Outsourcing Human Resources and Payroll
In last month's Flash Page we promised you an article on outsourcing your Human Resources (HR) and Payroll (PR) functions. Let's start it with some pointed questions about your hospice:
| (HR) | Are your rewards and recognition schemes consistent with company goals and getting the most from your employees? | |
| (HR) | Are you hiring the right kind of people to meet organizational goals, and do you have leadership development and succession planning in place? | |
| (HR) | What about employee retention? Are good ones walking out the door for jobs elsewhere? If so, do you really know why? (You won't necessarily learn this in an exit interview. Oh... was that someone saying, "What's an exit interview?") | |
| (HR) | Are you sure the way you handle all employee-related matters are legal? Do you have any assessments in place at all to identify weak or improper employee processes and the risks associated with them? | |
| (PR) | Is all your IRS paperwork getting filed properly? Were your W2s correct and submitted on time? Have you ever been a pay day late because "the bank messed up your electronic transfer?" | |
| (PR) | Are you confident that your Federal, State, and Local taxes are being calculated correctly and deposited on time and correctly? | |
| (Both) | Do you have the trained resources to verify your PR and HR information? Does your staff have the expertise to administer PR and HR or is PR/HR a task that "Esmeralda in accounting does in her spare time?" |
Our current economic climate is forcing hospices to find creative ways to remain competitive. Outsourcing of certain business functions is increasingly popular to let key hospice staff offload necessary but peripheral duties and focus on core services.
| Advantages of Outsourcing: Here are a few of the advantages in HR/PR outsourcing. | Disadvantages of Outsourcing: As the saying goes, "There's no such thing as a free lunch." There are disadvantages with HR/PR outsourcing as well: | ||||
| (HR) | Improving compliance with HR regulations and reduction of employer risk. | (HR) | Loss of the human factor — the replacement of a familiar face with an 800 number. Employee alienation through distancing the HR function and/or because of a poorly matched vendor. | ||
| (HR) | Overcoming the lack of expertise in-house. | (HR) | Change of company culture depending on what functions you choose to outsource. Outsourcing background checks or resume screening may have no effect; outsourcing training or new employee orientation could have a large negative impact. | ||
| (HR) | Offering employee services that otherwise might be overlooked and getting expert advice on best practices for employee management and benefits administration. | (HR) | An increase in costs at start-up, especially if your hospice had a minimal HR function operating at the time of outsourcing. | ||
| (HR) | Giving employees greater accessibility to HR experts to get prompt, accurate answers to their questions. | (PR) | Loss of PR flexibility. PR Outsourcing companies have deadlines for processing payroll information, which require discipline on the part of staff so deadlines will be met. Payroll processors are unforgiving; you'll only miss one deadline. | ||
| (PR) | The avoidance/elimination of IRS and State penalties. | (PR) | The hospice is ultimately responsible for the deposit and payment of federal tax liabilities. While the payroll administrator at a hospice will not make the deposits, they will need to verify that deposits are made and that all Federal and State tax returns/reports are timely and correct. | ||
| (Both) | 401k/403b anyone? | (Both) | Reporting will not always be to your exact taste. Don't expect every report you want in the exact format you'd like it. 80% is a good rule of thumb here, and outsourced reports that import into Excel are things of wondrous beauty. | ||
| (Both) | Utilization of current, integrated technology instead of a "where's that spreadsheet?" approach. | (Both) | The multiple processing centers typical of major, national outsourcing firms can lead to widely varying satisfaction levels depending on which processing center you get. | ||
| (Both) | Effective use of outside sources who are experts in their area, and who keep abreast of all the latest developments. This is especially important with HR and in the realm of tax regulations. And last but not least... |
(Both) | Outsourcing does not relieve you of the need for all in-house expertise. There has to be a supervisory function in-house to keep the outsourcers on track. The outsourced vendor must understand all the rules, policies, and procedures of the hospice so the process does not go awry. | ||
| (Both) | A strong likelihood of cost savings and a quantum leap in the overall quality in these two areas. | ||||
Ideas for Outsourcing:
The above is worth restating. Outsourcing does not relieve you of the need for in-house expertise about HR and PR. There must be a knowledgeable administrator to manage the outsourcing relationship(s) and make sure everything runs smoothly. Don't turn the reins over to your outsourcing vendor. Think of your outsourcer more like a long-term Temp agency.
Understand that the larger outsourcing firms offer integrated software solutions for PR, HR and Time-keeping, along with a much larger technical staff to maintain the software than your hospice could ever afford. This means, potentially, one-stop shopping for the hospice and typically a much easier course to navigate during major software enhancements or changes within HR/PR functions. An outsourcing firm normally assigns an Account Representative who is responsible for servicing your hospice account. The Account Representative is responsible for making sure software changes are managed smoothly.
Don't overlook the opportunity to leverage your vendor's expertise. The larger ones offer training seminars and publications which provide people involved at your firm focused training at an affordable cost. By the same token, outsourcing provides a hedge against HR/PR knowledge loss – if a critical employee, say your HR/PR Administrator, suddenly leaves the hospice, your provider can offer backup at different levels, and training for the new Administrator.
Do it little before you do it big (good advice for any large project undertaking). You can start by outsourcing pieces of the HR/PR functions. You don't have to do it all at once. Wet your feet in the wading pool. This removes the stress of a major conversion and also lets you take your vendor out for a trial run. In a related vein, starting with the function where your hospice has the most expertise is the safest bet. Typically for a small hospice that is probably PR, but not always. This lets you accustom yourself to the outsourcing process in an area in which you're more familiar. The main idea behind this whole approach is to spread change over an extended time period so it becomes manageable.
Resources and Conclusion
This section comes with the standard disclaimer that Multi-View makes no recommendations, expressed or implied, about the vendors mentioned below. That said, here are two major players in the HR and PR outsourcing arena along with ideas and links:
Automatic Data Processing, Inc (ADP) offers a whole raft of PR and HR related services. It is used by a large number of Multi-View clients.
Ceridian Corporation is another large, international firm that offers a full suite of products and services in the HR/PR arena. It is also used by a large number of Multi-View clients.
Investigate local and regional HR/PR outsourcing firms. They might not be as high-powered as the nationals, but they may relate better to the home-town crowd and offer competitive pricing. In other words, don't overbuy.
The Internal Revenue Service (IRS) is the source for all things tax related. Downside is that Uncle Sugar's site is hard to navigate and harder still to understand once you find what you're looking for.
After you've bounced off the IRS, the American Payroll Association is there to help take the sting out of all things payroll and tax related. They have a large offering of training courses
Finally, the Society for Human Resource Management (SHRM) is an organization well-worth the yearly fee ($180) for its wealth of articles, resources, and documents in the HR field. Browse the site for a bit and you'll see what we mean.
Outsourcing is not a decision that should be rushed into. You need to do your homework. Call the outsourcing vendors and request demonstrations. Before the demonstration make sure to complete a list of questions and items that you feel are deal-breakers. Read reviews. Before proceeding make sure you have a clear idea of the expectations for the outsourcing company and your local payroll staff. The main goal is to arrive at a solution that improves the quality of these functions at your hospice and saves money at the same time.
By Carolyn Hubbard & Fred Hansen
