Archive for June, 2010

Joe’s Jottings – PCS in the News!

Tuesday, June 29th, 2010

TV12 - Joes JottingsI’d like to send out a big “Thank You” to all of our customers and friends who sent their best wishes for PCS’s recent recognition!  I was very pleased when all of the attention brought us into the spotlight of a local television station.  Our friends at Channel 12 did a great job showcasing the value that PCS brings to our clients with a fantastic “Business Matters” segment.  Click here to view the video!

It just goes to show that after 14+ years we are still working hard to earn our customers’ business through high effort and “over the top” customer support.  As one of our customers recently commented, “We’re a team…we just happen to work at different companies.”  We rely on the competency of our customers to help us do the best job possible.  Good customers allow us to provide good service…and for that, we thank each and every one of you for your continued loyalty!

As always, if you have any recommendations or thoughts as to how we can continue to improve our service, please call me at 763-513-5951.

We do appreciate your business!

Joe Reilly

The Dollars and Sense of Employment Screening

Tuesday, June 29th, 2010

Background CheckAs businesses and government agencies are streamlining their budgets, more and more emphasis is being placed on Return-On-Investment or ROI. The burden of ROI proof initially fell to the operations side, but now even hard-to-quantify business areas like Human Resources are asked to prove the value of their stated best practices.

Employment background screening is widely recognized as a necessary process designed to help find the applicants who fit your employment criteria, but it also represents an expense. The question is, what dollar value does a background screening program deliver?

Here are some basic statistics:

  • 1 out of 3 applicants provide false, inaccurate, misleading or incomplete information on their resume or application.
  • 1 in 20 job applicants falsify their name, Social Security Number or Driver’s License Number to hide a conviction or other problem.
  • The average fraud scheme in a small to mid-sized business will result in $105,000 in losses.
  • The United States Department of Commerce reports that 30% of all business failures result from theft or embezzlement.
  • So, the primary areas in which companies are adversely affected by hiring the wrong employee can be prevented by reducing these areas of concern by implementing a quality employment background screening program.

    The three primary areas are:

  • Turnover
  • Occupational Fraud
  • Catastrophic Events
  • TURNOVER – is defined as the ratio of the number of workers that have to be replaced in a given time period divided by the average total number of workers employed during the same period.  Turnover ranges vary widely depending upon the industry and employment level. For example, the Aberdeen Group states the following annual turnover rates for hourly workers:

  • Hotel Chains: 51.7%
  • Specialty stores: 104%
  • Fast food chains: More than 200%
  • In addition, a study done in 2004 by The Employment Policy Foundation estimated that the average cost of turnover for businesses is 25% of the replacement salary.

    OCCUPATIONAL FRAUD – consists of asset misappropriations, corruption schemes, theft of property and fraudulent statements.  According to the Association of Certified Fraud Examiners’ 2010 Report to the Nations on Occupational Fraud and Abuse, the median fraud loss over 1,021 cases studied was $105,000.

    CATASTROPHIC EVENTS - include workplace violence, sexual harassment, and accidents that occur due to falsified qualifications or alcohol/drug use. Compounding these events are the resultant law suits and negligent hiring litigation that tend to follow.  The Workplace Violence Research Institute estimates the annual cost of workplace violence at $36 billion, while the Substance Abuse and Mental Health Services Administration (SAMHSA) says that alcohol and drug abuse costs U.S. businesses about $81 billion each year; totaling $117 billion/year.

    What is the Final ROI?
    The US Small Business Administration states for every dollar an employer invests in employment screening, the return on investment ranges from $5-16.  The savings are a result of improved productivity, reduced absenteeism, lower turnover, and decreased employer liability.

    Visit the PCS website for more information on background checks.

    Contributed by:

    Tony Lipinski
    Trusted Employees
    Trusted Employees Website

    Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney or an HR Professional.

    Why SAS 70 Type II is Important

    Tuesday, June 29th, 2010

    Payroll Control Systems, (PCS) has successfully completed the rigorous SAS 70 Type II certification, an internationally recognized auditing standard developed by the American Institute of Certified Public Accountants (AICPA). The SAS 70 process assures our clients that we meet the highest standards for security and have the appropriate controls and safeguards in place.

    We’re proud to have earned our certification, but the significance is more important to you and your company, especially with regard to the safety and security of the payroll process performed by PCS.  So, what is a SAS 70 Type II and how is it different from a SAS 70 Type I?

    What is SAS 70?

    The Statement on Auditing Standards (SAS) No. 70, Service Organizations, is a guideline that allows service organizations to disclose their business control activities and processes to their customers and their customers’ auditors in a uniform reporting format.  A SAS 70 Audit is not a predetermined set of control objectives/activities that organizations must achieve.  However, a SAS 70 Audit allows organizations to demonstrate business control objectives.  It also provides the ability to evolve controls and increase the level of audit evidence, thereby demonstrating improvements to customers and business partners.

    SAS 70 Type I vs. SAS 70 Type II

    The SAS 70 Type I provides an outline of the procedures, policies and controls that are necessary to ensure effective performance.  It describes controls as of a specific point in time.  The SAS 70 Type II is an independent audit of these procedures, policies, and controls which verifies and validates that the organization is actually following them and that the objectives set forth in Type I are being met.  The Type II includes the description and detailed testing of controls over a minimum six-month period and is usually a recurring and ongoing process.

    The auditor’s examination, performed in accordance with standards established by the AICPA, resulted in an opinion that PCS’s controls are “suitably designed to provide reasonable assurance that the specified control objectives would be achieved…”

    “By completing this extensive audit, PCS may now better serve financial, healthcare, government and other organizations that are required to substantiate adequate oversight of their service providers,” said Joe Reilly, CEO. “It also reinforces PCS’s position among the elite data processing operators, and validates to customers our willingness to take extensive steps to comprehensively support their business goals.”

    PCS’s SAS 70 Type II audit considers a broad number of business processes that include:

  • Management and Organization
    • Organizational Structure
    • Assignment of Authority and Responsibility
    • Information and Communication
    • Internal Control and Monitoring
    • Risk Assessment
    • Hiring Practices and Human Resource Policies
    • Confidentiality Agreement
    • Code of Ethics
    • Vendor Management
  • Physical Access
    • Office Building
    • PCS Offices
    • Packout Room
    • Server Room
  • Network Security and Management
  • Application Security and Management
  • Operations and Transaction Processing
    • Payroll Implementation
    • Payroll Processing
    • PC Input / Payentry
    • Payroll Distribution
    • Automated Clearing House (ACH) Processing
    • Finance and Administration
  • Tax Compliance
    • Daily and Weekly Tax Procedures
    • Monthly Tax Procedures
    • Quarterly and Annual Tax Procedures
  • Subservice Organizations
  • All of these processes are tested by independent auditors following these procedures:

  • Inspection: Read documents and reports that contain an indication of performance of the control.  This includes, but is not limited to, reading documents and reports to determine that authorization is evidenced and transaction information is properly recorded and controlled, and examining reconciliations and evidence of review to determine outstanding items are properly monitored, controlled and resolved.
  • Re-performance: Independently perform the relevant control.  This includes, but is not limited to, comparing reconciliations to proper source documents, assessing the reasonableness of reconciling items, and recalculating mathematical solutions.
  • Observation: Witnessed the utilization of controls by Company personnel.  This includes, but is not limited to, viewing the functionality of system applications, automated controls, and scheduling routines, and witnessing the processing of transactions.
  • Inquiry: Interviewed appropriate personnel about the relevant control descriptions, processes and procedures.
  • To request a copy of our SAS 70 Type II report, click here.

    Contact PCS at or at 763.513.5951.

    PCS has engaged WIPFLi, CPAs and Consultants to perform the audit.

    For Additional Information:

    Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA, or an HR Professional.

    Is Your “Free” EAP Really Free?

    Tuesday, June 29th, 2010

    EAP ProgramI recently reviewed a great article from the Holman Group that thoroughly explained the difference between “free EAPS” and individual providers.  I thought I’d share some of the most important components of it as DOR and PCS continue to work out the details of a potential partnership to offer the best in class EAP service and commitment to quality.

    These days, many health insurance companies, disability carriers and medical carriers are branching out into the behavioral health care field, offering “free” employee assistance programs (EAP) as part of their core plans. This seems like a great deal to the average consumer. The rationale goes, “If you are already going to offer the medical or disability plan, why not throw in the ‘free’ EAP?”

    The problem is that behavioral healthcare is not the main focus of a disability carrier or medical carrier. As a result, the kind of help available to employers is much more limited than what a specialized and licensed EAP carrier provides.

    Some of the most important components of a specialized EAP include:

    Face-To-Face Assessment, Referral, and Brief Therapy Sessions
    Many free EAPs only offer telephonic rather than face-to-face sessions with a licensed clinician. In most cases, counseling that is conducted over the telephone, rather in the privacy of a clinician’s office, is marginally effective. The Employee Assistance Professionals Association (EAPA) says that an EAP should establish “procedures to determine when to provide short term problem resolution services.” Most often with phone assessment and referral services, the employee does not have the option of short-term problem resolution. The employee can only speak with a clinician over the phone for a brief time, never really being able to explore the issue fully, let alone connect and establish therapeutic rapport.

    Some carriers say that they will provide face-to-face sessions if needed, which means that it is up to the carrier to determine whether an employee will receive the face-to-face sessions. EAP cost savings are based on designs that employ face-to-face sessions. The “free” EAP plans are simply paper programs that can cause more harm than good by not giving the employee the opportunity to discuss a problem in the security of a clinician’s office.

    Statistical Reporting
    When a company chooses to offer its employees a “free” EAP, they may not be invested in who utilizes the plan since they are not paying for the EAP. However, one important quality of the EAP is the ability to detect any patterns within the employee population regarding drug and alcohol use, personal problems, legal or financial problems and issues with childcare and elder care and identify any necessary assistance. By receiving and reviewing these reports, companies can get a heads up” on the types of issues their employees face and can be in a position to take action, which is one of the most important qualities of a successful business in today’s world.

    Because many of the “free” EAPs do not give employers utilization reports, company executives are unable to understand their employee’s needs.

    Crisis Intervention
    It is essential for EAPs to offer responsive crisis intervention services to employees, eligible family members, and the organization. When a crisis occurs on the job or at home, employees and their family members often need help coping with the traumatic event. It is the EAP’s job to offer counseling to those affected. Specialized EAP carriers have access to a network of crisis intervention specialists and therapists. They have the ability and understanding to effectively and quickly provide counseling in times of need.

    With most disability carriers and payroll management organizations, crisis intervention services are not available leaving employees to struggle with traumatic events on their own.  When employees find that the EAP isn’t available or doesn’t cover emergencies, there may be a liability for the employer. In most cases, employers with “free” EAPs find themselves without access to on-site intervention when it is needed most. In these cases, the employer must call around town to locate a specialized behavioral health care company that will offer crisis intervention on a fee-for-service basis.

    On-Site Presence
    Because the EAP is not the disability and medical carrier’s main focus, they may put little time or attention into it. Most often, on-site meetings with human resources representatives, supervisors, and employees are not included as part of the “free” plan. Therefore, unless a corporation has more than 5,000 employees, there is little to no contact between the EAP vendor and the company’s contacts. Specialty behavioral health care vendors appreciate that the understanding and communication of the EAP is imperative to its success. The EAPA identifies supervisor involvement and consultation as a top priority and essential component of an EAP. In short, an EAP should provide training for organization leadership to communicate EAP purpose and procedures and to explain the EAP role.

    Management Referrals
    An EAP can be an indispensable tool to those supervisors who appreciate its value. When supervisors observe poor work performance, they should be able to refer the employee to the EAP. The EAP presents a positive avenue for the supervisors to restore employee performance by providing effective tools for resolving problems in the most appropriate manner. During this time, the EAP maintains contact with the referring supervisor, reporting specific information on the employee’s prognosis, attendance, and compliance with the treatment plan.

    The ability to refer employees to the EAP can also serve a safety net for companies. For example, a supervisor can refer an employee who is performing poorly on the job to the EAP. If that employee continues to fail to meet expectations and is terminated, the employer has the knowledge and documentation that every effort was made to retain that employee, including the referral to the EAP.

    Most often, management referrals are not included in the “free” EAP. Supervisors cannot refer troubled employees to the EAP. They are only able to informally suggest to the employee that the EAP is available. Then it is up to the employee to seek help, if he or she is willing. More than likely, that employee will not seek help and will continue to be less productive. In most situations, even if the informally referred employee goes to the EAP, the supervisor never gets any feedback.

    One of the goals of an EAP is to help manage health insurance costs by helping members solve their problems early, thus avoiding utilization of their medical insurance benefits. However, with a “free” EAP through the disability and medical carrier, the employee is referred to a therapist within the carrier’s network. Since these types of EAP’s are often for assessment and referral only, the employee is seen by the medical carrier’s therapist and is referred to the medical plan where there is a co-payment without ever having utilized all of the free EAP visits. This results in an increased medical loss ratio and often in an increase in medical premium. This is where the “free” EAP is funded. As a result, utilization of the “free” EAP does not result in any type of cost savings; in fact it may even increase costs.

    It is important for EAPs to continually monitor and improve clinical practices and service quality. Most often, this is done through confidential patient satisfaction surveys. Surveys are sent to employees or dependents that recently used EAP services. The surveys help the EAP vendor determine to what extent the employees were able to resolve their problems and how satisfied they were with the services they received.

    Since most “free” EAP vendors do not perform follow-up surveys, they have no way of knowing the perceived quality of the services that have been provided. Also, they have no way of monitoring trends among providers and the clinical staff. This allows these vendors to maintain status quo without ever needing to improve clinical practices.

    How can “free” EAP be at all tempting for companies that want to offer a truly worthwhile benefit? The only truly worthwhile EAP is one that a specialty vendor provides. Implementing an EAP should never be an afterthought or be considered a bonus to another plan. Stand-alone EAP and managed behavioral health care carriers have the experience and knowledge to assist employees and their family members in the most clinically appropriate manner. Their sole focus is dedicated to improving employee and employer relationships and well-being. The price of a specialized EAP is minimal compared to the rewards that companies will reap.

    As the popular saying goes, “There is no such thing as a free lunch.” In the insurance industry, there is no such thing as a “free” EAP.  Employers are paying for the EAP premium as part of their disability, health, life, or other plan premiums.  Offering employees “value added benefits” implies that the benefits that are being added have value. But, by adding a “free” EAP you are adding a benefit that has little or no value.  In other words, you get what you pay for.

    Article Provided By:

    Lisa Anderson, CEAP
    Executive Vice President
    Visit the DOR Website

    Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney or an HR Professional.

    PCS Ascentis HR – Full-Scale HRIS

    Tuesday, June 29th, 2010

    PCS Ascentis HRIS is an easy-to-use, on-demand (SaaS) HR software solution for small to medium-sized organizations. This human resources management software maintains all employee data in a single database, even if you have multiple companies, with multiple payrolls.  Human Resources professionals no longer have to spend hours searching through paper files for specific information. Employee data is instantly accessible and always up-to-date.

    Critical Human Resources Function Automation

  • Benefits management
  • Payroll connectivity
  • Workflow automation
  • Hiring processes
  • Full-scale HR and Benefits Management

  • Billing reconciliation
  • Attendance
  • Compensation
  • COBRA administration
  • Compliance, i.e. OSHA, HIPAA, EEO, VETS
  • Online open enrollment
  • FMLA and other attendance tracking
  • Automated employee correspondence
  • Employee self-service and Manager self-service
  • The PCS Ascentis HRIS software contains a rules-based benefits engine which supports multiple types of employee benefits. Rate tables are automatically built into the database and virtually any benefit plan can be created. A few examples of traditional and non-traditional benefit plans that can be set up in PCS Ascentis HRIS include:

  • Medical
  • Dental
  • STD and LTD disability
  • 401(k)
  • Many Types of Life insurance and AD&D
  • Paid employee parking
  • Health club memberships
  • Voluntary benefits
  • Long Term Care
  • Additional PCS Ascentis HRIS software features and benefits include:

  • 300+ reports with step-by-step instructions for creating unlimited custom reports
  • Import and export capabilities to reduce data entry time and data duplication errors
  • 30 standard email alerts to keep HR managers ahead of employees’ needs
  • Electronic transfer of enrollment data to both HIPAA and non-HIPAA insurance carriers
  • Electronic EEO and OSHA reporting
  • Full integration with PCS Millennium payroll
  • For more information, visit our website by clicking here.

    The Successful Sale Of A Business Requires Preparation

    Tuesday, June 29th, 2010

    Business ValuationNote: This is the third in a series of three articles on preparing for the sale of a business. It is a summary on Mr. Lyons’ popular book, Exit Strategy: Maximizing The Value Of Your Business.

    In parts one and two of this series, we established that selling a business is the final part of the owner’s role in building it, and that, with some strategic planning, including retirement and estate planning, owners can maximize the value of their businesses, minimize the tax consequences, control the timing of the sale, and ultimately reach their personal financial goals.

    In this article, we look at the process of selling a business, which some may compare to a real estate transaction. The truth, however, is that selling a business can be exceedingly complex, and require experienced advisors quarterbacked by a seasoned business broker to maximize the value of the business and minimize the tax ramifications.

    Preparing the physical appearance of the business real estate may increase the confidence the buyer has in the continued maintenance of the business. Remove unused machines and old furniture, repair broken fixtures, and paint the facilities. These types of measures cost little for the potential impact they make.

    With the facilities cleaned up, it will be time to begin marketing the business. Prospective buyers will receive a short “teaser” letter from the business broker. The teaser provides enough information to entice the buyer to make an inquiry without disclosing the name of the company.

    After a financial screening process and the signing of a confidentiality agreement, the business broker will provide in depth information about the business.

    Who are these buyers? A seasoned broker will identify key buyer markets and should target those who can potentially afford to pay the most for the business. They may be competitors, vendors, manufacturers, distributors, private equity firms or any number of people who can maximize the profitability of the business.

    Once a committed buyer emerges and a Letter of Intent is signed, the buyer and seller enter a period of due diligence. During this period, the buyer and his or her accountant will scrutinize every aspect of the business: All financial records, real estate, titles, leases, intellectual property, sales and management personnel, operations, key employees, customers, and much more.

    In short, the buyer becomes intimately knowledgeable about the business.

    The due diligence period is based on trust and confidentiality. A prospective buyer must sense that he or she is receiving the best information possible, and that nothing is being withheld.

    When the buyer is comfortable with the due diligence review, it is time to proceed to the closing. Building trust between the buyer and seller is essential to closing the deal. Throughout the marketing and due diligence, there are opportunities for the seller and buyer to come to know each other and develop a relationship built on trust.

    The deal will be painstakingly described, in all of its legal glory, in the purchase agreement and any supporting documents. Yet, there is still some negotiating to complete. It will take an experienced business broker and a skilled team of advisors to work with the buyer’s team to find mutually acceptable compromise in order to close the deal.

    At this point the lead in negotiations usually shifts from the business broker to the M&A attorney so that the both sides can work out the final details of the agreement.

    When each party is comfortable with the purchase agreement, the deal is signed and completed. The actual closing event tends to be anticlimactic. The transaction attorney will provide a closing book, which will contain copies of all the closing documents. This, along with life’s other important documents, such as wills, trusts, financial statements, property titles, etc., should be filed in a home safe or a bank safe-deposit box.

    Selling a business is a complex process that requires vigilance and persistence. Deals don’t just happen. They need a driver—a quarterback to make sure they are completed. The business broker is that quarterback.

    Article By: Thomas W. Lyons

    Thomas W. Lyons is founder and principal partner of Faelon Business Brokers, a Minneapolis-based mergers and acquisitions advisory firm. Mr. Lyons is author of Exit Strategy: Maximizing The Value Of Your Business and conducts seminars based on the book for business owners and advisors. For 35 years, Mr. Lyons has owned, operated, bought and sold businesses; for the past 25 years, he has advised and represented owners in buying, selling and planning for business exit strategies.  He is also the host of Today’s Business and can be heard on 830 WCCO at 11:00 a.m. on Saturdays.

    More information and the book can be found at

    Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney or an HR Professional.