How smaller companies can gain a true advantage over their larger competitors

I’ve said it before and I’ll say it again that there has never been a better time to be a smaller and growing business. There have been numerous shifts in the marketplace, culture, and worker mindset in the last decade that combined make it possible now more than ever from business owners to achieve their vision and grow profitable, prosperous companies that serve a greater purpose. In the past, only large companies with staggering overheads had access to the professional caliber programs that gave them such an advantage in the competition for customers and employees. That’s not the case anymore.

Outsourcing part or all of different business functions has evolved to the point where in many cases it is not just a financial necessity, but a true strategic advantage to do so. And the best part is that because so many professionals are opting out of their corporate day jobs into a gig economy, companies no longer need to feel burdened with guilt about reducing their reliance on traditional employees. This allows small companies to retain their nimbleness, family feel, and flexibility without sacrificing strategic muscle.

Take Human Resources (please, ba dum dum). When I started my career a hundred years ago, an HR Department was like a right of passage for growing organizations. First you had an ‘admin’ do it, and then maybe an Office Manager, but when you grew up you got your very own HR Person. That’s when you’d learn all the things you were doing wrong hopefully in time to stop doing them and avoid fines and penalties. No longer would anyone scramble to complete 5500 audits (what?) or freak out when the DOL audit came (actually, you still need to freak out about that), or wonder if it was okay for an employee to see her file, and what should be in it anyway.

At some point, a company might even grow to the point where even the HR Person is hard-pressed to meet all the personnel needs. Once the growth engine is in high gear you suddenly have a whole new set of issues that you never had before. You’re bringing on more people than you can train the way you’re used to training. You have different compliance requirements. You are losing touch with your employees. You need more managers, and you need to make sure your managers are doing things legally and representing you the way you need to be represented. You might have a lot more revenue, but far less visibility into where it’s coming from or where it’s going and if all that revenue is getting billed for and collected in a timely manner.

At this point, in the past, the logical next step was to keep investing internally. You’d add to the HR team. Hopefully the HR Person was as good a leader as an administrator, and able to think strategically as well as tactically because now you’d like them to manage a team of people. Maybe you add a recruiter, maybe additional administrative support, possibly a trainer and if you were really progressive there would be some sort of performance management component in there. If you had an HR person who was not capable of transitioning from tactical to strategic it was probably a very painful transition. If you got a strategic HR person capable of overseeing that, you then had the issue of ensuring that the rest of your team had the capacity and bandwidth to support the strategic endeavors.

A lot of the times, the best case scenario was some stellar corporate goals and strategic plans that if you were lucky got mostly implemented before the next wave of growth or change happened and it was all hands on deck (or in the weeds, as the metaphor may be). And then when tides and revenue turned or the dust cleared, and you realized that the shrinking margins were not a blip but a trend and you had to start cutting overhead, the first to go was the ‘cost-centers’ of training and employee development.

Anyway, that was life, but not anymore.

Business process outsourcing just may be the not-so-secret weapon that allows smaller companies to take advantage of all the benefits of full scale support functions without the overhead, while allowing the service provider the benefit of working exclusively in their greatest talent while enjoying flexibility and variety. For quite some time now, businesses have had the option to outsource functions like payroll or HR paperwork administration. The playing field has expanded dramatically and is now exploding with opportunity!

I am fortunate enough to be networked with some amazing CFOs who offer their services to businesses who could never afford a six-figure Finance specialist, nor do they have a need of one full time, but who definitely need expert advice and counsel on a regular basis. I uncovered a similar need from an HR perspective in that businesses under 100 people don’t really need a high powered strategic HR leader on staff full time. But you better believe they need access to one. And they can also keep costs way down if they hire someone like me to set up their HR processes and then train someone on their staff to run things, knowing I’m available for tough questions.

And that’s just the tip of the iceberg! With an ever-growing demand to not only get more efficient and profitable but also to be a destination employer in a tough marketplace, companies need to have strategic workforce management plans in place to survive, let alone thrive. There are too many choices for both employees and for customers to not hit on all cylinders here. There’s a couple schools of thought on how best to accomplish this. Most commonly, I hear advice to outsource all the tactical and keep the strategic in house. I think that makes perfect sense in some cases, but probably not for smaller businesses.

What I’ve observed is that if you have less than 75 employees, hiring someone to do the strategic work is not as viable as it sounds. First, these people tend to be a lot more expensive. Second, and I speak from experience, is that if you bring in a strategic person when there is a lot of tactical work to be done, it’s going to be really hard to get people on board with why they’re there.

So how does outsourcing help? Again, I speak from experience. I have run OBM projects AND leadership training as both a consultant and as an employee and I can say hands down commitment to and compliance with the programs run much higher when they’re done from outside. Where this model as fallen short in the past (in my opinion) is the lack of customization and follow through that really drives success. I got more traction from my leadership training as an employee because I could talk to people more regularly and reinforce it, and also because I could tailor the training to the company and their issues specifically. When I work with companies on training, sometimes they’ll just ask for a canned “time management’ course and I’ll usually decline because I don’t think that brings the best value. Far more effective is something tailored to this group’s problems, even if takes a bit more time to prepare it

And don’t even get me started on recruiting! That is one of the best opportunities to outsource. I know of several companies that will outsource some or all of your hiring, allowing recruiting to be completely scaleable and flexible. And not only that, there are providers who will actually manage all your vendors, or even work internally to oversee interviewing and onboarding. This can make all the difference in providing a professional brand when recruiting to attract the best candidates.

There are so many options available now that it’s no so much a matter of if you should outsource, it’s where first. And no, it doesn’t mean you don’t need employees by any means, but it probably does mean your employees will be freed up to do the things they’re best at, and your outsource providers will similarly be doing the same. Like I said, win-win.

P.S. I’ve got a great list of providers for HR, Finance, Training, Purchasing, OD…the list goes on. Please reach out at any time for more information carrie@todaysleadershipsolutions.com

 

Carrie Maldonado is the founder of Today’s Leadership Solutions, a Seattle-based consulting firm providing comprehensive organizational development solutions for companies who are growing and who truly value their people.  With certified Executive Coaches, Organizational Behavior Management (OBM) practitioners, SPHR-certified HR professionals, and Organizational Development Specialists, Carrie’s team brings a unique perspective and a cross-functional approach to providing workplace solutions that work.  Carrie can be reached for consultation at carrie@todaysleadershipsolutions.com