What to Consider Before You Outsource

Outsourcing task or getting products from an outsourced vendor can help small businesses grow by freeing up more time to do whatever is at the core of the business even more effectively. You might know exactly what you need to outsource and who you’re going to work with, or you may be in that crucial decision making process. If outsourcing is still a future plan, consider these aspects before you do so.

How established is the vendor or individual? Have they been around for a long time or are they just starting out? Is there track record for deadlines, quality, and customer service positive or shaky? The way this vendor runs their business will affect how you run yours, so do your research to make sure this affect is positive for you. Check references and contact some of their other clients to get a better idea of how they work.

How will you monitor the vendor’s impact? Develop a system for keeping track of what they are doing, how long key processes are taking, and evaluating whether you investment in this company is worth the time for your business. Another thing to think about is are your employees comfortable with this new vendor’s relationship with the company? Some positions may not be effected at all and others may be directly. Have you had a conversation about the upcoming changes while addressing their concerns?

Have you set expectations and goals for the vendor and communicated them? Both businesses need to know what is expected from the other to make this partnership run smoothly.  Be specific and get assurance that they are confident they can meet all of your needs and expectations before things are finalized. Finally, how will you communicate the ins and outs of your business with the vendor? What methods and schedules will you have for communication in general? Working this out ahead of time will save you stress down the road. They will need to be absorbed in the key knowledge of your business that impacts what they’ll be doing for you. Make it happen!

© 2013 eMarketing 4 Business LLC

Promoting From Within Vs Hiring From Outside

         You may find yourself in a position of growth and change within your business. You want to increase the size of your staff or someone has just announced their resignation and you have an important position to fill. Hiring is always an extensive process, and one of the first decisions you are faced with as the head of a small business is to promote an employee you already have or to hire from the outside. The approach you take on this decision can be different depending on what position you need to fill and how your company is doing. What are some factors to consider that will help you decide?

If you promote someone from within the company, that person has already proven they are valuable or they wouldn’t be there. This can save you the time of countless interviews and the money you would have spent on advertising the position. Promoting an internal candidate can result in a more efficient workflow. Some argue that anyone can “buy” talent, but it takes a truly skilled leader to develop it. Promotions mean that people feel like they are being rewarded for their hard work and in some cases, it may motivate all other employees to work harder so they may be promoted in the future.

 However, hiring an external candidate can bring in a new set of skills that no one in your current staff has. You can avoid the resentment the rest of the employees may have felt towards the person who got the promotion. If they previously worked for a competitor, they could give you good advice on how they got ahead of you or what mistakes the management at the competing company made. You may decide a fresh perspective will give your business the changes that it needs, which can “save” the company. But you will need to take the time to train them on company policies, products, software, and the general way of doing things—internal candidates already know all these things. You can also expect to spend more money (giving them a higher salary) than you would for an internal candidate—the average is 18% more. Even though outside hires get paid more and sometimes have more education and experience, their review scores are often lower than those who get promoted. They are also 61% more likely to get fired from the position than someone who has already been with the company. Also, there will be an adjustment period for the new person and everyone else because they won’t know how to act around this person initially, especially if they are their new boss. Finally, if the company is involved deeply in the community, it may be best to consider someone with connections and knowledge of that community.

The bottom line is no one way is better than the other. There should be a balance between the two and the decision should be made on a case-by-case basis. You can also open up both options for the same position to see what will work out best. Keep making informed decisions. Make it happen!

© 2012 eMarketing 4 Business LLC

The Pros and Cons of Hiring Contracted and Temp Employees

When someone is searching for a job, most of the time, their goal is to obtain a permanent position, part-time or full time. They are looking for security, a place to grow in their skills, and they don’t want to have to worry about being unemployed again. However, there are times when a need for extra help arises and that need may not be long term. Therefore, a company decides to post an opening for a contracted or temporary position. People in search of this type of position may be a newcomer to their career field—college students and recent graduates, people who have had trouble finding work—people who have been fired and unemployed for months, even years, or people with a more undefined set of skills. There are specific characteristics and situations you will be looking for in a temporary or contract employee and there are positive and negative effects for the worker and the company from hiring a temporary employee.

Some reasons for hiring a temporary employee include employee absences, maternity leave, a sudden vacancy, special projects, or a peak in the season. When companies bring on temps, they can adjust more quickly to workload fluctuations. Their temporary status provides flexibility for them and for you: they may have other commitments to work around and you may not need them for eight hours a day, five days a week.

You can also evaluate the employee without making a commitment. You can determine if they are a good fit for your company and study their work performance—if you like what you see and the possibility is there, you can decide to offer them a permanent position. On the other hand, you know exactly how long they will be working for you as a temp and can release them without a lengthy explanation if you don’t see them fitting into your company long term. Temporary employees also save cost because you can offer them a lower pay rate and are not obligated to provide a benefit program and the same goes for independent contractors. With contractors, when there’s not work for them, you don’t need to pay them. When you hire through an agency, they can quickly help you find a qualified person and you can build a relationship with that agency.

With any temporary employee, there will be some need for training because there are skills and procedures specific to your company that they need to learn. Oftentimes, these employees have a lower morale because they don’t feel like an equal part of the team—although they should be treated with the same respect as any of your full-time employees. There are safety issues they must quickly be trained on and if they don’t learn them in time, there is a greater chance for injury. You don’t want to take any legal risks, either—make sure the timeframe and other terms of their employment are set in stone. For contractors, you do need to pay them according the market rate for the type of work they do and classify them correctly for taxes. They have control over whether or not they accept a project from you, making them less reliable. Finally,contractors are allowed to also work for your competitors—if they do great work for you, they’ll do great work for them.

All things considered, you may decide that hiring a temporary employee is just the thing to fit your current company needs. Just remember that most of the time, the benefits for you are the drawbacks for the employee, so make sure they are willing to work with them.

What is a PEO?

A PEO is a Professional Employer Organization. Companies who do not want to manage all of the employee related human resource aspects of running a company, often align themselves with one of these types of companies. A PEO provides a cost-effective alternative to outsource the management of HR, employee benefits, payroll and workers compensation which allows the business owner to focus on their core competencies of running and building their company.

By aligning yourself with a PEO you become a Co-Employer with them. For the most part everything stays the same with this arrangement, you still run the day-to-day management of the company and your people, but your PEO Company makes sure you do it within all of the State and Federal guidelines. They in essence become your in-house consulting firm to consult with to make sure you do everything right with your compliance, administration, procedures and interaction as it relates to your employees.

Another big benefit to aligning yourself with one of these PEO’s is that you can typically offer big Company benefits even though you are a smaller company. How? Because PEO’s usually have hundreds if not thousands of people in their Co-Employment relationships you are able to leverage these big numbers of employees to provide your employees more comprehensive benefits at what are usually lower prices than you could get on your own.

The fees for a PEO are usually a percentage of your payroll. The fees you pay them can sometimes be offset by the savings you might have with workers compensation, payroll administration and benefits cost reductions. Often times companies can compete better for new recruits with more comprehensive benefits and a more coordinated HR process.

© 2008 eMarketing 4 Business LLC