Best of Breed HR Separates Good Companies from Breakthrough Companies What s Holding Your Company Back? By Peter Yozzo Doing HR right is more strategically important to companies now than at any other point in history; this is especially true for emerging or medium-sized enterprises. Groundbreaking research by groups like McKinsey Co., who published several reports on The War for Talent, along with books by best-selling authors such as Jim Collins, From Good to Great, offers definitive evidence that effective HR is the critical differentiator between good companies and breakthrough companies. Companies of all sizes have embraced the reality that having best of breed HR is essential to achieving success for these reasons: A great work environment helps firms attract, hire and retain excellent employees which are the building blocks of prosperous companies. The United States is becoming more litigious and regulated, creating a certain amount of risk for companies who are frequently unable to keep pace with voluminous and complex workforce legislation and regulations. Best of Breed HR Separates Good Companies from Breakthrough Companies - 1 -
The bottom line is this. If you don t attract, motivate and retain the best people then you won t build the breakthrough company you envision. And, if you don t take compliance seriously, you are at risk. However, the complexity of HR today makes it nearly impossible for small to medium size companies to manage the entire HR function since they rely on individuals or small staffs. For these organizations, large HR staffs would be out of the question, especially from a financial perspective. Over 10 years ago, businesses experienced similar issues with IT. The perceived value of effective IT as a strategic advantage was high, and the complexity of IT was accelerating at a rapid pace, as was the fragmentation and specialization of IT. Internal resources were no longer capable of keeping pace with changes in the IT marketplace. So, vendors evolved their capability to support complex IT environments on an outsourced basis. Early adopters enjoyed noteworthy success as slow movers faced ongoing challenges. Ultimately, the benefits of IT outsourcing were too compelling to ignore, and outsourced IT became the predominant model in the U.S. Not unlike the rapid evolution of IT outsourcing, companies are now leveraging the required skills and expert knowledge of HR outsourcing and consulting firms to accomplish their HR goals. Today, HR outsourcing stands on the edge of a similar destiny. HR Outsourcing (HRO) is now emerging as a means for smaller companies to address the critical areas of HR. Competition has also prompted smaller companies to consider HRO as a way to avoid additional costly staffing. These companies find that doing so not only allows their company to focus on its core business, but also turns HR into a strategic advantage. Best of Breed HR Separates Good Companies from Breakthrough Companies - 2 -
What You Need Consider what your HR department must do: Administrative HR o HR administration and record keeping o Benefits administration o Payroll o Required postings and employment contracts o Employee file audit/setup o Policy administration o Employee handbooks, manager handbooks o Time tracking General HR o Recruiting and hiring (permanent and contingent) o Onboarding process and orientation o Basic documentation and infrastructure o Job descriptions and exemption status o Termination o Performance evaluation o Workplace safety Senior HR o Management o Training Sexual harassment Safety Diversity Disability Leadership Executive coaching Customer service Sales Assertiveness Negotiation o Compensation analysis o Compliance with federal and state employment laws o Risk management o HR systems, processes and procedure and administrative best practices as well as DOL regulations, ERISA requirements, HIPAA rules, COBRA administration, ADA practices, FMLA, USERRA and California and municipal leave-of-absence laws o HRIS To shortchange any one of these areas could limit your success or present you with risks you do not want and cannot afford. Best of Breed HR Separates Good Companies from Breakthrough Companies - 3 -
Who You Need To achieve world class performance in your company and in each and every one of the functions on the above list, simply ask yourself, How many people do I need a squad? A battalion? A brigade? The answer is typically more than I can afford. After juggling competing business priorities and a finite budget with the need for strategic, tactical and administrative HR support, after spending time and resources building all these processes from the ground up, and after deciding what to do now and what can wait, companies still leave themselves exposed to risks. How to Get It : Human Resources Outsourcing (HRO) Human Resources has become far too complex to expect one HR professional to build a break through organization. Moreover, the possible solutions available across multiple functional areas of HR are overwhelming. It would be challenging for a single internal resource or even a small department to effectively evaluate or integrate solutions into a comprehensive plan, especially when they don t have the right skill sets or the benefit of experience with best practices. As a result, for most companies the question is not if they will outsource HR, but rather: What to outsource When to do it By making good choices about what to outsource and what to manage in-house early in your company s development, you will be able to leverage best practices and reduce your risk of getting HR wrong, which many times is the reason why a company is held back and does not thrive and grow. Best of Breed HR Separates Good Companies from Breakthrough Companies - 4 -
While the pattern of adoption for HRO may be similar to that of IT outsourcing, the stakes are much higher fortunately, so are the benefits. HRO is even more critical to the long-term success of the modern enterprise than IT outsourcing. If you ve got world class HR functions, running like clockwork, foreseeing all the needs all of a sudden you can: attract and retain the best talent motivate employees to get the highest productivity make it easy for your employees to focus on their jobs by proactively addressing HR needs. Looking at the benefits, it s clear that a company gains a competitive edge when using experts they don t have to hire as employees. Times of great change create great opportunities, and securing world class HR now can create a breakthrough organization. Innovative organizations who have mastered HR grow significantly faster than average companies and enjoy better profitability due to productivity increases. HRO brings order, simplicity, peace of mind, and safeguards against the compliance and regulatory pitfalls, and can help create a great place to work. HRO has arrived and the benefits have been clearly established by early adopters. Adopting an HRO model now will help your business break through and meet the challenges that keep most companies from reaching their goals maybe the very challenges that are holding you back. Mr. Yozzo is CEO and President of ThinkHR Corporation. He spends his time focused on how to transform HRO from a service primarily utilized by the Fortune 500 to a solution available to both small and mid-sized companies interested in more efficient and potentially business-changing HR. He has served all sizes of companies, including Fortune 500. In his career he founded Mindshare Group, Blaise Software, Inc. and The Capital Group, and he worked directly with Channel Point. More about ThinkHR is available at http://www.thinkhr.com. Email Mr. Yozzo at pyozzo@thinkhr.com Best of Breed HR Separates Good Companies from Breakthrough Companies - 5 -