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Diving deeper into how outsourcing strategic functions can seriously help your business

I’ve been writing a lot lately about business process outsourcing and how it can support smaller businesses and even give them an advantage over their large competitors. I want to dive deeper and give some concrete examples about exactly how some outsourcing solutions can be so beneficial. The landscape has changed so much and has really opened up some exciting tactical and strategic opportunities once you understand how to use them for your financial and competitive advantage.

The great thing about outsourcing now is that the options have increased so dramatically in the last few years. In the past, if you wanted to outsource, it felt like the only options were to contract with a big consulting company who would expect you to fall in line with their processes. This might work in some cases, but a lot of times some unintended consequences have been an erosion of your company culture, and a mismatch due to the cookie cutter nature of the solutions being offered. There are far more vendors out there  now besides the big consulting companies who have some creative solutions from full service outsourcing to pieces, which provide greater customization and flexibility.

If you’ve been considering outsourcing, you may be under the impression that the only thing that makes sense is to outsource the tactical and keep the strategic in house. The argument is that only people inside your organization have the knowledge and capacity to undertake strategic endeavors, that the tactical is easy to hand off and that there is little impact to the organization regarding who undertakes it. This may or may not have been true in the past but it is definitely not true today!

Outsourcing only tactical  is a strategy that mostly benefits the large consulting companies that have tactical processing ‘machines’ already built and are ready to fold you into their processes. This may very well make sense for some of your processes, but probably not as many as you think. To take the tactical out of your organization completely removes a key component of engagement and morale, which is in the daily touch points. Simply outsourcing “HR” sends a message to employees that you are okay with them calling a third party who doesn’t know them to answer personal questions and job concerns. Granted, some companies do a better job than others at handling this, but you are deluding yourself if you think that the employee experience is not affected by the transition of tactical HR to a third party vendor.

Contrary to popular opinion, strategic roles are often the ones best suited to outsourcing for several reasons. First, it’s almost always the case in small and growing businesses that key leaders are wearing too many hats and putting out too many fires to be as strategic as they’d like. A savvy consultant can work with key leaders enough to ‘pick their brains’ and then do a lot of the heavy lifting in terms of developing plans and road maps. It’s also often true that leaders and managers in small businesses just haven’t had the experience at the strategic level. To think that they’ll magically develop the ability just because they own or are brought into a growing company is unfair. It’s similarly difficult for them to select, hire, and manage a person at this level. The balance of power makes it difficult for the strategic person to be as direct as to issues or roadblocks as they often need to be, and the reality is that the simply overwhelming amount of tactical work that always need to be done will eventually take over the strategist’s daily tasks. Finally, fair or not, high level strategic leaders almost always command a higher wage than their tactical counterparts, making a full time strategic role something out of reach for smaller businesses.

The solution is outsource consultants who don’t simply approach your businesses needs as something they press into their machine and spit out a stock answer to. Canned training and off the shelf ‘solutions’ are not the answer for small businesses either. One of the best features about being a small business is the flexibility, personal feel, and ability to be unique. These features will get lost when you try to force ‘corporate’ solutions on them. The great news is there is a huge cadre of equally flexible, personal, and unique outsource providers willing and able to fill needed roles at highly strategic levels on an ‘as-needed’ basis.

There are some aspects that naturally lend themselves to this solution: Marketing, Finance, Recruiting, and Organizational Development come immediately to mind, although these are by no means the only ones. Having partnered with several consultants who specialize in providing these services to small and growing businesses, I can’t speak highly enough about the quality and customization. Not only that, these consultants genuinely care about their customers and their businesses. It truly becomes a trusted partnership that, because of the scaleability and flexibility, is highly accessible to most businesses.

Just to give you some examples of how this might look:

  • A CFO consultant may work with you on-call or monthly to provide support in obtaining financing, in creating budgets and forecasts, or in determining how to responsibly grow your businesses.
  • A recruiting process outsource company will recruit as you and for you, sourcing and qualifying candidates for you on an as-needed basis. Some will even take it further, and completely manage your recruiting and onboarding processes, and even your other recruiting vendors, allowing you and your managers to focus on operational issues.
  • An Organizational Development consultant can work with you to provide leadership or management training to shore up vulnerable areas, and help you prepare for growth with succession and employee development plans and can create performance management programs that improve profitability and efficiency.

The benefits are almost infinite. And the best part is that using these consultants often allows you the luxury of growing your existing staff into the demands of their new role. I’ve seen time and again organizations feeling like they had no choice but to let go of loyal employees just because the role grew beyond their current competence. This is a horrible situation for everyone and it doesn’t always have to be the case. By bringing in the right consultant, the pressure can be relieved, the work can still be done, and the staff member can often learn what they need to know from the consultant. That’s a much better outcome for everyone than the alternative.

So if you’re finding yourself overwhelmed with growing pains, don’t worry! Those are good problems to have, and help is closer than you know!

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

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Can small businesses afford to outsource? Can they afford NOT to?

Whether you are just starting your business, or you are working on growing it, for every function that needs to be accomplished you have a choice of hiring someone as an employee to perform it, or to outsource it. There are advantages and drawbacks to every solution, but for entrepreneurs and small business owners, you don’t often have the luxury to engage in too much trial and error at this level. Having worked with many business owners as well as launching several start-ups, I know this can be a confusing and intimidating area. Here are some things to consider when deciding to hire, contract or outsource a role for your company.

What is your core function?

There are many things that have to happen to create a successful business. Most of the time, business owners have a service or product that they are passionate about providing to their target customer. It may be an innovative way of doing something, or it may just be something you’re really good at and enjoy doing, but whatever it is, this is your core function. In most cases, you want control over your core, so usually when you can’t do the work yourself, you will hire employees to do the core work. There are times when you will use independent contractors (1099 workers) to perform core functions. This is a bit risky and many times businesses incorrectly classify employees as contractors (usually to save payroll taxes or other employee-associated costs).  If you are using independent contractors it’s a good idea to verify with a CPA or Attorney that you have correctly classified these folks.

Besides your core functions, there are a myriad of support and associated functions that are required for operating a successful business. Every business at one point or another has legal issues, needs to declare a business structure and pay taxes and for quite some time business owners have become accustomed to outsourcing bookkeeping, CPA work and attorney. As Affordable Health Care storms through the land, most business owners have also started working with brokers and third party administrators on benefits and ERISA compliance. There are some excellent brokers and compliance administrators that are so good, and so affordable, that it’s almost impossible not to make the decision to use them rather than attempt to navigate the storms of COBRA and ACA alone.

But we are also seeing an upsurge in business process outsourcing, and leveraging outsourced providers for functions that businesses have traditionally either done in-house, paid big bucks to large consulting firms for or just not done. Some of these functions are social media marketing, human resources, purchasing and even accounts payable or receivable. This is really exciting news! For smaller businesses, it offers flexible access to high quality talent and assistance without inflated labor costs and more importantly, allows businesses to focus on their core competency and not attempt to become masters of all trades. It also offers consultants a way to leverage their expertise across a broad client base, ensuring revenue stability as well as variety.

As a Human Resource and Recruiting process outsourcer, I can offer my smaller clients some benefits that they just won’t see from other options. My business model is based on the fact that small businesses really don’t need a high powered HR Executive working for them full time – but they do need access to one. They need help setting up their HR policies, processes and general workflows. Sometimes there are scary harassment allegations or restructuring issues to navigate, and sometimes they need help hiring an HR Generalist or Administrator onto their team, including training or even managing that person. Having someone like me (or my associates) to assist with that on an on-needed basis is invaluable.

Sometimes company owners need someone to coach or train their managers and they don’t want to send them to a cookie-cutter seminar and they also can’t justify a big name consulting firm to come in. That’s where we can provide immense value. With multi-industry experience, we can ensure managers receive relevant training AND direction in applying the training that translates directly to the bottom line. It’s also a great resource when embarking on a management retreat, strategic planning session, compensation overhaul or succession planning. Having a talented strategic advisor when you need it is like having a secret weapon at your disposal.

For larger clients who have high volume recruiting or strategic sourcing needs, Source2 is one of the best Recruiting Process Outsourcing providers I know of. Their customer service and operational excellence is second to none and they do on a large scale what Limitless HR does on a smaller one for clients-including individualized reporting, analytics and support.

There are other business process outsourcers who focus on purchasing, AP, or IT that provide similar value.  I work with several of these providers and am amazed at the range of options that are available. Whether it’s the “Buyer for Hire” program that Innovative Advancement uses, or implementing cloud-based solutions to provide IT services for any business size and need, as Tanet does, or helping design and execute your social media marketing with Stay Visible Marketing, there are options and solutions for every need. As a business grows, it may make sense at some point to transition from outsourced to in-house employees. Your provider will likely be able to assist you with this transition and even hire and train your team.

The whole idea behind outsourcing is to keep you and your team focused on your core functions, while maintaining peace of mind that the other functions are being managed effectively. If you would like to explore this solution in a complimentary, no pressure, discussion, please reach out at carrie@limitlesshrsolutions.com.

 

Current areas supported by Limitless HR Solutions:

·      Human Resources Compliance

·      Recruiting

·      High volume recruiting, direct sourcing and staffing and search solutions (Source2)

·      Management Training

·      Leadership Development

·      Compensation/Wage Banding/Job Descriptions

·      Coaching

 

Referrals for the following providers also available:

·      Background Checking

·      Purchasing

·      IT

·      Social Media Management

·      CPA/Accounting

·      Benefits Broker

·      Benefits / ERISA Compliance

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Winning where it counts

If you are a business owner or leader, I can tell before I’ve even met you that you have high standards for yourself and don’t like to lose. Part of the journey of becoming successful not only in business but in life is learning to channel that high-achieving spirit into things that both matter and offer the highest return for your emotional and time investment. If you are a perfectionist type this can be a particularly difficult journey because it necessarily (as in always, as in no exceptions) means that you will at some point in your life need to delegate and/or outsource functions in order to maintain and grow. This transition, although inevitable, can be a struggle if you’re not prepared.

Depending on your circumstances, this is tough for various reasons. If you are a manager or leader, it probably means that you will at some point need to delegate functions to people who may or may not have your experience and skillset, may or may not be as invested in the success of the organization as you are and may or may not (although probably not) do things the way you do them. Most of us who have led individuals or teams have learned that peace of mind comes only when one releases oneself and one’s subordinates from the stifling yoke of perfection. Celebrating progress, effort and improvement the key to loving your job as a manager versus being continually frustrated and burned out.

If you’re a business owner or senior executive the premise is the same – if you want to grow, be successful, and/or have a life you can’t do everything yourself. Obviously entrepreneurs just starting out sometimes do have to wear all the hats, but if this keeps up indefinitely, you may be just a really overworked independent contractor.

Fortunately for all involved, we live in an economic period where outsourcing and freelance assistance is available for almost every function. This means that companies can focus almost exclusively on their core service or product and pay experts for whatever else they need. If you own a fitness business, or a sign-making shop, or develop software, you can focus just on that and pay others to perform HR, Financial Reporting, Payroll, Marketing, Accounting and Recruiting to name just a few examples. The beauty of the outsource model is that you can scale up or down as you need. There are providers for every size of business. For example, my business provides small scale talent searches for companies who need help with recruiting while my partner, Source2 provides high volume Recruiting Process Outsourcing for employers who are spending time and money on more than 10 hires a month.

I love the outsourcing models for a lot of reasons. As a coach and consultant, I love that it allows business owners and managers the ability to really streamline their core product, drive efficiencies and become leaders in what they do. It speaks to my coaching philosophy of playing to your strengths, because I believe that’s how you become exceptional. The alternative is usually becoming proficient at best, mediocre or even dangerously poor at performing tasks for which you have no skillset or passion.

Is outsourcing right for you? A good first step is to determine what is working for you right now and where you need help. Ignorance is not bliss here, by the way. If you are not doing anything at all regarding HR compliance, for example, continuing along this path is probably not in your best interest. Your pain point may be that a) you are constantly in a state of low level anxiety about what fines or penalties you may be risking or b) you are actively in danger of a lawsuit or audit. It really shouldn’t be a question of IF you are going to get compliant but how? Do you hire an HR person, learn it yourself or outsource? The answer depends on many factors.

Recruiting is another example. This is not most managers’ favorite activity (to say the least) and is usually not a manager’s strongest skill and yet finding good, quality employees is almost always on the top five list of strategic objectives of a company. If you only hire one or two people a year, you probably suck it up and go through the process of writing job descriptions, placing ads, interviewing and all that. Unfortunately, the more you need to hire, the more complicated it becomes and the less likely it is that you have the time, energy, passion and/or know how to utilize all the best practices like branding yourself as an employer, leveraging that brand across social media and job boards, qualifying applicants in a timely manner etc.

Sound overwhelming and like something that could pull you dangerously away from your core business? Guess what? There are providers for whom your headache IS their core business. At the end of the day, you only have so much time, energy and resources. It only makes sense that you, as a business owner or leader, should spend as much as possible of all of these on the things that you and only you are best suited to do. Forget about ‘rounding’ and instead keep your edges sharp and competitive by winning where it counts and adding other thoroughbreds to the stable when you need them.