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WENDY ELLEN INC.

March 2018 Newsletter
Outsourcing Human Resources/HR Calgary Calgary
In This Issue
  • Thanks for Joining Us!
  • The Definition of Outsourcing
  • Benefits of Outsourcing
  • Key Functions to Outsource
  • Quick Reference: What Does the Law Say About Outsourcing?
  • Quick Reference: Ask the Important Questions First
  • Quick Reference: Advantages of Outsourcing
  • Quick Reference: Disadvantages of Outsourcing
  • Coach's Corner: Best Practices for Outsourcing Contracts
March 2018
Volume 5, Number 3

Thanks for Joining Us!


March has arrived, our clocks have moved ahead, and most of us are waiting hopefully for the first signs of spring. Dare we say the long dark of winter is over? 

Sometimes - like second-guessing the weather - making the best decisions for your organization is difficult. Expand or remain status quo? Develop new products or stay the course? Rebrand or hold fast?

Business owners are often so overwhelmed by all the facets of their organization that they just can't get down to...well...business. Does this sound familiar?

In this edition, we explore the concept of outsourcing and what it can mean to your business. 

OUTSOURCING

Definition:
 The practice of having certain job functions done outside a company instead of having an in-house department or employee handle them; functions can be outsourced to either a company or an individual .

Employing an outside company to perform functions previously done inside the company.

A situation in which a company employs another organization to do some of its work, rather than using its own employees to do it.
Some people are familiar with a very common type of outsourcing: payroll processing. Others are familiar with various functions of an organization being handled by call centres and production facilities in southeast Asia. The reality is that outsourcing at its best is a partnership that works for the business owner. 

Keep reading for more learning.

Benefits of Outsourcing


Many business owners don't thoroughly understand the benefits of outsourcing. It's true that outsourcing can save money, but that's not the only (or even the most important) reason to do it. 

Wise outsourcing can provide a number of long-term benefits:

Control capital costs. Cost-cutting may not be the only reason to outsource, but it's certainly a major factor. Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business. Outsourcing can also make your firm more attractive to investors, since you're able to pump more capital directly into revenue-producing activities.

Increase efficiency. Companies that do everything themselves have much higher research, development, marketing, and distribution expenses, all of which must be passed on to customers. An outside provider's cost structure and economy of scale can give your firm an important competitive advantage. In many cases, outsourcing allows access to expert talent. Outsource service firms can offer innovative approaches, the latest technology, and creative, cutting-edge solutions that otherwise aren’t available. Outsourcing also increases flexibility in that resources no longer used in one area can be redirected to the company's core operations

Reduce labor costs. Hiring and training staff for short-term or peripheral projects can be very expensive, and temporary employees don't always live up to your expectations. Outsourcing lets you focus your human resources where you need them most.

Start new projects quickly. A good outsourcing firm has the resources to start a project right away. Handling the same project in-house might involve taking weeks or months to hire the right people, train them, and provide the support they need. And if a project requires major capital investments (such as building a series of distribution centres), the startup process can be even more difficult.

Focus on core business. Every business has limited resources, and every manager has limited time and attention. Outsourcing can help your business to shift its focus from peripheral activities toward work that serves the customer, and it can help managers set their priorities more clearly. For many businesses, the primary motivation to outsource is that it frees owners, managers, and employees to spend their time on income generating activities.

Level the playing field. Most small firms simply can't afford to match the in-house support services that larger companies maintain. Outsourcing can help small firms act "big" by giving them access to the same economies of scale, efficiency, and expertise that large companies enjoy.

Reduce risk. Every business investment carries a certain amount of risk. Markets, competition, government regulations, financial conditions, and technologies all change very quickly. Outsourcing providers assume and manage this risk for you, and they generally are much better at deciding how to avoid risk in their areas of expertise.

Improve the bottom line by decreasing expenses. A skilled contractor or firm can generally perform work less expensively than a full-time employee can, and the costs of hiring, training, and maintaining employees are eliminated, as are taxes and benefits.
Outsourcing Human Resources/HR Calgary Calgary

It's Okay to Let Go: Key Business Functions You Can Outsource

Outsourcing -- hiring outside firms to perform work normally handled internally -- is a good thing for small and even not-so-small companies. Some businesses don't have the man-power to tackle all the work that needs to be done. Outsourcing can also save money, giving work to companies that are cost-efficient.
The key is to outsource functions that are not integral to your core service. This will allow you to focus on what you do best. 

Consider the following functions: 

Administrative tasks
Scheduling, travel arrangements, data entry, typing and other administrative tasks can usually be handled by a virtual assistant or administrative service. While these tasks are crucial to the proper functioning of any business, they are not usually core business activities.

Payroll processing
Paying employees is tricky; it can take a lot of time to master the process. Outsource this task to a company that knows the payroll process inside and out so you don't have to spend time on taxes and health benefits. Outsourcing payroll processing alone can save considerable hours, headaches and dollars.

Accounting and financial duties
Accounting firms or individuals can help with many financial services including bookkeeping, invoicing and accounts payable and receivable, as well as financial reporting, analysis and planning. Many financial contractors will bundle these tasks for even greater savings. And many accounting firms will also handle payroll processing as well.


Human Resources
Outsourcing human resources is particularly useful for small businesses. An experienced HR outsourcing company can manage a whole range of human resources functions that you might otherwise outsource to multiple providers - these functions include everything from payroll processing and benefit plan management and administration to recruiting, employee relations and more. By staying current with employee legislation you know your employees will be managed in a fair and compliant manner.  With one provider to take responsibility for a range of HR functions, you'll not only spend less time on administration and legal fees, but less time managing vendor relationships as well. 

Benefits
Much like taxes and payroll, negotiating medical plans on an annual basis takes away from focusing on core business issues. Using a benefits specialist to manage employee benefits can also be wise, since they must stay up to date on the latest products that will work for your business.


Distribution
The skills needed to make an awesome new product are much different than the ones needed to distribute it widely. With the rise of e-commerce, international trade, and third-party suppliers, the process of getting your products to customers can be a logistical nightmare. Let the experts to do it.

Research
Have a new idea for a product or service, but don't know whether it will sell? Hire companies to do in-depth research for you. Specialists can conduct polling, focus groups, and online data evaluation to determine whether or not your business idea will work. Having an objective third-party do the research will make the results more credible.

Risk Assessment 
Every entrepreneurial venture comes with some risk. Outside consultants can tell you how to avoid risk in their areas and what challenges you might run into. For small businesses just starting off, it is helpful to have outside advisers who are experienced in your industry.


Marketing
Effective marketing determines how both brand and company reputation are perceived in the marketplace. A marketing firm or consultant can often provide an outside perspective that an internal marketing staff cannot. Professional freelance writers can develop higher-quality, polished content that will improve marketing efforts. Website design, brand development, press releases and online marketing duties such as social media, blogging and search engine optimization are good candidates for outsourcing as well. 
Independent contractors specialize in increasing brand recognition through social media platforms and word-of-mouth. With a new level of exposure, you will be energized to keep focusing on your core business.

IT operations
It can be extremely expensive to handle IT operations in-house. The average business has limited ability and knowledge to manage all of its IT needs. Unless you’re an IT company, IT is a maintenance and repair function, not a core business activity. The potential advantages of outsourcing IT tasks are enormous.


 

Top 10 Tips for Finding an Outsourcing Partner


Finding an outsourcing partner requires detailed research and discussion. It's critical that you are compatible with your partner, and that you work with organizations or individuals who will drive success for your company. Below are ten indicators that are critical when working with outsourcing partners.

1. Results Driven – Is the company committed to helping you reduce costs and at the same time increase customer satisfaction, one that can set a goal that is achievable within a specific time frame?

2. Partnership Oriented – Does the company that shares your common goals and values, of which performance is a key point among staff, the community and the managing company?

3. Innovative – Can the company execute on its own across the board, and can it provide a great deal of benefits to you and your business with modernized technology and more?

4. Flexibility –Does the company offer customized and tailored services, always keeping in mind the needs of you and your customers, first and foremost?

5. Modifiable Management – Can the company swiftly manage changes when necessary for achieving your performance improvement goals without negative impact. In addition, can it prepare staff members for a change without flaw and deliver change in a positive, productive and professional manner.

6. Benchmarking – Can the company comparison data to ensure that your customers are receiving the highest quality of service, and does it offer measurable success to customers' and employees' satisfaction thus creating more growth and profit potential for everyone involved?

7. Resourceful – Can the company attain depth, with an extensive experience in the long-term market and is it able to offer resources specifically fitting your goals and vision?

8. Employee Development – Can your outsourcing partner provide comprehensive and ongoing training, as well as overall professional development for all employees, at all levels of the corporate ladder in relation to your outsourced campaign?

9. Continuous Improvement on Quality – Can your partner always take things to the next level and raise the bar higher for every goal that is achieved? Can they also encompass the willingness and ability to meet both short and long term goals?

10. Proven Record – Above all, does your outsourcing partner have a successful, professional proven track record? They should be able to provide you with references and testimonials if you feel they are required. If a company, particularly one overseas, cannot provide references, then simply stay clear of them.

 
Source: chrisducker.com

Coach's Corner: Best Practices for Effective Outsourcing Contracts


Due to the strategic nature of the outsourcing initiative, it’s critical that you select the right outsourcing vendor and set up the partnership in such a way that both parties benefit from the relationship. Structuring the contract with the outsourcing vendor is a critical process in establishing the outsourcing relationship.

In each step of contract negotiations, both parties should make sure that the contract serves the purpose of their short-term and long-term goals. This will ensure that there are sufficient incentives for both parties to guarantee the success of the outsourcing relationship.

A well-defined outsourcing contract helps in:
  • Clearly articulating the success criteria to the stakeholders in both the client and the vendor teams.
  • Defining some of the high level metrics used to measure the vendor performance.
  • Defining the project requirements in terms of people, process, security, technology and business continuity.
  • Defining the incentives and penalties based on vendor performance.
  • Handling the unpredictable scenarios without causing undue frustration on either side.
  • Pursuing structured growth of the partnership.
It’s important to clearly define the requirements for the projects in terms of people, infrastructure, security, business continuity and processes.
  • People-related requirements include the skill set of resources, size of the team, duration of ramp up, etc.
  • Infrastructure requirements include hardware, software and network details.
  • Process-related requirements include resource induction process, status reporting, delivery knowledge transfer, quality process etc.
  • Security requirements include physical, personnel and network security.
  • Business continuity requirements include planning for physical theft, data theft, virus attacks and natural and man-made disasters.
  • The service levels for the outsourcing relationship and the corresponding incentives and bonus clauses should be clearly defined. This will help the vendor to internally measure and manage the outsourcing projects as well.
  • The governance of the contract in terms of termination clauses, contract breach and governing clauses should be clearly defined.
To reduce the cost of contract structuring, companies can leverage in-house legal council to draft the contract based on the term sheet. Also, vendor contract templates can be modified to incorporate the term sheet details, and outside legal support can be used only for the final validation of the contract.
Source: sourcingmag.com


 


Quick Reference: What Does the Law Say About Outsourcing?

As with any other business practices, outsourcing must abide by the legal and financial parameters of Canadian law, as well as adhere to relevant federal and provincial human rights or labour legislation. 

Here are a few links to sources that provide detailed information:

The International Comparative Legal Guide to: Outsourcing 2017  

Outsourcing: Canada Overview

Outsourcing - as outlined by the Office of the Privacy Commissioner of Canada

 



Quick Reference: Ask the Important Questions First


A simple and practical way to determine outsourcing tasks or projects, or even longer-term roles in your organization is to start by asking yourself some key questions.

One of the most powerful questions you can ask yourself, and your in-house team is this: What is the highest and best use of YOUR time?

In small- to mid-sized firms, a lot of what determines your outsourcing strategy is answering the question of what makes the most sense to outsource:
  • What are you spending the most time on that is taking you away from your most productive role in the company?
  • Are you focused on revenue- and efficiency-generating activity?  If not, what tasks should you delegate or outsource to provide yourself with more time for your most effective work?
  • What do you enjoy doing the most in your organization? (usually a great indication of the best use of your time)
  • What are you not very good at but you’re doing it anyway because of “time” constraints, “budget” or other “excuses?”
  • What do you really dislike (is “hate” too strong a word?) doing in your organization?



Quick Reference:  Advantages of Outsourcing


1. You Get More Experts
Your core team might be fantastic at a few things, but nobody is perfect at everything. By outsourcing particular tasks, companies are often able to substantially improve performance by drawing on the niche skills of experts in certain fields.

2. Things Get Done Fast
One of the top reasons small businesses tend to outsource work is because it will get done quicker. If you’re working with a limited number of staff members, you can get things done a whole lot quicker by passing time-consuming tasks on to freelancers or external agencies.

3. You’re Able to Focus on What Matters
Another benefit of outsourcing tasks is enhanced freedom. By passing on supporting processes, you’ll be able to concentrate your skills on strengthening and improving the core processes that help make your business tick.

4. You Can Share Some Risk
One of the most important factors in any project is risk assessment and analysis. By outsourcing certain campaigns or processes on to experts in their respective fields, you will benefit from their enhanced ability to plan and mitigate potential risks.

5. You Can Reduce Costs
As one might imagine, outsourcing piecemeal work is almost always going to be cheaper than hiring permanent full time staff. Not only will you save time and money on recruitment, but your profit will also be extended thanks to shorter overheads.

6. You Can Work Around the Clock
One major benefit of outsourcing digital work overseas is the substantial differences you might encounter in terms of time zones and holidays. Although this can pose an initial hurdle logistically, once overcome it can effectively mean your business is running even while you’re fast asleep.

7. You Can Simplify Project Management
If you choose to outsource work via a wide range of specialist freelance websites and online services, you’re often provided dynamic and intuitive platforms that will help you to effectively manage what’s being done, when it’s due for submission and how it will be paid. Most of this can be automated, freeing up your time for more important work.

8. You Simplify Work Relationships
Quite a few small business teams are tight-knit groups of friends and family — which is fantastic. But when you’re incredibly close to your staff members, it can also lead to issues when work isn’t being done up to par. By outsourcing work, you’ll typically be able to minimize work relationships to simple, contractual arrangements.

9. Efforts Are More Targeted
Another overlooked advantage of outsourcing is that it enables you to plan and execute more effective, targeted campaigns and projects that you wouldn’t ordinarily be able to take on. This gives your business the chance to take new risks and experiment with different methods of exposure.

10. You Get Peace of Mind
At the end of the day, choosing to outsource with a reliable individual or agency should give you peace of mind that tasks are being handled expertly and efficiently without you having to worry. 
 



Quick Reference:  Disadvantages of Outsourcing - and How to Avoid Them
 

1. You Lose Some Control
As you might expect, when you farm work out to external agencies  or freelancers, you’re losing control of how those tasks are being monitored and performed. So long as you know and trust who you’ve hired, that shouldn’t be a huge issue – but you’ve got to tread carefully.

2. There are Hidden Costs
Although outsourcing work is generally considered cheaper, you must also beware. Outsourcing companies or big agencies will typically ask small business owners to sign lengthy contractual agreements, and they’ll include plenty of fine print. If you don’t read the terms carefully, you could get hit with unexpected costs.

3. There are Security Risks
In this age of data protection, it’s essential that you exercise caution whenever using customer data. If you plan to outsource processes that require personal data, you could be placing the privacy of others or security of your business at risk by passing that data on to other people.

4. You Reduce Quality Control
Outsourcing companies and some freelancers may often be motivated by profit rather than a job well done. That means the work you send out may come back quickly, but will lack the standard and quality that customers have come to expect from your products or services. Ensure you work with a trusted and professional company.

5. You Share Financial Burdens
Although it can be nice to bring in expert agencies to share in risks, it can be pretty dangerous to tie your business to the financial well-being of another company. Again, you’ve got to spell out any and all terms and conditions in contractual arrangements plainly – because you don’t want to take a financial hit if they fail to deliver.

6. You Risk Public Backlash
If you’re taking work overseas (even just to write a blog or two), your business very well may run into ill will from consumers that have taken a moral stance against outsourcing. Right or wrong, for better or for worse, some form of criticism is often inevitable. Make sure you have a sound rationale should the need arise to defend your decisions.

7. You Shift Time Frames
One major disadvantage of outsourcing particular tasks is the risk that your freelancers or partner agency may be marching to the beat of a different drum. As a result, it might be difficult to synchronize schedules in order to ensure your customers receive what’s promised to them on a reliable timeline. Work only with reputable and professional organizations who work to your specified timelines.

8. You Can Lose Your Focus
Because many outsourcing agencies or freelancers tend to service multiple clients at any given time, the work you’re sending out may not be receiving the focus it deserves. Depending on the processes you’re outsourcing, that lack of focus could be detrimental to your small business. Thoroughly evaluate any company and check references scrupulously.

9. Things Get Lost in Translation
It doesn’t matter whether you’re dealing with overseas freelancers or some talented expert just up the street – if you’re handing out remote work via email or telephone, important instructions are often lost in translation. That could cause you serious time, money and hassle. Ensure there are clear, simple, and defined instructions included.

10. You May Face Moral Dilemmas
While it may not be an issue for everyone, a major disadvantage of outsourcing is that you may be denying your team or a talented local agency crucial work or development opportunities. Growth begets growth, and by outsourcing work, you may not be contributing to the growth of your community. We at Wendy Ellen Inc. recommend that - whenever possible - outsource to local companies.



 


Below is a simple process-strategy matrix that may help determine if outsourcing can work for your organization.

Source: Datamark Incorporated
Outsourcing calls for knowledge, research, and skill.

Contact Wendy Ellen Inc. for assistance today!
About Wendy Ellen Inc.
 
Wendy Ellen Inc. specializes in providing human resource and benefits management skills to small to mid-sized companies on an as-needed basis. From recruitment, Human Resource policy development and legislative compliance, employee retention and engagement, individual advisor/coaching, succession planning to employee development and performance, Wendy Ellen Inc. will help you protect your most valuable resource, your people.
 
Contact Us
http://www.wendyelleninc.ca
wendy@wendyelleninc.ca
 
 
Contact Wendy Ellen Inc. today to discuss your human resources needs.

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