Jefferson - HR Outsourcing: Will it Work for Your Organization

Will It Work For Your Organization

Understand the Outsourcing Industry

Consider HR Outsourcing as an asset to the organization - not a threat

Realize the importance of diversification and strategic planning to expand HR functions and operations outside of the organization

HR Outsourcing –Will It Work For Your Organization

Purpose of this presentation

"If you think you're too small to have an impact, try going to bed with a mosquito in the room." (Dame Anita Roddick, 1942-2007, British businesswoman, humanitarian, founder of The Body Shop,)

HR Outsourcing –Will It Work For Your Organization

"The minute you start thinking that you've done it all, that's when you're in the rear view mirror." (Chris DeWolfe, co-founder of MySpace.com, talking about market leading and innovation, quoted in the Guardian newspaper, 10 Nov 2008.)

HR Outsourcing –Will It Work For Your Organization

Relief of administrative burdens draining growth and efficiency

Technological improvements without significant investment

Economies of Scale in employee benefits

Maintaining efficiency and productivity in a tough economy

Reasons to consider HRO options

HR Outsourcing –Will It Work For Your Organization

Adding additional services and products normally inaccessible

Expanding expertise and services outside of the organization

Simplifying processes and procedures

Reducing overhead in staffing while maintaining or expanding current operations

HR Outsourcing –Will It Work For Your Organization

Controls costs, saves time and paperwork issues

Provides professional compliance

Reducing overhead in staffing while maintaining or expanding current operations

Benefits of Outsourcing to Employers

HR Outsourcing –Will It Work For Your Organization

Provides a greater resource for hands-on HR assistance and process delivery

Access to HR products, services, programs and technology

Assistance with employee issues

Consolidation of compliance methods

Relief from administrative burdens

Outsourcing Benefits for HR

HR Outsourcing –Will It Work For Your Organization

• Human Resources

• Benefits, Benefits Administration, Enrollments

• Workers’ Compensation and Safety

• Payroll

• Staffing and Recruiting

• Accounting

• I.T.

Outsourcing Options to Employers

HR Outsourcing –Will It Work For Your Organization

Why HR must innovate every single day

HR Outsourcing –Will It Work For Your Organization

• Internal efficiency gains are insufficient

• Economies of scale will drive down costs

• Retained staff can focus on strategic activities

• Less customization and more standardization

• Innovation will continue post go-live

• Provider sustainability is a non-issue

The Premise (and Promise) of HR Outsourcing

HR Outsourcing –Will It Work For Your Organization

• “Your mess for less”

• Customization prevailed

• Production deadlines were missed

• Scope was too aggressive

• Shadow organizations emerged

• Third parties exited the market

The Reality (For Some) Was QuiteDifferent

HR Outsourcing –Will It Work For Your Organization

The PEO Industry began in the 1980’s

Early pioneers struggled to develop a niche

Initially, several ‘bad apples’ gave the industry a shady reputation

Florida was the catalyst state for the future of the PEO Industry

What are Professional Employer Organizations (PEO)?

HR Outsourcing –Will It Work For Your Organization

Today, the National Association of PEO’s (NAPEO) is a leader of HR Outsourcing

SHRM and NAPEO share common interests with national employment legislation

Many PEO’s develop best practices in Human Resources Outsourcing

NAPEO has over 350 PEO organizations nationally

2010 Professional Employer Organizations – The Future

HR Outsourcing –Will It Work For Your Organization

PEO’s in Florida:

• Commonly known as Staff Leasing

• Lease the employees back to the Client

• The Client maintains direction and control

• Offer value-added products/services for a price normally based on percentage of payroll

Understanding Florida Outsourcing

HR Outsourcing –Will It Work For Your Organization

• Offering Administrative Services Only models (ASO/HRO)

• Employ more than 900,000 employees

• Service over 69,000 companies

• Pay over $25 Billion in Payroll

• FAPEO Task Force is currently working on UI issues for possible legislative consideration

HR Outsourcing –Will It Work For Your Organization

Gartner, Inc. is an information technology research and advisory firm headquartered in Stamford , Connecticut . •

Gartner predicted 85% of US companies would outsource at least 1 HR function by 2006

87% of companies interviewed by KPMG (global network of professional firms providing Audit, Tax and Advisory services) mentioned they planned to keep outsourcing level the same or increase it. 42% of the organizations believe that their sourcing contract has definitely improved their financial performance, and 27% said that sourcing has definitely improved their competitiveness.

• Realizing the importance of diversification and str ategic planning to expand HR functions and operations outside of the o rganization.

HR Outsourcing –Will It Work For Your Organization

Human Resources business process outsourcing (BPO) is the fastest-growing segment of HR services and will grow at a compound annual growth rate (CAGR) of 16% in the United States, reaching $18.9B in spending by 2010. In 2004, 37% of US HR outsourcing spending was on HR BPO services. IDC projects that HR BPO services will continue to grow, reaching 46% of HR outsourcing spending in 2010 as the market solidifies and leaders achieve profitability through economies of scale.

HR Outsourcing –Will It Work For Your Organization

Assess Your Objectives

Determine Transactional needs from Strategic needs – or do you need both

What are you long term/short term objectives

Determine your internal strengths and weaknesses to assess the amount of integration with the Outsourcing Provider

Making the Outsourcing Transition

HR Outsourcing –Will It Work For Your Organization

Transparency

Agreeing on the principles of collaboration is the first step in the process

The PEO and prospective Client must both understand that transparency and candor are key in establishing the HRO relationship

The biggest mistake is the lack of clarity on the protocols and not discussed early and often in Outsourcing engagements

Making the Outsourcing Transition

HR Outsourcing –Will It Work For Your Organization

Complete Collaboration

Accountability, responsibilities, and authorities must all be spelled out

Create a framework of communication that allows clear and honest direction and control

Work continuously together to improve the commitment for a long term relationship

Making the Outsourcing Transition

HR Outsourcing –Will It Work For Your Organization

Define Immediate Needs and Provider Capabilities

If you just need Payroll Services, then a full serv ice Provider may not be your answer

Ensure the Outsourcing Provider can meet or exceed your immediate needs and expectations

Always conduct Due Diligence and check existing Client References

Making the Outsourcing Transition

HR Outsourcing –Will It Work For Your Organization

Define Productivity

When integrating business models each organization may have different perspectives about what is effective and efficient

The Outsourcing Provider should work with the prospective client to fully understand workforce management

The relationship should be a compliant partnership and not a hindrance to growth

Making the Outsourcing Transition

HR Outsourcing –Will It Work For Your Organization

Measure Results

Increased expenses occur with Outsourcing but the results should outweigh the costs

Improvements in processes, procedures, products and services must be realized quickly

Even though Outsourcing competition is fierce, analyze the true value of great customer service and best practices to your organization and you will enjoy a long term relationship

Making the Outsourcing Transition

HR Outsourcing –Will It Work For Your Organization

If we keep doing what we're doing, we're going to keep getting what we're getting.

- Stephen R. Covey

HR Outsourcing –Will It Work For Your Organization

NAPEO, PEO Insider, June 2009, February 2010

Mark Stelzner, Principal, inflexion Advisors, LLCThe HR Outsourcing Evolution, SHRM Web cast, June 17, 2010

NAPEO, FAPEO, 2010

Thank You!

Questions?

HR Outsourcing –Will It Work For Your Organization

Contact Information

David F. JeffersonVice President of [email protected] Emerald Coast Parkway, Bldg BDestin, FL 32541850-650-9935 extension 12www.simplehr.com

HR Outsourcing –Will It Work For Your Organization