So you can do what you do best"Big Company" Support for Employers and Employees”

Why Outsource? Why Change? Let’s face it: you didn’t enter into business to manage human resources. And yet, because HR is complex, precious time and resources are used up as you handle it in-house. Why is "do-it-yourself" HR so overwhelming?Here are six main challenges that small businesses often cite:

1. Doing HR right can be time consumingThe scope and responsibility of HR is broad – covering both tactical and strategic activities. Unfortunately, the tactical HR activities can consume all of the hours in the day and steal time from the truly strategic activities. Doing HR yourself means allocating time for functions such as benefits planning, recruiting/hiring, on-boarding, training, managing personnel files, payroll/time reporting, employee relations, compensation philosophy, performance reviews, manager development, organizational design, annual merit evaluations, bonus/variable compensation, managing leaves and life status changes, and lots of HR administration and compliance issues.

2. Explosion of benefit plan choicesThe explosion of benefit options has created a huge administrative burden for many businesses. Should your company offer HMO, PPO, High Deductible, POS, Health Savings Accounts, Flexible Spending Accounts? What about Life Insurance, STD/LTD, Retirement Plans, Commuter Plans, and various Voluntary Benefits? If so, which ones will fit the needs of the employees and executives the best? Which plans will make it more likely that you’ll get the talent you need for your company to succeed? Figuring out which plans will make you more competitive is no easy task.

3. Many 3rd party relationships to manageYou will have to manage a payroll vendor, state tax authorities, health insurance brokers, health insurance carriers for medical, vision, and dental, and disability, as well as vendors for employment liability, voluntary benefits, recruiters, HRIT system, compensation data, employee handbook/policies, outplacement, legal guidance, and many others. Managing all these vendors also places a burden on the accounting team to reconcile invoices and pay vendors.

4. Many regulationsThe acronyms are numerous and adding up every year: COBRA, FMLA, ADA, OSHA, EEO, WARN, HIPAA, ERISA, FLSA, etc. And you will have to keep up with federal laws and labor laws specific to your state and region, plus an ever-changing tax code.

5. Lack of negotiating leverageGiven the size of most small businesses, they simply do not have negotiating power when dealing with large insurance carriers and other vendors. Even a single event, such as an employee who gives birth to premature twins, can dramatically alter the cost of your medical benefits. Unfortunately, the end result can be the lack of control over escalating costs.

6. Too much paper and inefficient manual processesHR consists of multiple inter-connected business processes and multiple people involved in each process. Our clients tell us that in their former “do it yourself” approach, many of their processes were ad-hoc, requiring manual effort and quickly turning into paperwork nightmare.

Options for Handling HRYou have 3 basic options in regards to who can handle your HR function:

1. Do it yourselfAssume 100% of the responsibilities for HR activities yourself or hire internal staff to manage these functions for you. The upside is you have 100% control, because you get to do it all! The downside? Doing it all takes a lot of time and can become a 2nd job for many entrepreneurs. In addition, you may face an opportunity cost if performing these duties takes you away from sales or servicing your customers; you’re also saddled with 100% of the liability related to being an employer.

1. Do it yourself (cont)One disgruntled employee, missed deadline or misunderstanding of a regulation, and your business could suffer an expected loss. Finally, as a small business, you may not have the negotiating leverage with insurance carriers and this may affect your ability to contain costs.

1. Do it yourself (cont)Pros:Cons:You have 100% responsibility You get to do it allHR may become your “night job” Opportunity cost if HR duties steal focus from sales or customer service You own all employer-related liability Inability to contain long-term costs Employees may express dissatisfaction with the level of benefits and HR support

2. Hire multiple vendors to perform HR functionsOutsource to multiple vendors: one vendor for each function (payroll, benefits broker, 401k, hr handbooks/policies, recruiters, employment law, etc). Small businesses that choose this route typically have contracts with 8-10 different vendors. The upside is you get specialized experts to do each function and you will gain a modest time savings for yourself and your employees. The downside is the amount of time spent managing the vendor relationships, including ramping up each vendor on your specific business needs. In addition, it will be up to you and your staff to manage the interactions between these vendors and the data that flows between their IT systems (e.g. payroll deductions to medical carriers, dental carriers, vision carriers, 401k providers). As a small company you may not have access to the same web-based HR technology that big companies do, forcing your employees to spend time filling out paper forms rather than leveraging automation. Also, when something important needs to be addressed, you won’t have a “single point-of-contact” to drive everything that needs to be done. Finally, you may not have negotiating leverage with each vendor and this may affect your ability to contain costs.

2. Hire multiple vendors to perform HR functionsPros:Cons:Shifting some responsibility and administrative tasks to others Time saver in the short term Leverages vendor expertise Multiple vendor management—no “one throat to choke” May have to settle for limited HR automation or none at all Lack of data integration between vendors and systems You may still need to hire internal staff to manage the vendors & data flows You own all employer-related liability Lack of control of long-term cost

3. Outsource HR to a Single VendorPartner with a HR outsourcing provider as your trusted advisor. The upside is you manage a single relationship and gain HR expertise, HRIS technology, and a qualified team to manage your HR function. This saves time and costs in the long term. However, it is important to find the right one—an HRO that tailors its services and cost structure for your specific industry.

Pros:“One stop shop” for all HR functions. Time saver – you can focus on building & running your business You gain a virtual HR department without the overhead expense HROs can provide you with “big company benefits” with much more choice HROs have negotiating leverage to help you contain costs of benefits and HR over the long-term You gain a trusted advisor who will take the time to understand your business and be accountable Reduced employer-related liability HROs provide advanced HR Technology to make your employees more productive Your employees can self-serve and get answers to HR questions wherever, whenever

Cons:Perceived loss of control – you no longer have to perform 100% of HR duties Change from your status quo

In general:HR providers can manage your organization’s HR functions better and more efficiently than if you did it yourself -- allowing you to stay focused on your core mission.

Financial Benefits of HROA closer look at a typical Champion HR client reveals how a small business accrues time and cost savings. Discover the financial benefits that an organization can reap from outsourcing its HR function.

Chart DisclaimerThe preceding chart represents a conceptual financial opportunity that a Champion HR client, fitting specific salary and workforce requirements, may encounter as a result of its outsourcing arrangement. It demonstrates that HR outsourcing presents small businesses with the opportunity to realize bottom-line savings, resulting in a reduction of administrative headcount, or top-line savings, in which current staff are redeployed to revenue-generating activities. The chart is only intended as a conceptual illustration; factors unique to a particular business may affect the outcome of its outsourcing arrangement. You should consult with legal, financial, and HR professionals regarding the potential benefits of HR outsourcing for your own firm.

Company Profile: XYZ CompanyTime SavedFinancial Opportunity in Dollars and Days* The U.S. Chamber of Commerce estimates that 3-7% of a company’s payroll hours are spent on administrative, non-core activities.** The figure reached for bottom line savings assumes that the employer leverages the outsourcing arrangement to reduce staff. It’s important to note that this step is not a requisite of the outsourcing arrangement; the employer could choose to retain current staff and focus on top-line savings.

Contact UsRonnie O’DellBusiness DevelopmentC: (818) 588-0468O: (800) 513-2153eFax: (805) 426-8127 E: ronnie@championhr.comW. www.championhr.com