Bundled HR Service Solutions vs. Best of Breed Providers

The HR BPO market had forecasted growth from $20.8 billion in 2004 to $31.3 billion in 2009, reflecting an 8.3% compound annual growth rate. The estimated revenue is $28.69 billion in 2009. (Source: Robert H. Brown, “Gartner Research – Sourcing options Grow as the HR BPO Market Matures”, July 26, 2006) One of the primary reasons for this sustained growth is the value that both employers and HR service providers recognize in outsourcing non-core business functions to third parties. In the down economy, the number of employers evaluating HR outsourcing as a cost cutting measure has increased dramatically. This ranges from employers who have never outsourced any function of HR to employers who seek a fully outsourced solution. Financial buyers see outsourcing non-core transactional functions as an opportunity to streamline HR processes to reduce direct and indirect costs. Outsourcing provides employers and employees access to the latest technology and communication tools which align the HR function with the overall business strategy. It provides a platform to consistently achieve better quality around managing human capital in an efficient and cost effective manner. Some employers feel that the benefit of outsourcing is even more effective when it can be managed through a single source HR service provider who offers multiple HR services in a bundled, comprehensive offering while other employers find more value in partnering with specialty providers who focus their services in one main area of HR.

Over the last few years, many HR service providers have expanded their serving offerings beyond their core business to adapt to demands of a growing market. For example, 401(k) providers now offer payroll services or a staffing company may now also offer benefits brokerage services. A PEO offering non co-employment solutions via an ASO arrangement is yet another example. In several instances, strategic alliances are formed as non-competing HR service providers align in order to accommodate the multiple and/or changing needs of their client via a bundled “menu of services” type offering. Other HR service providers have chosen to acquire additional companies instead of partnering to strengthen their offerings. Still, other HR firms choose to build additional offerings through their own internal resources and HR industry expertise.  The question then becomes: Do the benefits of a consolidated offering truly outweigh those of “best of breed” providers?

Perceived Benefits of Consolidated HR Outsourcing Offerings:

1. Integration and streamlined processes. With HR technology being at the core of many HR service offerings, several transactional processes can be automated. This is especially true if all HR processes are managed within a single system or by a common vendor. An example of this would be when an employee is terminated, a COBRA notification is automatically sent because the payroll provider and COBRA vendor are one in the same. Another example may be when an HRIS system has the functionality to initiate an electronic job offer to a candidate and through process workflow an automated alert for instructions to complete a drug/background check is initiated to the screening vendor and the pending candidate. In many instances, employers are able to eliminate headcount or reallocate duties as manual processes become automated and less error prone.
2. Multiple service offerings allow for the most competitive pricing structure. A bundled offering includes the benefit of economies of scale. The more revenue that a vendor earns, the more leverage a company has for negotiating volume discounts. This also holds true for guaranteeing higher service-level agreements or contract terms.
3. Simplified employee experience. Having one point of contact or one system to access for managing multiple requests or transactions creates an efficient employee experience. This heightens employee productivity and increases employee satisfaction.
4. Ease of vendor management. Coordinating with multiple vendors is time consuming and creates risk when dealing with time-sensitive and sometimes compliance-driven processes. A single vendor approach creates efficiencies and reduces errors. An example is a consolidated invoice for services.

Perceived Benefits of “Best of Breed” multi-HR Vendor Approach

1. Quality of service delivery. A specialized vendor that offers one core service tends to offer a higher quality experience because they are not focused in any other area. Many times this allows for custom solutions designed with the client in mind rather than a “boxed” approach. An example would be an HRIS vendor that delivers a function-rich system that is configured to the needs of each customer vs. an out-of-the-box software application.
2. Access to expertise. Specialty vendors seek a competitive advantage by deploying the best possible industry experts to meet the unique needs of their clients. An example of this would be a health and welfare consulting firm that specializes in servicing employers with self-funded benefit plans.
3. Ease of transition to begin or end vendor relationship. Implementation of a multi-faceted service offering can be a very time consuming project which may create comprised success due to deadlines. Focusing one just one functional area creates a higher success probability because a project isn’t dependent on competing projects. Additionally, if a consolidated vendor is performing well in one area and poorly in another, the entire relationship may be compromised. An example would be an employer terminating a benefits consultant relationship due to poor service and being forced to change HRIS systems because of the bundled offering.

If challenged with making a clear distinction as to the best approach for your company, I suggest asking a few key questions:

• What do you value more – quality or simplicity?
• Are you solely interested in saving on hard dollar costs or do you the see a greater opportunity for indirect savings by increased quality relationships and delivery?

If you are leaning towards a consolidated approach, I suggest asking detailed questions around the service integration. Qualify which resources are actually internal or if some are outsourced partnerships. With this, clarify defined responsibilities of the service provider vs. the employer and more importantly who holds the liability. If a specialist approach seems more fitting, ask for specific examples of success stories from their clients who were able to achieve measurable benefits that could not otherwise be realized in a consolidated approach. Contact us today for a free consultation. www.gocentripetal.com.

HR Events 2010

HR events are in full swing! SHRM and HR Technology Conference are just a couple shows that you’ll want to check out this summer/early fall.

SHRM (www.shrm.org)

The annual SHRM conference takes place June 27-30 in San Diego. Not only does SHRM have some dynamic and engaging speakers this year (like Steve Forbes and Al Gore), there is a ton of one-of-a-kind tracks part of the MEGA sessions. Here’s a day-by-day guide of the events you should check out:

Saturday
Mid Morning Seminar: Strategic HR: Delivering Business Results

A great way to “kick off” the SHRM event. As we come out of the recession and get “back to business” HR will be called upon, once again, to help drive the business to the next level. This seminar focuses on the impact of HR on the bottom line.

LaJolla Tour

If you have been to LaJolla you know this is a must do. If not, here is the description from the Conference Planner:

“La Jolla is a must-see when visiting San Diego, as well as being one of the most exquisite areas in the country to live. The first stop is the Birch Aquarium at Scripps. Overlooking the Pacific Ocean, this beautiful facility presents undersea creatures in realistic habitats, and allows guests to experience the frontiers of marine science through interactive museum exhibits featuring the latest research at Scripps Institution of Oceanography. Following the Aquarium, guests will enjoy exploring the special boutiques, galleries and designer studios, viewing the coastline, or beach combing on their own at the famous La Jolla Cove. All of these are set against a stunning backdrop that is often compared to the French Riviera for its aesthetic appeal.”

Military Recruiting Workshops

In the mid afternoon there are three sessions related to recruiting and retaining returning military personnel. Very interesting and important topics.

Sunday

Executive Session: Silo Busting

An interesting and timely topic. The presenter is from the Wharton School and will be discussing why silos form and how to break them down.

Super Sunday Session: Health Care Reform & HR: One ‘Check-Up’ You Shouldn’t Miss

Health care is obviously on everyone’s mind and this session will help you analyze the impact of HCR on your organization.

Sailing in Style

A 49-passenger Catamaran sailing around San Diego harbor. Count me in.

Monday

Early Morning Session: Keeping Up With the Current State of Recruiting

Companies are beginning to hire again and more and more channels are available to source candidates. This session looks like a good primer on the state of the market today.

Mid Morning: What every HR Manager should know about strategic planning.

HR must get better at speaking and articulating strategy.

Mid Afternoon: Going Green in the Workplace

The Obama administration is certainly driving green initiatives. It’s a good idea to get prepared.

San Diego Tour: Cooking Class and Wine Tasting in Little Italy

Italian food and wine…enough said.

Tuesday

Making the most of your talent management

A real life case study from an HR professional about how they made talent management work for their organization.

Talk Your Way into a Million Dollar$: The “ATES” of Controlling Rising Medical Costs

Another real life case study from a company that saved two million dollars on their health care costs.

How to Develop Butt Kicking Leaders

Leadership skills are more critical than ever.

Wednesday

The World in 2030: Answer Tomorrow’s Global Challenges Today

A good way to close the event – with a look to the future.

HR Technology Conference & Expo (www.hrtechnologyconference.com)

The 13^th annual HR Technology Conference will be held in Chicago September 29-October 1.  In addition to the hundreds of exhibitors and product announcements, there are some interesting sessions/tracks worth noting:

• Oracle Shows Its Next Generation HCM: Unless you attend Oracle’s private user conference, you’ll see for the first time the new HCM demoed by Gretchen Alarcon, Oracle’s VP of Global HCM Product Strategy.
• Naomi Bloom Debates Gartner’s Jim Holincheck: The world’s two leading experts on HR technology will face off on the hottest issues of the day.
• The Shootout: Our signature event is now a full track with four sessions, each featuring two vendors demoing their live software to a tough scripted scenario — so they can’t just show you whatever they please. That makes The Shootout very different from the marketing demos you could get in your office or even be asked to pay for at other conferences! 
• Twitterversity: Bring your fully charged WiFi-equipped laptop to get hands-on Twitter instruction from famous Punk Rock HR blogger Laurie Ruettimann, joined by Gen Y and Gen X HR practitioners as her roving teaching assistants to help you one-on-one.
• Talent Management System Vendors — Leaders and Laggards in Customer Satisfaction: Hear how hundreds of current users really feel about their vendors and their products before you make a choice. The second annual report from Bersin & Associates will again debut at the conference, this time naming the top and bottom rankings.
• Getting the Most Out of Workforce Planning: A panel of leading-edge HR practitioners — of course from Google and Microsoft, but also from Ameriprise — will tell you how to launch, manage and derive value from a Workforce Planning system and make it integral to your organization’s success.
• The Best How-To Advice on Social Recruiting: Everybody’s talking and writing about using social networks like Twitter, LinkedIn and Facebook for recruiting, but almost nobody has got it right.
• Five Other Panels:
  • Fourth Annual Talent Management Panel with Knowledge Infusion CEO Jason Averbook, focusing this year on how TM has failed at some companies and how to fix.
  • Being Global with Karen Beaman, Founder & CEO of Jeitosa Group, with senior executives and experts who are already there.
  • Job Boards – Valued 21st Century Partners or R.I.P? with Recruiting guru Gerry Crispin of CareerXroads, featuring a passionate argument from staffing leaders and insightful vendors on the future of job boards.
  • Social Learning – What Is It? Why the Buzz? Are There Results? with expert Jeanne Meister and four CLOs exploring this latest phenomenon.
  • Blogger Insights with Kris Dunn, VP HR at DAXKO, and The HR Capitalist blogger. Learn about Social Media from the people who live it.
• Dave Duffield: Returns to the HR Technology® stage with his client, Flextronics International.
• Expert Discussions: Five Industry Analysts host separate group discussions and Q&A sessions based on their favorite subjects.
• Expo: Certain to be the world’s largest again this year. Dozens of new products will be introduced. Plus, many vendors bring their CEOs, giving you product insights you can compare and act on.

Getting Out of a PEO

Many small to mid-size employers have looked to PEOs as an affordable HR outsourcing solution for managing liability and controlling the cost of health care and worker’s compensation insurance. The events of the past year have prompted employers to re-think whether co-employment will still offer the same benefits it once had. One of the questions lingering is how new legislation around health care reform will affect PEOs and their clients. There is a case to be made that administratively the PEO will help employers track the new changes in legislation such as tax credits, new HSA limits, and employee enrollment in the new health care exchange. However, is this really a benefit to the employer or to the PEO? Who is the “employer of record” in the eyes of the IRS? Will the PEO be receiving the tax credit or the employer? Will the size of the employer even be considered since participation in a PEO pools several employers together? How will this affect the penalties and/or tax credits? The way regulatory authorities (such as the DOL, IRS, Department of Health and Human Services) treat PEOs has always been a bit uncertain and inconsistent and now, with the upcoming health care reform changes, it will only create more confusion.

In addition to the unknown future for PEOs, many employers are no longer benefiting from lower health insurance premiums like they once did. In years past, many PEOs were able to offer health plans that were less expensive than the national average and could guarantee renewals that were lower than the trend (10-13%). This past year proved that this no longer the case as many PEOs delivered renewals upwards of 35% to their clients.

If you are an employer that is wondering whether the PEO relationship is still a good solution for your business, consider these four questions carefully to determine whether the value of the PEO is worth the expense and furthermore how to craft a plan of action for leaving the PEO. Often it is very difficult to determine your true costs so seeking outside help may make sense and mitigate any confusion.

Questions to Ask When Evaluating Leaving a PEO

1. Am I being serviced from an HR perspective so well that, without the PEO, I would have to hire someone internally to replace them?
2. Can I obtain similar health coverage at a comparable rate outside of the PEO?  How do the last few years’ renewals with the PEO compare to the national average?
3. Can I obtain similar Workers Compensation and EPLI (Employers Practice Liability Insurance) coverage outside of the PEO at a comparable rate?
4. Will my SUI (State Unemployment Income) rate be higher or lower as compared to that of the PEO?

If you are unsure about at least one of these questions, a cost analysis is definitely worth conducting. In many cases, an employer may be getting a good deal in one area yet could be overpaying in another.

The cost to consider is a fee that many PEOs call Administrative Costs or an Admin Fee. This fee could be shown as a flat per employee per month rate or it could be shown as a percentage of the total payroll and combined with other cost components such as SUI or Worker’s Compensation. The Administrative fee is where the bulk of the profit margin lies for the PEO and when the services are bundled, it makes it easy for the PEO to shift costs so they remain profitable.

In order to get a full understanding of the financial impact of moving away, ask your PEO to break out each cost area separately: Benefits, Workers Compensation, EPLI, SUI, and Administrative fees. You then have a basis to compare costs as a stand-alone group outside of the PEO. The only sensible way to compare is to look at the total cost WITH the PEO versus the total cost OUTSIDE of the PEO. The only cost that will remain constant in or outside the PEO is employer-paid FICA and FUTA taxes.

The Five Cost Components to Shop

1. Health Insurance and other related benefit products including STD/LTD, Life Insurance, Vision, Dental, COBRA, FSA, and HSA
2. Workers Compensation/EPLI
3. SUI – this rate will be the manual rate for a new business in each state
4. Payroll/HRIS services
5. Fractional HR or the cost of hiring an HR resource

If you are utilizing the PEO’s 401(K), add this to the list items to consider.

The timing of the transition away from the PEO must be considered because of tax implications to both the employer and employees. Making a change later in the year will have a greater impact because more employees will have met their Social Security wage requirements and employers will have met their SUI and FUTA limits. Employees will have to adjust this when they do their tax return because they will have an overpayment. The tax duplication payments need to be deducted from any savings if you are looking to make a mid-year switch.

Also, an employer’s unemployment experience rating adjusts as if the employer were a new business in each state that it has employees. This could have either a positive or negative impact on the employer and should be considered in the financial analysis as well.

Evaluating getting out of a PEO and actually making the transition can be very confusing and time consuming. Centripetal Consulting Group can help you alleviate the guesswork and complete the financial analysis. Depending on the outcome, we can help transition you off the PEO and help select vendors from our network of over 100 top-rated HR outsourcing providers.  Contact us today for a free consultation. www.gocentripetal.com

Finding the Right Applicant Tracking System

Finding the Right Applicant Tracking System

With the economy beginning to finally show signs of upward mobility, employers are slowly beginning to hire again. There is a surplus of candidates on the market, and without an easy and automated process to manage candidate flow, the recruiting process can become increasingly more challenging. Do you feel like you are spending too much time with the wrong candidates and not enough time with the right ones? Have you ever lost a top candidate to a competitor because the candidate fell through the cracks or your process wasn’t timely enough?

These inefficiencies are costing your company real dollars each and every day. Although the “human touch” may never be completely eliminated in the recruiting process, technology can certainly help you become more productive and decrease your time to hire. Not only will an Applicant Tracking System (ATS) eliminate redundancies in data entry, it will also allow you to match skill set, experience, education, and geographic location quickly, thus giving you an edge in a competitive marketplace.

Once you have decided that you have the need for an ATS, look for these key features in a vendor:

Profile Creation: Allows candidate to create career preferences such as salary range, desired position, location, skill set, etc that are viewed by potential employers. This profile can be edited and activity can be tracked by the candidate. Resumes can be attached to this profile.

Scheduler: Tracks all aspects of your recruiting including calling candidates, arranging interviews and follow-ups, and taking notes from phone calls. Allows you to share tasks, manage status of activities, and link hiring managers to potential candidates. Managers are able to update HR when milestones have been met with work-flow capability.

Remote access and Smartphone Integration: Provides better time management by helping you get things done without being in the office. Grab information from any secure online connection including applications that are downloadable to smartphones. Share and collect information, schedule interviews, and monitor the process from anywhere you can reach the internet.

Keyword/Data Search: Saves the time it takes to sift through every detail of a resume or cover letter. Can search data fields and email attachments for specific keywords to best match employees.

Saved searches/hot lists: Sorts by characteristics such as open job orders, locale, position, or years of experience. Save customized searches for future reference so you don’t need to re-enter the data.

Online application with job screening questions: Requires candidates to answer qualifying questions for quicker filtering of candidate pool. This could range from compliance based questions that are answered via drop down menus to behavioral based questions that allow you to screen for personality and cultural fits.

Automated Candidate Communication: Ability to send system generated emails to candidate communicating profile receipt, acceptance and rejection of the profile, and interview process status. Create emails and send to multiple people at once including the candidate, hiring manager, department head, etc. directly from the system. Keep track of correspondence with potential candidates.

Reporting capabilities: Provides details on candidates and suggests which ones are the best for the job. Documents response rates and helps you determine if you’re getting an ROI through your ATS. Provides capability to track successful hiring sources including recruiting agencies, job boards, or internal referrals. Capability to facilitate EEO reporting and ensure compliance if applicable.

Customizable fields: Creates fields for specific departments, contact managers, job responsibilities, and other items unique to your organization. Allows you to easily search for specific information when you need it.

Promote job openings: Can publish open jobs to company Web site and fee-based job boards.

These are basic functions that are core to most applicant tracking systems on the market today. Depending on the complexity of your needs, function rich systems could include employee assessments in conjunction with the system.

To maximize integration, you may want to consider an HRIS system that includes an ATS within it, as opposed to buying a separate ATS system. At the very least, make sure to select an ATS that can create an export file for upload into your existing payroll or HRIS system. This will eliminate the timely data entry process involved with on-boarding as well help you to build a skills inventory which will help your organization to promote internal candidates as part of your total recruiting strategy and succession plan. Robust HRIS systems with Applicant Tracking  will also store job descriptions, include job requisition creation with workflow for approval and job offer letter creation and approval processes.

If your organization is considering implementing a system to better manage your recruiting efforts and would like to explore the options available, contact Centripetal Consulting Group to learn how we can help.

Training Employees – Why it is More Important than Ever

Companies have found that investment in human capital in the form of training and development yields high returns. The ones that recognize the value of their employees and place a new emphasis on education and training are becoming more competitive, successful, and profitable as a result. According to a study conducted by Knowledge Assessment Management, companies in the top 20 percent of those who spend money on training receive higher returns in the stock market. Is it possible that knowledge is equal to profit?

According to an article in T+D Magazine a knowledgeable workforce may ensure a company’s survival. The article profiles four companies that survived the economic impact of September 11, 2001, and a business climate marked by recession and corporate scandals. These companies—Southwest Airlines, Viacom, Dell, and Guardsmark—all consider employee training an investment in company growth and stability. Rather than cutting back their training budgets during hard times, these companies chose to invest in the development of new skills and knowledge within their workforce. In doing so, these companies showed a commitment to their workers and gave them the educational background necessary to increase productivity and effectiveness in their respective markets. The workers, in turn, supported these companies and ensured their survival through a difficult chapter of American business history.

Experts in this field can work with your leaders to help instill the importance of a motivated and engaged workforce. That is critical to achieve success when the economy improves.

The face of business is changing at an alarming rate. Technology advances, globalization, workplace diversity and the list goes on. And all this in a weakened economy! Every industry sector and each departmental division within a company is confronting the same reality. Which outcome a company and its people will experience is directly focused on their commitment to training and development.

The new paradigm for training requires us to view it as an inseparable part of performance improvement and management. Once viewed in the eyes of management as a nonessential support tool, training and development has become an integral part of business strategy and aligned with business results. Training is a process that involves dynamic interrelationships with the other functions of the organization, especially supervisors, managers and performance management systems.

A number of trends in training and development are occurring as the marketplace changes and companies strive to achieve these levels of performance in a time when corporate dollars are not spent on training. As they watch their budgets shrink, HR and corporate training professionals are looking for cost effective training options that can still get the job done without an expensive price tag.

This economic downturn is actually an excellent time for companies to focus on maximizing internal talent and resources by means of an improved training program. Spending time and resources now to train employees will help motivate them to be ready to move forward successfully when the economy gets better.

Qualified Instructional Design firms can help you maximize your talent pool by ensuring that your succession planning and talent management processes are setting you up to emerge successfully when the economy takes an upturn.

HR Technology – The Core of Strategic HR

Do you feel as if your human resource department has turned into a mess of administrative work?

Are your core processes muddled with paper-based, manual systems?

Is senior management questioning how HR adds value to the organization?

Is it becoming harder to get additional budget assigned to your department?

If yes, is the answer to any of these questions, it may be time to look at getting out of the “paper pushing” business and take that leap towards functioning as a truly strategic department that adds value to the overall business approach. HR departments alike strive to focus their attention on key elements deemed as “Strategic HR”. This includes recruiting top talent, training/development, and organizational development strategies that focus on employee retention and succession planning. HR departments that can effectively strategize and implement these core functions are truly maximizing the value of human capital. The first step towards this end is the deployment of the right HR technology. Without access to meaningful HR related data, a business cannot measure or analyze trends within their organization. One of the key reasons that companies struggle with gaining visibility into the organization is because data is contained in multiple systems thus limiting any reporting capability needed for analysis. The right HR technology strategy is paramount to deployment of “Strategic HR” as it will minimize administrative processes, easily ensure compliance, and allow access and create meaningful reporting capabilities.

Implementing an end to end HRIS which includes employee and manager self-service is necessary for a business that is striving to become fully paperless. Since payroll is the most accurate data in any organization, it only makes sense to build an HR database off of this data. To maximize the benefits of automation and ensure data integrity, fully integrated or single database for Payroll/HRIS system is the answer. Most systems on the market today deploy role based security which allows designated employees including managers, employees, and non-HR executives to have unique access rights to certain data points that are core to their role in the organization. The system becomes a universal tool that benefits the entire workforce, not just HR. Self- service gives employees, managers, and executives instant access to the information that otherwise was only accessible by the HR department thus eliminating the time consuming requests made on HR. This alone promotes productivity and makes for a compelling ROI for implementing a new system. Explore the benefits that are realized by using an integrated system and the features to look for as your company evaluates the applications on the market today. For a no cost evaluation of your company’s needs or for assistance with a vendor selection process, contact Centripetal Consulting Group at 214-824-4439 or at www.gocentripetal.com.

Key Benefits of an Integrated Payroll/HRIS:

• Improve responsiveness to employees and management with a workflow process that streamlines HR record-keeping and maintains proper audit trails
• Maintain a competitive workforce by simplifying and speeding up hiring, training and retention programs with an accessible, integrated database
• Gain greater control real time payroll processing by eliminating the need to transfer files back and forth, reduce errors and payroll corrections
• Ensure government and payroll tax compliance with automatic updates that keep you up-to-date on the latest regulations
• Plan for talent succession by indentifying top talent and key positions for keeping the business fluid and healthy
• Increase employee retention by deployment of self-service tools that keep employees involved with the employment lifecycle
• Enhance your reporting capabilities with workforce decision data that helps you lower benefit costs, spot organizational trends and take clear action
• Containment of costs including insurance premiums, controlled labor expenses including overtime, Travel and Expense, IT and disparate system related costs
• Improve employee communications through centralized intranet portals and employee survey capabilities
• Create and leverage a standardized infrastructure that will enable executives to better analyze costs associated with their organizational structure for budgeting and forecasting purposes

Key Features of an Integrated Payroll/HRIS

• Applicant Tracking that interface to outside job boards and company website
• Electronic On-Boarding
• Time and Attendance
• Payroll Processing
• Benefits Enrollment and Administration
• Performance Management and Compensation
• Salary Planning and Budgeting
• Automated Learning/Training Management
• Employment History and Succession Planning
• Employee/Manager Self-Service
• Effective Dating
• Open platform for easy integration and import/export to third party systems

Bundled HR Service Solutions vs. Best of Breed Providers

The HR BPO market is forecasted to grow from $20.8 billion in 2004 to $31.3 billion in 2009, reflecting an 8.3% compound annual growth rate. The estimated revenue is $28.69 billion in 2009. (Robert H. Brown, “Gartner Research – Sourcing options Grow as the HR BPO Market Matures,” July 26, 2006)

Many HR service providers have increased their serving offerings beyond their core business to adapt to demands of the market. For example, a 401(k) provider might now offer payroll services, or a recruiting company is now offering benefits brokerage services. Even further, a PEO starts marketing non-co-employment solutions via an ASO arrangement. In several instances, strategic alliances are formed as non-competing HR service providers align in order to accommodate the multiple or changing needs of their client via a bundled “menu of services” type offering. Other HR service providers have chosen to acquire additional companies instead of partnering to strengthen their offerings. Still other firms choose to build additional offerings through their own internal resources and HR industry expertise.

My question then becomes: Do the benefits of a consolidated offering truly outweigh those of “best of breed” providers?

Perceived Benefits of Consolidated HR Outsourcing Offerings:

1. Integration and streamlined processes. With HR technology being at the core of many HR service offerings, several transactional processes can be automated. This is especially true if all HR processes are managed within a single system or by a common vendor. An example of this would be when an employee terminates, a COBRA notification is automatically sent because the payroll provider and COBRA vendor are one in the same. Another example may be that when the HRIS system is told that an offer is being made to a candidate, the process for completing a drug/background check is initiated. In many instances, employers are able to eliminate headcount or reallocate duties as manual processes become automated and less error prone.

2. Multiple service offerings. These allow for the most competitive pricing structure because a bundled offering produces economies of scale. The more business that is given to a single vendor, the more leverage for negotiation. This also holds true for guaranteeing higher service related agreements.

3. Simplified employee experience. One point of contact or one system to access for multiple requests, creates an efficient employee experience. This heightens employee productivity and increases employee satisfaction. A new hire can enroll for benefits, request time off, and view a paystub in a centralized location.

4. Ease of vendor management. Coordinating with multiple vendors is time-consuming and creates risk when dealing with time sensitive and sometimes compliance driven processes. A single vendor approach creates efficiencies and reduces errors. A consolidated invoice for services is an example of this.

Perceived Benefits of “Best of Breed” Multi-HR Vendor Approach

1. Quality of service delivery. A specialized vendor that offers one core service tends to offer a higher quality experience because they are not focused on any other area. Many times this allows for custom solutions designed with the client in mind rather than a “boxed” approach. An example would be a HRIS vendor that delivers a function-rich system that is configured to the needs of each customer vs. an out of the box software application.

2. Access to expertise. Specialty vendors seek a competitive advantage by deploying the best possible industry experts to meet the unique needs of their clients. An example of this would be a health and welfare consulting firm that specializes in servicing employers with self-funded benefit plans.

3. Ease of transition to begin or end vendor relationship. Implementing of a multi-faceted service offering can be a very time consuming project which may create compromised success due to deadlines. Focusing on just one functional area creates a higher success probability because a project isn’t dependent on competing projects. Additionally, if a consolidated vendor is performing well in one area and poorly in another, the entire relationship may be compromised. An example would be an employer terminating a benefits consultant relationship due to poor service and being forced to change HRIS systems because it is core to the bundled offering.

If you are challenged with making a clear distinction as to the best approach for your company, I would suggest asking a few key questions.

The first being what does your company value more: quality or simplicity. Furthermore, are you to simply save hard dollars costs or do you see a greater opportunity for indirect savings by increased quality relationships?

If you are leaning towards a consolidated approach, I suggest asking detailed questions around the service integration. Qualify which resources are actually internal or if some are outsourced partnerships. With this, clarify defined responsibilities of the service provider vs. the employer and more importantly who holds the liability.

If a specialist approach seems more fitting, ask for specific examples of success stories from their clients who were able to achieve measurable benefits that could not otherwise be realized in a consolidated approach.

The Value of Total Compensation Statements

In many cases employees don’t pay much attention to how much their employers are paying out for benefits.  Often, the only thing that catches their attention are the COBRA rates AFTER they have left the company. Total Compensation Statements are rising in popularity as a means to communicate the contributions above and beyond wages employers make to employees. These expenses can include health insurance premium contributions, health savings accounts or FSA contributions, Life Insurance, STD/LTD, PTO, 401(k) matching, stock options, auto allowances, tuition reimbursement, and employer paid taxes.

The reason Total Compensation Statements are gaining popularity is largely due to the advancements in HR Technology. Many newer payroll systems are integrated with robust HRIS systems. It makes it easier for employers to compile this data easily because it is all contained in one system as opposed to multiple spreadsheets or paper files. In fact, many HRIS systems can support dynamic total compensation statements that update with each processed payroll. If an employer utilizes a self-service approach, employees can see this statement on their own on-demand.

Total Compensation Statements serve as a powerful retention tool for employees to understand the true worth of their employment. This is especially true for lower compensated employees who may leave an employer for a few thousand more dollars elsewhere. If they can easily understand their current benefits, the decision to leave may be avoided. It can benefit higher compensated populations if vesting schedules for retirement benefits or stock options are easily communicated as well. Many employers try to communicate this information to employees at least once a year, either at annual reviews or open enrollment. If an employer can save a few employees from turning over each year by providing Total Compensation Statements, it is well worth the cost of doing it.

What is Instructional Design and Why is it Key to Training Your Employees?

Instructional Design by definition is the process by which instruction is improved through the analysis of learning needs and systematic development of learning materials. Instructional designers use many theories and models to design instruction and varied technology and multimedia as tools to enhance learning.

Instructional Design (ID) is especially important in the development of employee job-related training programs. Many times too much emphasis is placed upon the content of the training and not the methods by which people understand and retain information. Instructional Designers aim to appeal to all learning styles – visual, auditory, kinesthetic – which facilitates optimum learning efficiency. With improved instruction, your company will realize improved performance and productivity. Results will also drive enhanced employee satisfaction and workforce morale, both which directly impact your bottom line. Employees will learn new skills faster, better, and retain them longer. This may eliminate the need for expensive retraining or unnecessary turnover.

An Instructional Designer works with a content expert within your company to define the audience and goal, conduct a needs assessment, analyze the results, and develop a solution that will achieve the goal for the specified audience. Learning initiatives can range from instruction on very specific jobs to company-wide training. The ID designs the materials to ensure that the specific learning goals are accomplished. It is important for the ID to work closely with the content expert to be sure that the solution is on target. Then the ID will test the solution, analyze the results, and make modifications to the materials if necessary. Learning styles of the audience are considered, and it is decided upon what the appropriate mix of the delivery will be. An ID must be familiar with learning theories, all standard modes of delivery of information and instruction, as well as with new and innovative technologies. Additionally, an ID must also create material to support learning from preparing camera-ready print materials and visual aids to building dynamic multi-media for e-leaning and web-based training.

If your company is experiencing challenges with your current training approach, and you are not getting the results you want, you may want to consider outsourcing this function to an Instructional Design firm. Some ID firms can be a one-stop shop for your learning needs: they can design, develop, deliver and evaluate training effectiveness. This is a fantastic solution if you are looking to outsource the entire training function.

The Flavors of HR Outsourcing – PEO, HRO, ASO

Human Resources is one of the most critical functions for a small/mid-size business. HR Compliance alone presents so much risk and liability as an owner builds and grows an organization. One violation could cost an employer thousands, sometimes enough to put them out of business. The legalities involved with having employees are so cumbersome that they can legitimately occupy a full-time job, in addition to the administrative burden that occurs as a result.

The question then becomes, “Does a company hire someone to handle this function or do they outsource?” Or a combination both? HR administration does nothing for a company’s bottom line – but it is necessary. In fact, many companies view HR as simply a cost center that adds no value to an organization, thus making an argument that HR is the poster child for outsourcing. Why hire someone or add additional headcount when you can outsource for a fraction of the cost? This may be true in some scenarios.

There are 3 main forms of outsourcing in the HR space. One form of total outsourcing could include a co-employment arrangement with a Professional Employer Organization or PEO. Many small to mid-size employers have found value in this type of arrangement. The four main benefits of co-employment include:

1. Shared Risk – the PEO shares in the compliance aspect of the HR function. It reduces the exposure and risk an employer bears by incorporating the business under their tax ID. The PEO sets strict guidelines for hiring and termination practices and ensures that you operate within the guidelines of governing bodies including the IRS, DOL, EEOC, OSHA, ERISA, COBRA/HIPPA.
2. Administrative Relief – the PEO brings robust technology for managing payroll processing, HR, and benefits administration to the small market. These HRIS systems are not affordable for a small business on a standalone basis. The automation that these systems create add value by elimination of redundant processes and improve consistent employee communication through employee and manager self-service. Benefits administration is a key component in the deliverables of a PEO’s technology offering because it is such a compliance driven and error prone process.
3. Improved Insurance Offerings – the PEO provides access to quality insurance options not readily available to the small market at an affordable rate. Employers enjoy the buying power of the larger organization to obtain health and worker compensation insurance. Many times the rates through the PEO are far less than what an employer could obtain on their own. Through economies of scale a PEO also protects an employer from hefty increases related to workers’ compensation claims.
4. Access to HR professionals – the PEO provides employers resources for managing day-to-day employment issues and best practices for keeping your employees happy and productive. The PEO provides an outlet once an employment issue arises. They deal with lawsuits involving wrongful termination, discrimination, harassment, unemployment, etc.

Many PEO’s are becoming more flexible with their clients to allow certain components of the PEO to be “carved out” of the co-employment arrangement. These include health insurance, 401(k), and workers compensation. The employer may be able to obtain better arrangements as their own entity and don’t need the economies of scale that the PEO can offer.

Another form of outsourcing is an Administrative Services Outsourcing or ASO arrangement. Similar to a PEO, an ASO incorporates best of breed HRIS technology alongside a menu of additional HR services including COBRA, FSA administration, Unemployment Management, 401(k), Time and Attendance, and Recruiting. The ASO model seeks to eliminate or automate the transactional components of HR Administration. Many ASO’s will also do fractional HR or project work for an additional fee. The main difference is that the employer remains under their own tax identification number. This scenario allows the employer access to high touch HR expertise, thus potentially eliminating the need for added head count in the HR department while still allowing internal control.

The final form of outsourcing is Human Resource Outsourcing or HRO. This may also be referred to as BPO, Business Process Outsourcing. This has traditionally only been available to larger organizations; however, many outsourcers are bringing this model to the mid-market. Like an ASO, an employer remains the “employer of record” in this type of arrangement. In an HRO model, the solution focuses on managing the entire HR business process. The provider manages the HR function by utilizing their own tools on behalf of the client. This includes payroll processing, new hires/terms administration, and benefits administration. In a sense the HRO becomes the HR department, and employees communicate directly with the HRO provider as if they were internal HR. An Employee Call Center is inherent to the solution within an HRO offering.

Each form of outsourcing is very different and has the potential to bring unique value to a company whose goal is to improve the overall efficiency of the HR function. The entire premise behind outsourcing any or all of HR is to allow an organization to spend more time on meaningful tasks that are core to the business. It is paramount to partner with the right HR services provider. This relationship is critical to experience success in the entire business today and to be better positioned for growth in the future.