For eight years, Mickey Swortzel, founder of vehicle control systems start-up New Eagle, watched her employees' health-plan costs steadily increase. Then, in 2016, she made the decision to outsource her one-person HR department to ADP, one of the largest companies in the quickly growing market of Professional Employer Organizations (PEOs).
This is not an uncommon story among businesses today. In the last few years, the outsourced HR industry has taken off, bringing in an estimated $165 billion annually and nearly 85 percent of all firms—not just small businesses—now turn to an outside organization for at least some of their HR functions.
What's the motivation behind this growing trend?
More Affordable Benefits
For Mickey, like many others, the primary reason behind making the switch to a PEO was to lower healthcare plan costs and the ability to offer employees benefits that were previously unaffordable. "My number-one reason for outsourcing was to reduce the cost of our health plans, and joining with a PEO allowed better group rates," Swortzel says. And the switch paid off: The prices of family plans were cut in half at her company and her employees now save an average of $5,000 annually.
"Outsourcing gave us benefits that I couldn't afford—or even obtain at any cost—on my own," she says. By giving her small businesses the opportunity to access ADP's Fortune 500-level benefits, she also made the company more competitive when trying to recruit top talent amid a field of much larger competitors.
Sharing Legal Liability for Compliance
The increasingly complex regulatory environment that small businesses have to navigate makes it nearly impossible for a small HR team to stay up to date with compliance issues like the Affordable Care Act, worker's compensation, workplace discrimination and much more. HR outsourcing firms often shoulder some or all of the legal liability for maintaining that compliance.
"There are things companies have to do because it's the law," says Deanna Arnold, president of Employers Advantage HR Company in North Carolina. "And small business owners have so many things they need to focus on that when issues come up, they can find themselves unintentionally in trouble. By establishing compliance we protect these companies."
"Between the complexities of payroll, hiring, administration and organizing huge companies, it's often better to shift some of the responsibilities to others who are more focused and more qualified," explains Pierre Tremblay, HR director for Dupray, a Montreal-based company that sells steam cleaners and irons internationally.
Changing Perceptions and Evolving Services
Of course, outsourcing isn't right for all companies. Arnold recommends that once companies have 50 or more employees, they should start bringing some HR functions in-house. The downsides of HR outsourcing are most evident in areas like employee engagement or recruiting, where in-house HR people are in a better position to develop the culture, and reflect the values, of the company.
For Swortzel, the decision to outsource one of her core business functions was a tough one to make. "I'm in peer groups of other executives, and they were shocked that I was thinking of using a PEO," she says. "It scared me too. I thought they would tell me how to run my business, who I could hire and fire."
Arnold says this is a common misconception about modern HR outsourcing. While outsourcing won't necessarily provide the same amount of culture or engagement support as in-house HR, most firms try to embed themselves with the clients as much as possible: "We actually partner with the employer and employees to create work environments where they thrive."
Continuing to foster the human side of HR is vital to the success of both the business and HR as a whole. An important part of the service Arnold's company provides is offering her clients' employees a friendly face to speak with when they have questions or concerns. "I have a team of five HR business partners who actually work on-site in some clients' offices for a set number of days or hours per week," she explains. "We fully integrate into that organization, and even when we're not there, we're always reachable if they get injured or have an issue."
Swortzel says her experience was the opposite of what she had feared. "It has been a true partnership. They're not interested in running my business, they want us to be successful," she says.
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4 Ways to Expand Your Social Media Recruiting Strategy
Social media is ubiquitous, and companies are using it in many different and innovative ways for enhancing their sales, marketing and customer services. So why is it then that many HR departments still fail to see social media as more than a job board? Outside of the office, the same HR people happily engage with friends on Facebook, share news and ideas on Twitter, look at pictures on Instagram and send snaps on Snapchat. But when they put their work hat on they seemingly forget why they use social in the way they (and hundreds of millions of other users) do every day, and resort back to just posting jobs (in a boring way) on social media! Of course there is nothing wrong with job posting, and it's often an effective approach to reaching an audience, but not all of the time. According to LinkedIn, only 12 percent of the working population are actively seeking new employment. So, if all you do is post jobs on your LinkedIn, Twitter or Facebook page, you are consciously ignoring the other 88 percent of the working population who might be interested in hearing more about your company in general. Creating and sharing interesting content about your company such as employee stories or volunteer days help bring your employer brand to life. It might even trigger people to reach out to you and find out more about your job opportunities. In truth, mixing up your social media feeds with a variety of content will provide more depth and candidate engagement. Here are four ways to expand your social media strategy and engage with new potential candidates. 1) Candidate Sourcing With people using an average of more than five social networks, sourcing talent via social media makes absolute sense. Branch out from just using LinkedIn and look to sites like Twitter, Facebook and Google+ to search for and engage with prospective talent. Try search tools like Followerwonk to search Twitter bios for keywords and job titles, a clever Chrome browser extension called Intelligence Search that easily searches Facebook and using the search bar at the top of Google+. They will help you identify new talent. If you are looking to build social media pipelines then try Hello Talent. It is a great free tool that allows you to build talent pipelines from many different social networks by using a browser extension. 2) Competitor Monitoring Social media is a fantastic source of information and data. By using tools like Hootsuite and Tweetdeck, you can monitor the social media activity of your competitors. Both of these tools allow you to set up search columns, where you can enter things like keywords, hashtags, Twitter names and track when any of these are mentioned on sites such as Twitter. You can use the interact or use the insights accordingly. 3) Resources for Candidates Consider your Facebook page (or Twitter channel) as a real-time customer services channel for you to engage and communicate with both new and existing candidates in the recruitment process. Provide links to your social media pages to candidates at all stages in the process and encourage them to visit the pages and ask questions about any part of the process. You can also share useful information about working for the company, including locations, employees and other relevant news. 4) Live Recruitment Events Not everyone can attend the many recruitment events happening every month. But by using social media like Twitter, Facebook Live, Instagram and Snapchat, you can easily provide live commentary for these events you attend or host. Real-time video via Facebook Live and interaction via Twitter chats are superb examples of ways to regularly engage with a live audience of potential candidates. With social media firmly established in our working lives, I question how much more evidence HR departments will need to fully embrace this "new" form of candidate engagement. Photo: Twenty20
Cartoon Coffee Break: Unconventional Recruiting
Editor's Note: This post is part of our "Cartoon Coffee Break" series. While we take talent management seriously, we also know it's important to have a good laugh. Check back every two weeks for a new ReWork cartoon. Missed the Recruiting Trends conference? From the state of recruiting automation adoption, to the role that the human element still plays in recruiting, our recap covers everything you need to know. Header photo: Creative Commons
The Latest Office Benefit Is Tackling Student Debt
Modern companies are more than just employers — increasingly, they are also gyms, cafeterias and even laundromats. As perks like yoga class, free lunch and complimentary dry cleaning become the norm, companies continue to push the boundaries on ways to attract and retain top talent by providing much more than a paycheck to employees. The latest in the slew of new workplace benefits? Student loan assistance. In April, Chegg partnered with Tuition.io to give full-time employees extra cash for student loan reduction. Then in September, consulting firm PricewaterhouseCoopers announced it would provide up to $1,200 to help employees pay off loans annually. As a benefit, student loan assistance programs are certainly still in their infancy— one survey found that only 3 percent of companies offer such a benefit. But experts say that may soon change as companies seek to differentiate themselves in a competitive hiring environment. "We think student loan benefits are poised to be the next big benefit; similar to what 401(k) matching was when it was first introduced," says Dana Rosenberg, who leads employer and affinity group partnerships at Earnest, a lender that offers student loan refinancing and works with companies to create loan pay-down programs. The Burden of Student Debt Such programs could be extremely attractive to debt-laden Millennials. Around 40 million Americans collectively carry $1.2 trillion in student loan debt, and the graduating class of 2015 was the most indebted class in history with an average debt of $35,000 (a superlative they won't hold for long come May 2016.) For employers looking to adjust benefits to correspond to the changing demographics of their employee base, student loan programs hit the mark. "In 2016, our employees will be 80 percent millennials, and we also hire close to 11,000 employees directly out of school each year," says Terri McClements, Washington Metro managing partner of PwC. With student debt often preventing young people from participating in 401(k) plans and reaching traditional life milestones, the benefit could potentially make a large impact on employees' financial and personal well-being. A study from the American Student Association found that 73 percent of people with student loans reported putting off saving for retirement or other investments due to their debt, 75 percent reported delaying a home purchase and 27 percent reported it was difficult to buy daily necessities. "Student loans can be a very stressful thing to deal with, so if we can give our employees peace of mind, that's great," says Caroline Gennaro, corporate communications manager at Chegg. The Allure for Employers Student debt assistance programs aren't just attractive to employees, either. Rosenberg says there are significant benefits for the organizations that offer them as well. "Employers that offer programs to help their employees get out from under their debt load are seeing big benefits: increased retention, more competitive recruiting and, perhaps most importantly, happier employees who have additional cash flow to put towards their life goals," Rosenberg explains. Rosenberg says happier employees are more engaged employees, who tend to be more productive. Studies show that companies with high employee engagement experience lower turnover and have double the rate of organizational success than their less-engaged counterparts. Student loan benefit programs may also lead to a more diverse workforce, attracting employees whose financial backgrounds meant they had to take on more debt for their education. "Diversity and inclusion are also very important to us, so the ability to offer this benefit can help minorities who come out of school with a higher debt burden," says McClements. A Promising Response Companies say the response to their student loan assistance programs have been overwhelmingly positive. Chegg has had more than 80 people sign up since they started their program this summer, and they've already eliminated roughly 86 years of collective loan repayments for their employees. Companies are also finding these programs are a way to differentiate themselves from organizations that may offer more generic benefits. "As a company in the San Francisco Bay Area, we are always looking to attract the best and brightest in the industry, and this benefit is a big draw," says Gennaro. Photo: Shutterstock