1. Biology: There are nearly 2 million Bio majors out there, and 6.7% of them are in the top 1% of earners in the country. In terms of what portion of the entire 1% of earners Bio majors account for, they lead the pack at 6.6% (See chart below).
2. Economics: A lot of Econ majors go into Finance, which is why it should come as no surprise that more than 8% of them are in the top 1% of gross earners in the country. Overall, Econ majors account for more than 5% of the top earners in the U.S.
3. Biochemical Sciences: This is a highly specialized degree program, a fact which is reflected by the fact there are less than 200,000 BioChem majors in the workforce right now. Yet, those who graduate with a degree in BioChem are on the fast track, as more than 7% of those with an undergrad or advanced degree in this field are in the top 1% of earners.
4. Zooology: Who would’ve thought, right? But, again, this is a specialized field where high-level professionals are in demand, and well-compensated for their skill set. Of the 160,000 Zoology majors out there, nearly 7% of them are in the top 1% of U.S. employees.
5. Health/Medical: Anyone who studies to go into Health or Medicine (e.g., Doctors, Nurses, etc.) is in very exclusive company. According to the New York Times, nearly 12% of medical professionals are in the top 1% of earners, accounting for nearly 1% of the overall 1%  (Say that 5X fast).

(For the full breakdown of 1%ers, see the chart below)

The placement firm polled its clients to determine whether white-collar workers can expect salary increases in 2012. Here’s what the respondents predicted for various fields:

• Overall, white-collar workers can expect an increase of 3.4%.
• Workers in the accounting and finance fields are predicted to get a salary increase of 3.5%. Especially in demand: financial analysts and business systems analysts who can target growth areas, and tax accountants who can help firms navigate what are expected to be ever-more-complex corporate tax laws.
• IT professionals will see an increase of 4.5%. Systems and networking engineers are in strong demand, particularly in the specialty of cloud computing. No surprise: Mobile-applications developers will be in high demand.
• The salaries for administrative professionals will see the same rise as overall white-collar workers — 3.4%. The growth fields: customer service and almost anything associated with health care administration.

This according to Bruce Bartlett, who held a senior position in both the Reagan and George H. W. Bush administrations, balances out the potential positives of such a cut with the long-term consequences.

Proponents of the payroll tax cut argue it’ll increase spending and stimulate the economy by providing more in-pocket pay for every taxpaying employee in the U.S. On top of which, it decreases the taxes an employer has to pay on each individual employee, which – in turn – could lower the overall unemployment rate.

All of which begs the question: “If the idea has so many potential benefits, what’s the problem?”

Well, the potential problems, according to Bartlett, break down as follows:

• The tax cuts only help those who are employed. They don’t do much at all for independent contractors or those who remain unemployed.
• A lot of workers may simply pocket the additional savings, which means the cuts could wind up costing Washington without generating fiscal growth on the back end.
• Historically, employees don’t add to their spending at all if they’re only seeing an incremental increase in take-home pay. In other words, if their gross salary isn’t increasing, neither is their spending.
• A recent survey by the National Federation of Independent Business reveals 23% of businesses claim weak sales are their biggest problem, while only 4% claim it’s the cost of labor.

While a lot of what Bartlett is throwing out there is speculative at best, and almost every point has a counterargument that speaks to the greater good of the payroll tax cut, these are points that need to be considered. In the end, the key is to develop solutions that help the economy more than they hurt it. While a payroll tax cut sounds great on the surface, we need to consider whether it really serves the purpose for which it was proposed.

Source: “The Case Against a Payroll Tax Cut,” by Bruce Bartlett, New York Times, 8/30/11.

According to Sibson Consulting VP Joseph DiMisa, every type of commission or quota plan has its advantages and disadvantages.

In a recent article, DiMisa explains there are six different types of sales compensation models. We break down the pros and cons of each, as well as what type of plan makes the most sense, based on your business model:

1. Straight commissions: Salespeople are paid a flat rate based on overall sales volume, the number of sales they close or the number of units they sell. Straight commission plans work best when salespeople’s only responsibility is to sell (as there may not be any base involved). More importantly, this strategy is most effective when salespeople aren’t in a position to bargain or negotiate based on price (or other concessions), as this tends to diminish profit margins, despite the fact salespeople continue to make the same commissions.
2. Net commission: Salespeople earn commissions based on the net profit each sale yields (as opposed to gross volume). Net commission plans work extremely well in cases where salespeople are authorized to negotiate and make deals when they see fit. Knowing their bonuses are based on net profit makes salespeople much less likely to lower their price or grant concessions that minimize the company’s profit margins.
3. Step quota systems: In this type of system, salespeople earn a fixed bonus amount based on the percentage they exceed quota by on a bi-weekly basis. In other words, if you exceed quota by 10%, you earn a fixed percentage of the overall volume you earned for the company.  If you exceed quota by 20%, you earn a much higher fixed percentage of the overall volume you earned for the company. In other words, a mid-level performer who exceeds quota by 10% may receive 5% of the overall sales volume he generated, while a rep who exceeded quota by 20% may earn 15% of the overall volume he generated. Step or staggered quotas push performance, but they may also encourage salespeople to rush and close bad deals, simply to earn a much higher bonus rate for that pay round. These systems are only advantageous if salespeople don’t have a lot of leverage in terms of manipulating the system.
4. Itemized commission plan: In this type of comp plan, salespeople are rewarded with fixed bonuses based on which specific models or services they sell. The scale generally varies based on what the cost/benefit or profit margin of each product is. This system works well when companies want to each push a specific product (in which case they can temporarily increase the bonus for that product), or they want to encourage salespeople to promote products and services that offer the highest rate of return.
5. Steep commission: Salespeople are paid increasingly higher bonuses for closing higher amounts of sales or volumes. For example, a top-performing rep may be averaging $100 per sale, while a low performer is only making $65 per sale. In other words, low performance is a double whammy – you earn fewer commissions at a lower rate. This system only works in cases where high performance is the ONLY thing that matters to a sales organization. Systems like this are set up to reward star performers and discourage everyone else. A small sales force of veteran pros could potentially thrive on this system, but larger companies would most assuredly encounter morale problems, as well as disputes over unfair wages, etc.
6. Individual commission plans: These plans are based on terms that both the sales manager and the salesperson agree to. Because every commission plan or agreement is unique, these plans are only advisable in cases where a salesperson is hired as a consultant or independent contractor. Otherwise, offering individualized commission plans based on each rep’s preference, while motivational, is bound to end in utter chaos.

Source: “Commission Versus Quota,” an article by Joseph DiMisa, Sibson Consulting.

Here’s the set up: Many firms count all IT costs as general and administrative (G&A) expenses, say the folks at Forrester Research who keep an eye on such things.

The lack of true IT cost transparency by budgeting this way can put  your organization at a disadvantage on two fronts:

1. Your  financial statements will be distorted. Your bottom line remains the same, but your G&A will be overestimated while your cost of goods sold (COGS) will be understanted. That may mistakently make people think you have too much overhead or that products are more profitable than they actually are.
2. Other top execs may make bad decisions. If they rely on faulty data, execs may make the wrong calls on where to direct resources.

Best bet: Encourage IT to break down its costs as completely and accurately as possible.

The Towers Watson study, which included nearly 400 U.S. companies across a broad range of industries, found the average merit raise in 2011 will be approximately 3% (compared with 2.7% in 2010).

That represents the largest annual increase in merit raises since the financial crisis began back in 2008. Back in those days, companies averaged 3.5-4% merit raises a year, according to a recent CFOZone post.

What’s more: Companies are planning to hire, providing some much-needed relief to long-time employees, who’ve been forced to take on more responsibilities over the past few years.

Among the expected hiring trends:

• 42 percent of companies are planning to hire workers for positions that require critical skills
• 40 percent plan to add professional and technical workers, and
• 25 percent plan to hire sales professionals and hourly workers this year.

Despite all the optimistic forecasts, more than a third of companies claim they’re still having trouble when it comes to recruiting top performers, many of whom have been able to maintain their employment throughout the crisis.

Source: “Merit raises are coming back,” by Stephen Taub, CFOZone, 3/1/11.

1. Mortgage loan discounts: One of the few upsides to the housing market in 2010 was that if you bought a new house, you may be able to deduct any mortgage origination fees or discount points that you paid, as these are considered prepaid mortgage interest.
2. Home energy improvements: The government is pushing energy efficiency, and as a result, any home improvements that made your house more energy efficient (e.g., weatherproofing, new windows, a new water cooler, etc.), you may be eligible to deduct as much as $1,500.
3. Expenses for volunteering/mentoring: Do you get involved with any non-profit programs, coach a little league team, support charitable causes. If so, any costs you incurred may be deductible. This includes gas, meals, hotels (if applicable), and event costs.
4. Business expenses: If you’re an entrepreneur or you do any type of freelance work, you can deduct expenses for business dinners, gas, supplies, utility bills (assuming you have receipts that prove they’re specifically related to the work you do), and several other everyday costs you incurred as a result of your business.
5. Dependent parents: If either your parents or in-laws live with you, and/or you had some hand in paying their medical expenses, you may qualify for some considerable deductions. The dividing line, according to U.S. News and World Reports, is whether you provide more than 50% of your parents’ financial support and their expenses exceed more than 7.5% of your adjusted gross income.

Source: “10 Hidden Tax Deductions Exposed,” Erik Folgate, U.S. News and World Reports, 3/11/11.

Here are three strategies that’ll bring lost customers back:

1. Review account history. If a former customer won’t reveal specifics as to why he or she left, prepare to do some research. Check the account records carefully to see if there were any problems or complaints that went unanswered (perhaps about delivery or quality). Try to come up with a plan to fix any unresolved problems, then share that plan with your former customer.
2. Check with other departments at your former customer’s company to get more information. Maybe the account was lost because of a decision made in Accounting or elsewhere within the company. You can’t fix what you don’t know.
3. Don’t let the experience affect other accounts, especially if you uncover problems that led to a loss of business. Try to repair any unresolved issues and explain your solutions to your present customers before they cancel, too.

Adapted from “Master Selling, Maximize Success,” by Kristina Susac.

In an economic downturn, small firms find themselves hit by more incidents of in-house larceny. Here’s why – and what to do about it.

First, the statistics. The Association of Certified Fraud Examiners looked at 959 cases of in-house fraud and embezzlement, and came up with the following conclusions:

• The median loss in this study was $175,000.
• The typical period between the time of the first act of fraud and the time someone was caught was two years. In other words, most of the instances of theft went undetected for long periods.
• Most of the thefts were committed by first-time offenders – people who appeared squeaky-clean prior to getting caught. Only 7% of fraud perpetrators in the study had prior convictions, and only 12% had been previously terminated by an employer for fraud-related conduct.
• Most of the perpetrators were caught as a result of tips from employees or others, rather than by audits (more on that below).
• Most of the victims were small businesses – who thought their size was an advantage for keeping track of cash and the people who handle it.

To make matters worse, in-house fraud and embezzlement tend to worsen as the economy worsens, for at least two reasons:
1. Cash-strapped employees get desperate and are more likely to scheme against their employers.
2. Layoffs tend to leave holes in the usual controls designed to prevent fraud.

What to do about it
The ACFE study examined what might have been done to prevent fraud in the 959 cases:

• Look for it in the obvious places. Fact is, fraud and embezzlement usually take place exactly where you’d expect: your accounting department that handles the money. There are variations of fraud and embezzlement – some in billing, some in accounts payable and so on. But no matter the variation, the problem usually exists in the accounting department.
• Use checks and balances as much as possible. As mentioned above, many instances of fraud were uncovered as a result of tips: one employee’s noting misdeeds by another. (In a minority of cases, the tips came from customers, vendors and others.) One suggestion: Use cross-training and job rotation, so that one employee isn’t solely responsible for one area all the time.
• Use surprise internal audits. Big, planned audits or those conducted by outsiders are effective and have their place, but the surprise internal audit remains the most effective deterrent and means of detection.

You can download the full 68-page report in PDF at www.acfe.com/documents/2008-rttn.pdf