more-arw search

Q&A Forum

Human Resources: When do you need Internal HR Expertise?

janet kataw's Profile

I work for a small healthcare laboratory with less than 50 employees and we are entertaining a company "Inspirity" to come in and handle our healthcare benefit, employee costs, workers comp, 401k, employment attorney fees, etc. We are doing everything ourselves and we don't know if this is wise to do i need help in making this decision.

Answers

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Janet,

In my experience, and I don't know Inspirity particularly so do take it with that grain, after 20-ish employees there is a $60K - $100K benefit from in-sourcing. That doesn't mean do it all yourself; that means hire the vendors yourself. Inspirity may have competitive rates, so the benefit may be smaller. If Inspirity is set up like an independent accounting firm, and not a PEO, the net cost to you will likely be closer to $20K. The tasks you indicate probably cost about that if you internalize it; this depends on whether you can have this as a part of someone's role, or if you need to dedicate a resource to it.

So, that is my experience.

My specific advice is:
-Calculate how much time / employee cost you are spending on doing this yourself. If you outsource, how much of that will be saved?
-Get from them a bid on providing these services. If they are structured like a PEO, you will need to get their pricing on the benefits themselves, as PEOs very often mark-up the benefits to add hidden costs, so that you are paying more fees than they are quoting you (note, I personally find this practice extremely unethical. If they quote you for known items at a higher rate than you are paying...run. Either they are incompetent or unethical)
Based on the differential between realizeable savings and their quote, are you saving money? If it is significant, move. If not....keep bidding the business until it is. This is something you *do* want to outsource in the end, because your value proposition is not being the best benefits provider, so there will be someone who can make a $ by being better at it.

Cheers,

KP

Ps...feel free to contact me if you want to walk through any details.

Timothy Guthrie
Title: President
Company: CFO Services Group, LLC
(President, CFO Services Group, LLC) |

Janet,
Keith gives some good advice on evaluating this from a cost standpoint. I would add though that you need to get to a "total" cost not just your time/employee cost. For example, if you are outsourcing payroll, what is your total annual cost for paychecks, tax filing, w2 processing. Do you have software and IT cost that would be eliminated? You need to take a wide view of what the entire process involves and what is costing you in order to get to an apples to apples comparison.

It is good advice to have the quote from a PEO breakout you insurance and benefits cost. My experience has been that it is difficult to realize the cost savings claimed for the insurance and benefit related components.

I would caution you on making this simply a cost analysis. Once you reach 25-50 employees, your compliance and regulatory burden increases. You always have the risk associated with even one or two employees from an employment practices standpoint. It is critical for you to evaluate the level of expertise you have access to internally, including your attorney, and decide how much you can rely on these resources for compentent HR/payroll/benefits support. You need to really understand the level of support offered by the PEO or other outsourced provider and how it will be delivered.

I would be happy to discuss this further if it would help.

Tim

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

If your need is related to payroll processing and tax payments, there are multiple services. However, if you are looking for HR guidance, a highly recommend a PEO, as employment law is complicated and ever changing. I posted a blog on this site which may help - "A PEO is not a “Set it and Forget it Process.”

David Marom
Title: President
Company: Marom Tech
(President, Marom Tech) |

Janet, in my previous reviews of PEOs, such as Insperity, we find that they make it very hard for employers to make a true apples-to-apples comparison. They like to bundle services into one fee. This causes many employers to save a bit for one product or service but overbuy on another. I actually have a meeting with a company this week that wants to get out of their Insperity contact and unbundle their services so they can negotiate for each benefit related service directly and only buy what they want. For you, this doesn't mean a huge amount of extra work or administration if you use the right partners and vendors.
Hope this insight helps.

Mike Poe
Title: CFO
Company: XinRay Systems Inc
(CFO, XinRay Systems Inc) |

You should also review the closely-related postings at https://www.proformative.com/questions/what-has-your-experience-been-insperity-formerly-administaff.

Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

Janet, in addition to what has already been conveyed, I would add get a few bids and make apples to apples comparison to select the provider. As Regis's post title suggests, this relationship still needs to be managed regardless of "who does the work" so have meaningful SLAs defined. During the process of outsource, redefine and communicate the new roles/responsibilities for the internal staff as their jobs will change since some of the work is being outsource. This is usually the opportunity for HR to take on a more impactful role like performance and talent management etc. Hope this helps.

2796 views

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.