Archive for the ‘Outsourcing’ Category

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3 Ways to Reduce Employment Costs with HR Outsourcing

Thursday, June 16th, 2011

The Human Resources Outsourcing industry remains strong through the weak economic recovery. Recent studies indicate that organizations, both large and small, either already have an HRO relationship and plan to expand it, or are considering an HR outsourcing relationship, in the coming year.

The survey, conducted by HfS Research and the London School of Economics, finds that 31% of business already outsource human resources and are looking to increase outsourced services over the next year. An additional 15% do not currently outsource, but are looking to begin outsourcing various HR functions in the coming twelve months.

What is the driver for these businesses to outsource human resources?

It is no secret that in lean economic times, business owners are pressed to identify expenses within an organization that can be reduced or minimized. Employment overhead (payroll, taxes, workers’ compensation insurance, employee benefits, governmental compliance, and other employee-related cost centers) typically comprise the single highest area of expense within a company. More than rent, or facilities operations, or equipment, or compliance, human resources administration and expenses weigh heaviest on the business’s bottom line.

By engaging a human resources outsourcing firm, the business owner is able to reduce employment costs in three primary ways.

Streamlined HR Systems

HRO firms offer streamlined human resource systems to their clients, significantly minimizing management’s time in overseeing daily administrative tasks. Non-productive “paper pushing” can be outsourced to the HR firm, enabling key staff to focus on their core competencies. Processes such as payroll processing, tax filing and compliance, Unemployment Claims administration, workers’ compensation management, and employee benefits enrollment and management can all easily and efficiently be outsourced. The HRO firm rolls the client’s administrative processes into their existing systems, offering seamless management at a fraction of the cost.

Cost effective insurance products.

Small businesses are at a significant disadvantage when it comes to purchasing insurance products for their employees. Both workers’ compensation insurance and employee benefits have become a significant financial burden on employers. While a small employer is limited in the range of benefit plans and insurance offerings they can provide, HR Outsourcing firms forge relationships with large regional and national insurers. Through these relationships, and the resulting economies-of-scale, HROs offer their clients richer, more cost-effective insurance plans.

Reducing employment risks

Government compliance and regulations continue to grow in complexity and scale. Month after month, new case law is created and many of these decisions directly impact employers on the ground. From wage and hour issues, to discrimination restrictions, to protected classes of employees and new disability guidelines, employers often walk through a minefield of risk. Without dedicated human resources personnel or legal counsel, it is likely a business will be faced with some form of an employment lawsuit in the coming years. With close to 100,000 employment claims filed in 2010 (the highest on record!), employers recognize the risk and are turning to Human Resource Outsourcing firms to assist them in managing these risks. HR firms employ teams of experts in a wide range of disciplines and are able to provide accurate and timely advice to assist their clients avoid expensive employment lawsuits.

Human Resources Outsourcing may not be the solution for every employment need. However, for most employers with less than 200 employees looking to reduce employment expenses and overhead, outsourcing human resources may be exactly what their organization needs.

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Posted in Outsourcing, PEO/Co-employment | No Comments »

Just Released: “Human Resources Outsourcing – 7 Client Success Stories”

Monday, May 9th, 2011

In almost every organization, it is the employees that drive their success. From growth and product development, to customer service and quality assurance, it is the people who will ultimately have the greatest impact on the company’s future profitability and stability. A key to business success in today’s environment will be concentrating on improving the human resources systems within the organization: developing and motivating their employees, protecting their companies against employment lawsuits, and researching more efficient and cost effective HR systems.

The obstacles faced by many businesses in achieving these goals are the limitation of time, resources, and manpower to effectively improve their HR infrastructure. The level of expertise and know-how required to impact the HR systems is usually beyond their means. More often than not, these critical areas are left by the wayside as other tasks dominate management’s time and energy.

The HR Outsourcing Solution

A solution that has been growing in popularity over the past decade has been to bypass the conflict completely, by outsourcing the complex, time consuming, or unproductive tasks relating to employee administration. The Human Resources Outsourcing industry has continued to grow in recent years, despite the global recession.

Human Resources Outsourcing can take on many appearances, from complete end-to-end processes, to specific, discreet functions. But in the end, they all share the same principle: by entrusting non-core, non-revenue generating tasks to an outside expert or firm, the business can comfortably focus on other critical areas, assured their human resources systems will be managed professionally and efficiently.

**Just Released** – 7 Client Success Stories

Over the past 3 decades, CPEhr has successfully helped small employers throughout the state of California, and across the nation, manage their employee administration more efficiently, and cost effectively. We encourage you to read seven real-life stories of businesses that were ready to think out-of-the-box and utilize HR Outsourcing in their company.

Download your free copy of:

“HR Outsoucing: 7 Business Success Stories“

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Posted in Employment Laws, Outsourcing, PEO/Co-employment, Uncategorized | No Comments »

Four Ways HRO Firms Can Help Boost Employee Morale and Improve Productivity

Tuesday, April 12th, 2011

As the economy slowly climbs out of the recession, your employees may also be in need of a little extra motivational help. Things may still be tough financially around the office, and it is important to maintain a positive and upbeat work environment, regardless of your financial statement.  In recent years, thousands of employers have been turning to Human Resources Outsourcing firms for support. An HRO firm provides many services that can help improve employee morale and productivity.

Motivated Employees

Despite the common perception, increases in salaries or financial bonuses are NOT the number one motivational factor for employees. Study after study proves that employee development, training and recognition programs are the primary motivators in the workforce. Most employees understand their employers may have gone through a difficult financial time and will allow them a “pass” if they skip this year’s bonus, but not if they feel under-appreciated. Recognize and appreciate your staff, and they will continue to give you their all, despite the tough economic times.

Employment Challenges and the HRO Solution

Yet, despite the noblest intentions, most small employers find their time and resources too limited to research, create, and implement effective programs. Their management team is already tasked to just “get the job done” and motivational programs are often view as extraneous or expendable. This is where an HRO firm can help! Human Resources Outsourcing firms employ a team of HR experts in a wide range of disciplines, from employment compliance and HR policies, to employee benefits administration and safety consulting. Most importantly, HRO firms work with a wide range of businesses and are able to collect, review and implement the most effective motivational programs that have been proven to work. More importantly, these programs can be implemented quickly and at a substantially lower cost than if they employer attempted to manage it themselves.

Below are four fundamental elements of an employee recognition and motivational program: with which an HRO firm can assist:

1. Management Training – Some trainings are required by law, such as Unlawful Harassment Training. However, many courses empower supervisors to reach higher levels of confidence and commitment to their employer. With advanced management courses in their pocket, they can more readily motivate, train, and lead their staff.

2. Employee Development – An educated employee is a dedicated employee. Numerous trainings motivate and empower staff to reach their full potential. Time management, Positive Motivation, and Managing through Difficult Times are just a few examples of training that motivate employees to excel.

3. Incentive Programs – In a tight economy, most employers don’t have the financial resources to provide large bonuses or cash incentives. However, with a little creativity, employers can find alternatives to incentivize and motivate their staff. Birthday parties, small gestures of appreciation, public recognition, and minor gifts go a long way in keeping your staff supportive of your efforts in tough economic times.

4. Employee Benefit Packages – A key motivator for employees to work hard and remain dedicated are good benefit programs. While insurance can be costly, many low-cost alternatives exist, including voluntary benefit and retirement plans.

If you have been struggling with low employee moral and an under-motivated workforce, perhaps it is time to consider turning to a Human Resources Outsourcing firm for help. The HRO will review your needs, create a comprehensive motivational program, and see that it is administered effectively. Look forward to an active and motivated workforce in no time!

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Posted in Outsourcing, Training and Development | No Comments »

Avoid Common Payroll Mistakes with HR Outsourcing

Monday, March 28th, 2011

With few exceptions, small businesses expend significant resources ensuring that their core operations run smoothly. However, attention must also be paid to peripheral business functions such as workplace safety, employment law, employee benefit administration, and more.  Any misstep in the human resource aspect of a business can derail management’s focus on core activities. To ensure management can remain focused on their job, outsourcing Human Resources is an excellent option for dealing with all aspects of HR operations.

Let’s take a look at one feature of HR – payroll. Of all employee-related processes, there is no doubt that the laws surrounding payroll processing and payroll tax submission are some of the most difficult to master, even for the tax accounting specialist. Consider the following statistics:

  • The tax code (the basic law written by Congress) is 2,840 pages.
  • The IRS regulations add an additional 46,000 pages.
  • The combined number of forms for businesses and individuals is now over 480

Internal Revenue Code (IRC) 6656 reviews penalties for late payments of payroll deposits. A deposit only ONE day late will result in a penalty equal to 2% of the delinquent amounts. It jumps to 5% for payments made 6 days late, and doubles to 10% for payments made 16 or more days late. A recent report states that over 1 MILLION tax penalty statements are sent out quarterly.

Common Payroll Tax Mistakes

Simple attention to the details can often reduce the risk of missing a tax payment, or making an incorrect deposit.  Below are three common mistakes that Human Resource Outsourcing services can help prevent:

1. Submitting Late Deposits

Once you have withheld taxes from the employee, it is important to know when and how these taxes, along with the employer contributions, must be paid.  There are many regulations at the Federal and State levels that dictate when and how payments are to be remitted.  If payments are late, penalties and interest can be assessed. Contact your accountant, bookkeeper or payroll vendor to find out your payment obligations.

2. Late or Incorrect Payroll Tax Return Filings

There are numerous Federal and State returns that must be filed for payroll taxes, including withholding, unemployment, local and school district taxes.  All have different reporting requirements (paper, e-file, mag media, etc.) and due dates.  If proper procedures are not followed, penalties and interest can be assessed.

3. State Unemployment Insurance Rates not updated

Most States update employer SUI rates annually.  It is important to update the payroll software with the new rates, so taxes are properly paid.  Underpayment of taxes can result in penalties and interest. Once again, contact your CPA for this information.

Avoid the Obligations Altogether – Outsource it

Most small employers recognize they are unable to stay abreast of all their payroll tax obligations. Many already outsource payroll to an outside payroll vendor. However, many employers are now outsourcing this HR function to a Professional Employer Organization (PEO). A PEO “co-employs” the client’s worksite employees and assumes the payroll and tax obligations of the client. The payroll is reported under the PEO’s Federal Tax ID Number, which in turn provides a layer of compliance to the business. IRS audits, payments and inquiries are directed to the PEO, which has teams of payroll and tax specialists on staff. Thousands of employers have found that a PEO is precisely the cure to the payroll tax headaches they have been looking for.

Discover today how outsourcing human resources can help your business keep its payroll running smoothly!

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Posted in Outsourcing, Payroll and Tax | No Comments »

Outsourcing Human Resources: Smarter – and More Cost Effective – than Keeping HR In-House

Wednesday, March 9th, 2011
One of our sales reps recently returned from the field, after signing a human resources outsourcing contract with an infomercial marketing and distribution firm. This was a growing company with fundamental HR needs shared by many, many employers. Their challenges were not unique or exceptions to the rule – they are the rule! Their concerns included:

  1. Unsure if all their employees were classified properly
  2. “Needed more structure” in their HR processes
  3. Grew from 20 people to 55 but still had no dedicated HR person or expertise
  4. Two office locations were not in sync with the other; had no consistent policies or protocol
  5. Wanted training for supervisors on progressive discipline
  6. Looking for HR advice, “independent of management”, to help with compliance and work around internal politics

 

The Cost of HR Management

Experience reflects that until an employer has approximately 50 employees they do not employ a dedicated HR manager to administer all employee administrative functions. These functions, such as payroll, benefits administration, employee files maintenance, recruiting, training and employee relations, are shared by different employees in various departments. Usually, only after a business employs 50 or more employees, do they require a dedicated employee to manage all of these tasks.

This position, typically titled HR Manager or Director of HR, is a senior position that reports directly the President or CEO of the company. They also carry a hefty price tag. According to Salary.com, the median salary of an HR Manager in Los Angeles, California in 2011 is $95,000. Adding tax and benefit load, a small employer of 50-100 employees is looking at a position that will set them back $130,000!

 

Human Resources Outsourcing

Alternatively, employers are turning to Human Resources Outsourcing firms, or PEOs (Professional Employer Organizations) to manage the entire process for them. The HRO firm employs a team of experts that are able to manage the complete gamut of human resources administration more efficiently and cost effectively than private employers. And this comprehensive service comes with a price tag at a fraction of hiring a single, internal HR manager.

The HRO’s team of experts manage:

  • Labor law compliance
  • Employment administration
  • Personnel files, documentation and forms
  • Mandatory postings
  • Payroll and tax
  • Vacation and benefit accruals
  • Health Insurance
  • Voluntary/optional employee benefits
  • Workers’ Compensation
  • Safety Consulting
  • Management training
  • Recruiting

If your company faces challenges in any of the above areas, consider outsourcing human resources functions before bringing it in house. Like our newest client, you will not only receive superior human resources support, but you’ll do it at a fraction of the cost!

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PEO Client Case Study – Real Estate Firm Cuts Cost and Simplifies HR Administration

Thursday, February 3rd, 2011

Background and Business Challenges

This Woodland Hills, California-based real estate investment company was founded in 1980. It grew to 35 employees and focused on property development and management throughout Southern California. Shortly after joining the firm in 2007, their new CFO quickly identified four critical challenges within the organization which needed to be quickly addressed.

Payroll. The processing and production of payroll was being handled by an outside CPA firm. The CPA was charging exorbitant fees for the preparation of payroll, electronic tax deposits, quarterly tax returns, annual tax returns, and W2′s. Despite the excessive fees, the CPA firm had no system for tracking vacation, sick and other time off, and the organization constantly found itself requesting information that was unavailable.

Medical Benefits. Any questions, clarifications or employee health benefit issues needed to be handled through an outside broker or directly with the insurance company. All of the health plan administration was being managed through the organization’s accounting department. This process was extremely time consuming and did not provide them with accurate results. “The process caused a great deal of stress to myself, my department, and other employees within the company,” explains the CFO. “I knew we had to make a change”. Additionally, their benefit premiums were extremely expensive. It was one more reason they needed to look for alternative health care solutions.

Workers’ Compensation. While they did not face excessive workplace injuries, there were several incidents that required attention from the insurance company. They found that claims were not being addressed satisfactorily from their insurer, and as a result, faced increases to their workers’ compensation insurance premiums.

Employee Management. Lacking a dedicated personnel department, the company did not have proper Human Resources systems established. Employee termination issues were not handled properly, many employees’ exempt vs. non-exempt statuses were questionable, and employee personnel files were in disarray.

“There was no way we could continue managing our HR responsibilities as we were,” says the CFO. “We began researching alternative HR management options. After extensive research and interviewing five HR providers, we selected CPEhr to help us.”

HR Solutions

CPEhr conducted an initial consultation to determine which service package would best fit the needs of their company. While they offer a range of HR programs – from “A La Carte” consulting to a full HR Outsourcing solution – the CPEhr Consultant determined the client required the complete Co-Employment service model through the PEO (Professional Employer Organization). The PEO program includes payroll and tax administration, human resources management, workers’ compensation and safety services, and full range of medical and voluntary employee benefit packages.

The first step was to provide each employee with a new employment packet, including I9’s, W-4’s, general information sheet, and other mandatory state and federal documentation. The client’s management team then reviewed the benefit options with the CPEhr Benefits Representative, discussed options, and selected a variety of HMO and PPO plans to offer their staff. Finally, the Business Implementation team conducted an Employee Orientation with all their existing staff and assisted them in completing the paperwork and enrolling them in their new benefit programs.

Once on-board, CPEhr provided the client with a dedicated Human Resources Representative that acted as their primary liaison with all other CPEhr departments – Workers’ Compensation, Benefits, Payroll and HR. One by one, each employment challenge was addressed, and solved:

  • Payroll was processed accurately and timely, and all paid-time-off benefits were tracked and managed;
  • Health benefit premiums were significantly reduced;
  • All employee benefit issues were managed by a CPEhr Benefits Representative who acted as the intermediary between the client and insurance carrier;
  • Workers’ Compensation premiums were significantly reduced, and a Claims Manager was assigned to address all future workplace injuries;
  • Employee files were updated and all exempt and non-exempt status questions were resolved.

Tangible HR Results

To cover the services provided, CPEhr charged a monthly administration fee as a percentage of payroll. “The administrative fee charged by CPEhr was most reasonable,” reflects the CFO. “It provided our company a significant cost savings in both hard and soft costs.”

Offsetting the fee were reductions in workers’ compensation, health and other benefit premiums, consolidated vendors under a single roof, streamlined employment processes, and a reduction in employment risk.

“Beyond the savings, CPEhr protected our company against making bad employment decisions and running inefficient HR systems. They provided exemplary advice on employee termination issues and kept us out of trouble on numerous occasions. Joining CPEhr was probably the best business decision our company ever made.“

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Posted in Outsourcing, PEO/Co-employment | No Comments »

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