Archive for the ‘Outsourcing’ Category

HR Outsourcing Case Study – Medical Practice Reduces HR Risks Through HRO

Thursday, February 18th, 2010

human resources outsourcingSometimes change is hard. But when this medical practice recognized their existing HR systems were inadequate in the face of rising employment challenges, they selected a HR Outsourcing and Professional Employer Outsourcing relationship to assist them in reducing their HR risks and exposures. Our next two posts will look at their challenges, and the solutions offered by CPEhr.

Company Background

This medical practice was founded in 1980 with the mission to provide the highest quality health care combined with clinical research and education. It is currently one of the few cardiovascular practices in the country that balances private practice with academic medicine, and runs one of the world’s largest cardiac transplant programs. They currently employ over 30 employees, but are opening two more locations and are expecting to significantly grow their employee base in the coming months.

It was obvious to the Executive Director of this prestigous medical practice that his time would be best spent on providing superior patient care and conducting scientific research. Managing employee issues should have been the last thing on his mind. Unfortunately, it wasn’t.

Business Challenges

As the practice grew in size and prestige, the Director recognized the critical role Human Resources played in his practice. “We do not have a dedicated HR staff,” he explains, “But I understand that human resources can’t be put on the back burner. HR is still a critical part of our practice.” With the lack of sufficient internal HR resources they struggled to standardize employee practices and stay abreast of changing employment regulations. While the Director and his Office Manager continued to personally handle the employee relations, an incident pushed them to consider outsourcing their human resources to a professional firm.

An argument ensued between two front office staff, and the altercation ended with one employee threatening to physically harm the other. The event was witnessed and the employee was let go. A short time later she sued the practice for race discrimination. Even though, at the time, the Director was sure he was doing the right thing, he ended up in an 8 month lawsuit with the EEOC that cost him hundreds of hours of time and distracted him considerably from running the practice. While he ultimately won the case, he realized it was time to work with human resource professionals. He needed a firm who would help him structure an HR system to prevent this from recurring, and to take over the administration of a lawsuit if one ever occurred again in the future.

“As our firm continues to grow and we open new offices, managing the staff in multiple worksites is only going to become more complicated,” he says. He invited CPEhr to present their outsourcing HR solution, and quickly engaged their services.

Our next post will review the HR solutions implemented by CPEhr.

Employee Training and Development – a Business Must-Have to Survive in 2010.

Tuesday, January 19th, 2010

Even now, in difficult economic times, while employers continue to look for ways to keep costs down and reduce overhead, owners and entrepreneurs see value in employee and management training. Employers realize that educational development and training is a crucial investment for a motivated workforce. An intelligent, well-trained workforce is central to worker productivity and key to a company’s success.

Surveys support the need for management training.

Ken Blanchard Companies recently conducted a poll of over 1,700 executives and managers in their “2009 Corporate Issues Survey”. In the survey, the executives were posed the question, amongst others: “What tactics will your firm implement to cope in a down economy?” The overwhelming response by close to 2/3 of respondents was “Invest in productivity and performance maximizing strategies”.  These businesses recognize that the most promising way to weather tough economic times is to have skilled talent help grow the organization. Additionally, numerous surveys directly link employee training with lower turnover, lower accidents, and increased performance and productivity. Successful companies embrace training as a central part of their philosophy.

Outsourcing training to a Professional Employer Organization

According to the American Society of Training and Development (ASTD) over $134 billion was spent on employee learning and development in 2008. In their 2009 State of the Industry Report, the ASTD reveals that over $45 billion was allocated to external services such as workshops, vendors and external events. Businesses recognize the value of accessing external resources to train and develop their staff, as opposed to creating and implementing these programs internally.

A Professional Employer Organization offers a wide range of employee training and management development courses, often built into their standard services, or for an additional nominal fee. This training goes  hand-in-hand with additional Human Resources support services, to round out a company’s corporate policies to ensure a safe, compliant, and positive work environment.

Robust Course Offering

PEOs offer a complete range of training, but the most common ones appear below. CPEhr provides over 40 customizable trainings that can be delivered via the internet, or live, on-site at the client’s workplace.

Courses typically offered can include:

•    Sexual Harassment    •    Workplace Safety   •    FMLA    •    Interviewing Skills   •    Progressive Steps of Discipline    •    Motivating Employees   •    Performance Appraisals    •    Effective Communication Skills   •    Principles of Time Management    •    Diversity in the Workplace   •    Preventing and Defusing Violence    •    Customer Service Training   •    Effective Business Writing    •    Managing Difficult Employees

FREE Webinar on the Value of Training

If you like to learn more about the benefits of training for your organization, please join on THIS THURSDAY, January 21, 2010 for a free webinar: The Business Value of Training. Register here.

PEOs Help Streamline Operations and Simplify Complex HR Administration

Thursday, January 14th, 2010

We continue our discussion on how Human Resources Outsourcing firms and Professional Employer Organizations can significantly reduce the labor costs for small and mid-sized employers. Last post discussed the concept of economies-of-scale. Today we will look at how PEOs can streamline the HR processes within an organization, and reduce redundant employment administration.

Streamlining Operations.

PEOs can help small employers stabilize operating costs is through streamlining their internal administrative operations. By joining a PEO, businesses are able to combine multiple vendors under one roof, thereby eliminating the need to maintain relationships with multiple vendors.

A full-service PEO can provide all of the following services, often at a reduced cost:

  1. Payroll processing
  2. Tax services
  3. Governmental form submissions
  4. Safety consulting
  5. Assistance with labor law compliance
  6. Creating and reviewing employee handbooks & policies
  7. Health insurance plans & administration
  8. 401 (k) and Cafeteria 125 Plans
  9. Workers’ Compensation insurance
  10. Management Training
  11. Recruiting services
  12. Assistance with unemployment administration

Eliminate Multiple “Point People”
From the personnel and management perspective, these services result in a reduction of duplicated efforts between departments and enables them focus their time on core business functions. Often, only one “point person” is required within the client’s organization, replacing multiple positions in multiple departments.

Some companies experience such a drastic reduction in administrative functions they are able to reduce headcount. Others find more valuable, revenue-generating tasks for these employees to fill. The most successful companies will be those that focus on the core business rather than spend money and use staff resources to manage non-revenue generating tasks, such as benefits and retirement plans administration, managing HR compliance regulations, or processing payroll and taxes.

From the business-owners’ perspective, reports indicate that once HR and other operations are outsourced, employers are better positioned to focus on their core operations.

HR Outsourcing and PEOs Enable Small Businesses to Reduce HR Costs

Tuesday, January 12th, 2010

Continuing our discussion on small business employment priorities, we will discuss the first priority mentioned in the last post, stabilizing operating costs, and how an HR Outsourcing firm or Professional Employer Organization can help to reduce those costs.

Stabilizing operating costs

As employment costs continue to grow, employers must review their primary HR-related expenses. These areas can include: health insurance premiums, workers’ compensation costs, employment compliance, payroll/tax costs, salaries and overhead relating to employee administration. An HR Outsourcing firm can help small employers successfully reduce costs in all of these areas accessing the HRO or PEO firm’s Economies-of-Scale.

Economies-of-Scale.

Economies-of-scale is the primary method through which an HRO firm can reduce a business’ operational costs. Small employers with minimal payrolls and fewer than 500 employees are often limited in the variety of health insurance plans they can offer, have limited buying-power for workers’ compensation, and overall, have less flexibility in administering these plans. In contrast, by pooling hundreds, and even thousands of businesses, HRO firms aggregate health benefit plans, retirement plans, workers’ compensation insurance, and legal expertise. The HRO firm establishes relationships with large regional insurance companies and can offer better plan selections with lower premiums.

Stabilizing insurance premiums.

Another benefit of working with an HRO firm is that it provides the insurance carriers greater stability by offering insurance coverage to employees in a broader employee base. The pooled employees come from different industries and geographic areas which stabilize the premiums over the long-term. This provides the HRO firm greater negotiating power at renewal, thus typically keeping renewal rates below market averages.

Proactive programs keep premiums down in future years.

Beyond rate negotiations, HROs possess the internal resources to support programs that can help maintain low insurance premiums into the future. In health insurance, many offer Work/Life balance programs, health and wellness incentives, or discounts to health clubs and gyms. A healthy lifestyle in and out of the workplace can make significant, positive impacts on the utilization and expense of future health insurance premiums. In regards to safety and workers’ compensation, the HRO firm conducts routine safety walk-throughs, creates effective injury and illness prevention plans, and offers safety incentives to reduce the frequency of workplace injuries. These programs ultimately result in fewer workers’ compensation losses and more competitive insurance premiums.

A more efficient system

Finally, the HRO firm can manage routine HR tasks more efficiently as the talent and infrastructure are already in place. When a small business joins the HRO firm, they simply access these existing programs at reduced rates and a minimal time investment.

Three Employment Priorities in a Slowly Recovering Economy

Thursday, January 7th, 2010

Our last post reviewed some of the economic indicators that are leaving economists guessing when we will pull out of the current recession. Overall, the indicators would support the premise that the weak economy is slowly strengthening, but the numbers are still mixed. Small businesses in particular are finding this transitional period as particularly challenging.  Additionally, when we consider how deep the recession has been with over 7.2 million jobs lost since it began, it would be wise to assume that it might take another year or so before things are relatively back on track.

Despite the uncertainty, businesses should take stock of what is required to succeed and use this time to prepare them for the bumpy road ahead as the economy slowly recovers. When considering the future, small businesses should focus on three key employment strategies in 2010: stabilizing operating costs, reducing employment risks, and enhancing overall employee performance.

Stabilizing operating expenses.

Following dismal sales in 2009, employers will be looking to reduce unnecessary expenditures and maintain a lower operating budget until revenues increase. While there are hundreds of areas to be considered, employment costs typically account for the single highest percentage of overall operating expenses in a business. These expenses include both hard and soft costs. Beyond payroll and tax overhead, hard costs are related to health insurance premiums, workers’ compensation, recruiting fees, payroll processing and legal fees. Soft costs include employment administration, management time, employee reviews and compliance. Reducing these employment costs can significantly impact an employer’s bottom line.

Reducing employment risks.

There is a direct correlation between an increase in employment related lawsuits and difficult economic periods. Employers should beware that a downturn in the economy is often accompanied by an uptick in employment litigation.  As such, employers should prepare themselves by reviewing and training managers on termination policies, updating their forms and policies, and ensuring compliance with payroll-related labor laws and regulations. As the economy strengthens, employers may begin to rehire lost personnel. They should review proper interviewing techniques, update their employee handbooks, and have new-hire packets and offer letters reviewed for compliance.

Enhancing employee performance.

Even as companies begin hiring again, it will take some time before the workforce is back to pre-recession levels. What this means for the average business is that managers are trying to maximize productivity with a smaller workforce. The inevitable result is a more stressful work environment as both employees and management struggle to find a healthy balance of productivity despite the decreased manpower. Employers will be required to find new ways of incentivizing, motivating and training their workforce to maintain a positive attitude while managing increased workloads.

Employers that proactively pursue these three employment priorities will be a strong position to weather the uncertain economic times that lie ahead.

Key Human Resources Outsourcing Drivers

Monday, December 21st, 2009

As we complete a turbulent 2009 , small employers are looking for ways to reign in costs and prepare for recovery in 2010. One of the hottest trends in the small business environment today is Human Resources Outsourcing.  According to Hewitt Associations, a world-wide provider of HR consulting services and research data, the most common reason for engaging an HR Outsourcing firm is to reduce overhead. This is accomplished by accessing the HRO firms’ economies-of-scale in areas such as insurance products, HRIS infrastructure, or payroll systems.

Size Counts.

Economies of scale are the primary method through which an HRO firm can reduce a business’ operational costs. By pooling hundreds, and even thousands of businesses, HRO firms aggregate health benefit plans, retirement plans, workers’ compensation insurance, and legal expertise. Additionally, they can manage routine HR tasks more efficiently as the talent and infrastructure is already in place. When a small business joins the HRO firm, they simple access these existing programs at reduced rates and a minimal time investment. They can jump onto the HRO’s programs and platforms with little start-up time or expense, and can hit the ground running.

Other reasons to outsource human resources include:

  • Access to outside expertise
  • Improving service quality
  • Ability to focus on core expertise
  • High cost of remaining up-to-date with rapidly changing environments
  • Eliminate high volume of low-value transactional activities
  • Reduce Management distractions away from core business
  • Leverage existing staff to focus on key competencies
  • Reduce transaction costs

The HR Outsourcing R.O.I.

Studies indicate that once HR operations are outsourced, many companies show a strong return on investment. IDC, a global provider of market intelligence, conducted a survey of American executives and reported that almost 85 percent of the respondents saved as much as they spent on outsourcing. Over a quarter reported a savings of twice as much. And the savings, according to nearly 95 percent of the respondents, went toward operational performance and innovation.