This column will continue my attempt to convince tax-exempt organizations that traditional monthly financial statements, without dashboard analysis, are a failure in terms of management and board communication, transparency, and accountability. My prior columns (one of which ran in the 11/12/18 issue of CNYBJ, titled: “Using financial ratios to detect problems in nonprofits”) were devoted to the extraordinary benefits that can be derived from the development and effective use of dashboards. I believe that developing or enhancing dashboard reporting for your organization should focus on the following eight quadrants:

1) Balance sheet financial ratios

2) Operating ratios and performance indicators

3) Salary and fringe benefit ratios and metrics

4) Billing, program revenue, and units of service

5) Human resources — recruitment, retention, turnover, and vacancies

6) Regulatory and corporate compliance reporting

7) Cash flow and capital purchases

8) Projected actual to budget variances and action steps required

The recent columns focused on balance sheet financial ratios and operating ratios and performance indicators. This column will address the following:

• Salary and fringe-benefit ratios and metrics

• Billing, program revenue, and units of service

•H uman resources — recruitment, retention, turnover, and vacancies

Salary and fringe-benefit ratios and metrics

The third of our eight dashboard quadrants may be the most important of all, since 65 percent to 75 percent of expenditures for most tax-exempt organizations fall into the salary and benefit categories.

The dashboard information selected for each quadrant must be tailored to your organization. The suggestions made in this column are not intended to be all-inclusive. In fact, it would be surprising to me if your organization’s management and board would not ask for additional data elements as well as eliminate one or more of my suggestions.

In the area of salary and fringe-benefit ratios and metrics, I believe the following dashboard data points are appropriate. Each of the following can be compared to your annual budget expectation.

a) Number of full-time equivalent (FTE) employees. If appropriate, you can provide both full-time and part-time employee statistics. 

b) Total payroll incurred / accrued during the month. This information may be more useful if presented by program service area / department as well as administrative functions.

c) Total fringe benefits, which would include health insurance, workers’ compensation, and employer retirement cost.

d) Overtime hours paid and total dollars expended.

e) From the information provided above, the dashboard quadrant can include the following valuable information:

i. Fringe-benefit costs as a percentage of salaries.

ii. Health-insurance costs per FTE.

iii. Retirement costs per FTE.

iv. Workers’-compensation costs per FTE.

f) Employee-incentive costs can be presented if your organization has a monthly, quarterly, or annual policy of lump sum payment distributions to reward desirable performance and/or achievement of performance goals.

g) Finally, subject to your editorial modifications, the total amount of vacation and holiday hours together with total expense for paid time off provides far more valuable information than your traditional monthly financial statements.

Billing, program revenue, and units of service

The fourth quadrant is also important, since we all have heard the comment that “cash is king.” Prompt billing and monitoring of service volumes and your receivable collection practices are what convert receivables into vital cash flow. This quadrant will most likely require the most significant editing to develop the most important information relevant to your program-services revenue, as follows.

a) ˇotal revenue recorded by program for the period in comparison to budget. 

b) Total accounts receivable outstanding at month-end.

c) Aging percentages of outstanding accounts receivable by time duration from billing date (e.g., 30, 60, 90, over 120, etc.).

d) If your organization has any amount of backlog in processing claims for all services rendered during the period, this quadrant should include the total dollar value of services provided but not billed. 

e) Total amount of cash deposits received and processed during the period. This amount, when compared to total revenue above, will indicate whether total receivables are increasing or decreasing.

f) While not directly related to the focus of this quadrant, it is important to report the total amount of check disbursements, which will indicate, when compared to deposits, whether a cash basis surplus or deficit was generated for the period.

g) Service volumes and units of service by program component in comparison to budget represent the most important statistic to monitor during the year. Accordingly, current month and year-to-date statistics should be presented. 

h) If your organization provides health care, human services, and/or social supports, this quadrant should include information regarding service-provider productivity in comparison to target expectations. 

The preparation and processing of check disbursements without mailing is referred to as “held checks.” This procedure represents an internal control weakness and should be avoided. However, if a held check procedure is used by your organization, the total amount should be reported in this quadrant.

Human resources — Recruitment, retention, turnover, and vacancies

In my more than 40-year career serving and advising tax-exempt organizations, I must now disclose my most significant frustration with traditional internal or audited financial statements. That is, no one can determine the total cost of employee turnover from traditional financial statement reporting. There is no “cost of turnover department,” and as a result, one of the most significant costs to any tax-exempt organization is recorded in five or more distinct cost accounting classifications. Rarely, if ever, are these costs summarized for management and board awareness. 

The following quadrant recommendations, if adopted, will eliminate my most significant career frustration. The first step in accumulating the cost of turnover is to identify the costs incurred related to a single employee being hired as well as employees who are voluntary or involuntary terminations. 

Based on calculations and estimates that we have made for our clients, the cost of a single employee turnover in most tax-exempt organizations ranges between $3,000 and $10,000. That is why, with turnover frequently exceeding 10 percent, the information in this quadrant can produce extraordinary value for your organization in terms of actionable procedural improvements. In order to properly assess the cost of turnover, an organization must determine and report the following information in this quadrant:

a) Employee FTE turnover during the reporting period.

b) Number of new FTE hires added.

c) Current number of vacant positions by program.

d) Total number of actual FTEs vs. budgeted FTEs, including a calculated vacancy percentage.

e) Overtime costs incurred during the reporting period due to vacancies.

f) ˇraining and orientation costs for each new hire.

g) Dollar impact of mandated minimum- wage increases. This can include incremental salary costs resulting from “salary compression” for longer-term employees.

Management is in the best position to identify and determine the estimated cost of employee turnover. You will note that I have not referenced the human resources department in any of the above quadrant recommendations. Obviously, the HR department is responsible for more than just recruitment and retention. The most productive approach in estimating the approximate costs of human resources devoted to addressing turnover is to obtain the opinion of your HR director.

Finally, please be aware that all information provided in any dashboard quadrant can be compared to either or both a targeted benchmark or the organization’s budget expectation.                         

Gerald J. Archibald, CPA, is a partner in charge of the management advisory services at the Bonadio Group. Contact him via email at garchibald@bonadio.com

Now that 2019 is here, business owners and marketers should be thinking about what they can do to make their companies more successful in this New Year. Hopefully, somewhere near the top of their priorities list is finding ways to leverage their social-media channels more effectively. 

Gone are the days when companies can treat social media as an afterthought or a supplemental marketing channel. Today, social-media platforms are where a business has an opportunity to consistently demonstrate its value and reinforce its voice. They are the go-to places where customers ask questions, offer accolades, and air complaints. No business can ignore the significance of its social-media presence because it influences how people perceive its brand. So what can you do to bolster your brand’s success through social media in 2019?

I’ve always been cautious about making social-media predictions because the ideal social strategy is unique for every business. However, there are some online marketing trends worth considering as you evaluate what tactics will grow your business. Here are five social-media trends to observe.

1. The growing importance of personal branding to business branding 

Especially for small businesses, putting a real, human face to a business name helps build loyalty. A brand that’s more relatable and has the human element naturally garners more trust — and trust is essential for building relationships. 

One way to humanize a brand is to promote the personal brand of the business owner or a high-level leader. This tactic has become a staple for many organizations, as demonstrated through guest blogging, podcast and webinar appearances, and other publicity opportunities. Through allowing people to get to know the character and expertise of company leadership, a business can strengthen its brand reputation.

Businesses that embrace this in 2019 will have a distinct advantage over companies that hide behind their logo.

2. Long-form content for making an SEO impact 

While word count is not the only thing that can impact how prominently an article will appear on the search-engine results page, SEO experts say long-form content will be able to give you an edge. Although Google doesn’t penalize blog posts, if they fail to reach a certain word-count threshold, it stands to reason that a high-quality article with 1,600 words will likely outrank a high-quality article with 500 words. It’s for that reason we’re seeing more publishers requiring guest authors to submit articles with a minimum of 1,000 or more words. 

We’ll see more company blogs embracing long-form content and incorporating it into their content strategies. Therefore, businesses that have found they aren’t getting SEO traction with short posts may want to “go long” and add longer articles rich with information and insight that will attract readers and give Google a reason to rank them more favorably. This trend will definitely make a difference in your results in 2019.

3. Acceleration of personalized marketing

With more companies digging into their data and using it to create customized marketing campaigns that target individuals’ interests at different points in the buyer’s journey, the pressure is on. Customers have come to expect brands to tailor special offers and discounts to their wants and needs. To accommodate that expectation, more businesses will need to consider targeted advertising and retargeting campaigns on social-media channels. I anticipate that social platforms will continue to refine their targeting offerings as the demand for individualized content grows.

4. Video’s prominence as the preferred form of content 

In a survey by Wyzowl “The State of Video Marketing 2018,” 97 percent of marketers said video has helped increase user understanding of their product or service and 76 percent said it has helped increase sales. Additionally, live streaming video will continue its emergence as a powerful way to engage people on social media. In fact, according to statistics compiled by Go-Globe by “2020,” 82 percent of internet traffic is expected to be live video. 

Video’s prominence tied closely to the first trend, personal branding’s influence on the business brand. Video allows for a company to put a face to the business. It enables prospects and customers to get to know who leads and works in a business. Video gives businesses an opportunity to show not only what they do but also “who” they are.

Also, keep in mind that social-media algorithms might give video posts better organic reach than other types of posts. 

5. “Pay to play”—the path to more exposure 

In 2012, brands could expect, on average, about 16 percent of their fans would see their updates according to an article on “Hubspot.” Fast forward to today and that reach has declined even more.

With the diminishing organic reach of business content, most companies will need to invest in sponsored posts, boosted posts, and social-media ads if they want to stay top of mind. Fortunately, social-media advertising doesn’t have to break the bank; a small amount of money can go a long way and this trend should continue well into 2019.

Change: an ever-constant trend

The one trend you can always count on resurfacing year after year is that businesses must — to some degree — adjust their social-media approach to gain broader awareness and increase engagement with customers.

Mark Zuckerberg once said, “Figuring out what the next big trend is tells us what we should focus on.” While that might be true for Facebook, realize that it isn’t always so for every business. The thing about trends is that following them doesn’t guarantee success. Pay attention to social-media trends, but before you jump on the bandwagon, carefully evaluate if incorporating them in your marketing strategy will be consistent with your brand and practical for your business.                        

Rachel Strella is the founder of Strella Social Media (www.strellasocialmedia.com), a social media management company. She is a regular contributor to Small Business Trends and Social Media Today and has been featured in several well-known business publications.