’s workers’ compensation requirements by 65 percent. This allowed them to collect $18 million in premiums that would otherwise have gone unpaid. Los Angeles County has made effective use of the technology as well, specifically with regard to the detection of individuals illegally tapping into public welfare programs.

The IRS signed a contract with SAS to begin using the software in December 2011. Accounting Today reports that the IRS hopes to use the technology to close an estimated $345 billion gap between the amount of money that should be collected through taxation and the amount that is actually collected.

With state and federal agencies using these sophisticated new tools to catch companies that do not comply with their legal responsibilities, it is increasingly important for business leaders to take steps to ensure that their organizations are in full compliance with tax codes and other regulations.

Working with an internal audit consultant can help a company ensure that it does not have any outstanding liabilities that will lead to legal challenges or expensive penalties in the future.

The Washington Post’s Sarah Kliff recently offered an explanation for a survey showing that zero of 512 companies planned to stop providing health insurance programs to employees as a result of the Affordable Care Act – offering these benefits pays off for employers.

Kliff asserted that these business leaders simply continue to believe that providing group health insurance plans offers a significant advantage in their efforts to recruit and retain talented professionals.

She went on to explain that the Affordable Care Act – “ObamaCare” – does not change the nature of the benefits equation for employers, whose chief concern is remaining competitive against other companies. Although they could eliminate expensive healthcare benefits for a mere $2,000 per employee, it would simply not be advantageous.

“They offer benefits not because any law requires them to but because it serves their interests,” wrote Kliff. “They can remain competitive when recruiting employees and keep their workforce healthier and more productive.”

This is an excellent point. We’ve previously reported on research from Truven Health Analytics, which indicated that employers can benefit significantly from offering health insurance coverage to staff members. And, it appears as though many employers agree with the conclusion that cancelling their benefits programs would have a significant negative impact on their ability to attract and retain top-quality professionals.

Companies that are looking to gain a further edge in their efforts to recruit leading talent should contact a firm of experienced corporate recruiters. Working with experts enables a company to conduct a fast, effective executive or financial professional search and come away with its staffing needs fully satisfied.