| As the economy begins the long recovery process | | | | and wellness programs, and developing existing staff |
| after the turbulence of the past couple of years, | | | | with ongoing training and education. |
| businesses across the country continue to look for | | | | Benefits of Outsourcing |
| ways to cut costs and boost their bottom line. Rather | | | | By enlisting the services of a third-party firm to handle |
| than slashing prices, lying off employees, and scaling | | | | your HR functions, you’ll be able to: |
| back inventory, many companies are discovering the | | | | * Stay up to date on the most recent state and |
| fiscal advantages of outsourcing their HR functions, | | | | federal regulations, ensuring that your company |
| prompting a spike in demand for Human Resources | | | | remains compliant |
| Outsourcing (HRO) providers. According to a study led | | | | * Receive expert advice on best practices for |
| by Gartner, a technology research company, the HRO | | | | employee management and benefits administration |
| market is expected to expand by nearly 25% by 2010. | | | | * Provide employees with greater accessibility to HR |
| Whether you run a small business or a global | | | | representatives to get prompt, accurate answers to |
| corporation, there will always be some core HR | | | | their questions |
| functions—such as employee training, payroll, and | | | | * Reduce the risk of lawsuits by minimizing mistakes |
| benefits administration—that serve a critical role in | | | | and violations |
| your organization. As a business owner, you have | | | | * Pay a variable cost to cover only the HR functions |
| three main options for handling them: | | | | that are absolutely necessary, rather than a fixed cost |
| * Do it yourself. Many presidents and CFOs of small | | | | that doesn’t fluctuate with the workload |
| businesses are tempted to manage all HR functions | | | | * Save on the costs of hardware, software, and |
| themselves; mistakenly assuming they’ll save | | | | systems that would be required for an in-house HR |
| money by not hiring an HR specialist or outsourcing to | | | | team |
| another company. The reality is, with U.S. business | | | | * Have access to a full team of HR professionals, |
| owners spending up to 25% of their time managing | | | | including benefits administrators, HR managers, payroll |
| paperwork, compensation, and benefits, keeping HR | | | | specialists, attorneys, and more |
| in-house can quickly become a drain on your | | | | * Build employee morale by providing the tools, |
| productivity. Plus, by juggling all of the balls yourself, the | | | | rewards, and motivations they need to succeed |
| risk of dropping one or more of them drastically | | | | * Receive professional documentation, such as |
| increases. | | | | employee handbooks, forms, and policies |
| * Hire a full-time HR team. While this approach will take | | | | * Spend more time on core business functions geared |
| a bulk of the employee management tasks off your | | | | toward producing revenue, promoting your products or |
| plate, it also requires a sizable annual investment in | | | | services, and building your brand |
| salaries and benefits of your full-time employees. With | | | | * Replace time-consuming manual recordkeeping with |
| the myriad of tasks and considerations demanding | | | | automated, efficient processes |
| attention—employee relations, anti-discriminatory | | | | * Receive professional reports of all HR initiatives, |
| laws, worker’s compensation, benefits | | | | allowing you to quickly gauge your return on |
| administration, salary trends, payroll, and much | | | | investment |
| more—you’ll likely need to hire more than one HR | | | | * Access a much wider scope of tools, knowledge, |
| employee. If the HR workload fluctuates throughout | | | | and technologies, including state-of-the-art HR |
| the year, you may end up paying for more time than | | | | management software |
| you actually need. Also, you’ll spend some of your | | | | Choosing the Right HRO Provider Once you’ve |
| own time managing the internal HR team. | | | | made the decision to save time and money by |
| * Outsource HR functions. There’s a reason the | | | | outsourcing HR functions, it’s important to choose |
| HRO market is enjoying the highest level of demand | | | | the right vendor to suit your needs. Ideally, your |
| it’s seen in the 75 years since the business model | | | | provider should have an understanding of your industry, |
| was created. Significant time and costs can be saved | | | | offer a diverse range of services, and strike a |
| by leveraging the services of a seasoned third-party | | | | desirable balance between quality and value. |
| provider. Most companies can expect to save up to | | | | Before signing a contract with a third-party HRO |
| 20% in worker’s compensation payouts, up to 20% | | | | provider, be sure to ask the following questions: |
| in employee benefits, and up to 10% in basic HR | | | | * Can they provide references of companies who |
| functions, such as payroll and compensation. This can | | | | have seen quantitative results after utilizing their |
| easily result in thousands of dollars in cut costs each | | | | services? A reputable vendor should have no |
| year, even after paying the outsourcing fees. | | | | reservations about providing contact information for |
| The Outsourcing Model | | | | satisfied clients. |
| Anytime you use a third-party contractor to perform a | | | | * How long has the company been in the industry? |
| business-related function, you’re outsourcing. | | | | Are they profitable and stable? Be wary of providers |
| Commonly outsourced tasks include technology | | | | who are just starting out or have recently downsized |
| support, web design, copywriting, data entry, and | | | | or changed owners. |
| employee management. As a general rule, any | | | | * What sort of resources does the vendor have on |
| functions that are not part of your business’ central | | | | hand? Ideally, you want a company who has invested |
| focus can and should be delegated, freeing you up to | | | | in a team of specialists, a professional office space, |
| focus on your core objectives and revenue-producing | | | | and the latest HR software and technologies. |
| activities. As an added bonus, specialized contractors | | | | * What’s their pricing model? While it may be |
| typically have a stronger skill set in the task at hand, | | | | tempting to go with the lowest bidder, you’ll likely |
| adding more value to the project than you or another | | | | enjoy greater benefit by striving for a desirable middle |
| internal employee could. | | | | ground. Remember, value is not only measured by |
| In some cases, when a business regards Human | | | | price, but also by the quality of service you receive |
| Resources as a critical factor in their growth and | | | | and the amount of time saved. |
| development, they may choose to keep their existing | | | | * Will you have a dedicated point of contact for |
| in-house HR team and use third-party firm for certain | | | | questions and requests? What is the vendor’s |
| administrative functions, such as payroll and benefits | | | | desired mode of communication? How quickly will |
| administration. This gives the internal HR personnel | | | | phone calls and emails be returned? |
| more time to spend on recruiting talented employees, | | | | *Does the provider back up their work with a |
| building morale, promoting ancillary initiatives like health | | | | guarantee? |