HROplus presentation - Why Outsource HR?

© 2010 PEO Consulting Group, Inc. Used with permission by HROplus.

Why Outsource your Human Resources?

Will it work for my company?


Our Mission

To improve owner's wealth by delivering HR services in a manner that impacts our client's profitability and business value.


Reasons Companies Consider Outsourcing Human Resources

• Reduce labor costs – save money• Attract and retain better employees• Increase employee productivity• Decrease liability – compliance• Simplify

Do what you do bestand outsource the rest!

Focus on growing yourcompany, not HR functions


Shareholder ValueOwner Wealth Accumulation(Shareholder Value)

Shareholder Value

Benefits of Human Resources

Increase Business Value(For Sale or Exit Strategy)

Business Self-Sufficiency and Systemization

Asset ProtectionStrategies

Cost Containment

Strategies

Attract Better Talent

Employee Performance

Improve…• Individual / team

productivity• Training / dvlpmnt• Communications• Absenteeism• Lost time• Strategic planning

Protect…• Compliance

(proactive)• Trade secrets

(proactive)• Litigation

(reactive)

Control…• Health insurance

increases• WC E-Mod• SUI rate(s)

Improve…• Recruiting strategy• Interviewing effectiveness• Selection process• Compensation• Benefits plan• Training & development

Employee Retainment Strategies

Build…• Hire experts and

specialists• Consolidate

vendors

Improve Company Profits

Executive Compensation

Non-Qualified Deferred Comp Plans

LeverageResources

Monitor…• Efficiencies• Save time• Job analysis• Core bus. focus• Outsource options






Cost Containment

Strategies








(reactive)







vendors




LeverageResources


The Competitive Edge of Human Resources

• Large companies with HR departments employ “Human Capital Management” strategies to increase shareholder value.

• Smaller companies with limited HR expertise are at a competitive disadvantage to larger companies, and may not make as much money per employee.

• A Professional Employer Organization (PEO) makes large company HR expertise available to smaller businesses at a small fraction of the investment of hiring all that expertise on their own.

• And here’s how…


CPA Firm – Expertise in:

Audit & Review ServicesTax Code

Estate PlanningSuccession Planning

Internal ControlsFinancial Automation

Law Firm – Expertise in:

Business LawContracts

Corporate StructureLawsuit Defense / Initiation

Real Estate

PEO – Expertise in:

Recruiting & SelectionTraining & Development

CompensationBenefits ManagementEmployee Relations

Gov’t Compliance / HR RecordsHealth & Safety

CPA Firm – Expertise in:

Audit & Review ServicesTax Code

Estate PlanningSuccession Planning

Internal ControlsFinancial Automation

Law Firm – Expertise in:

Business LawContracts

Corporate StructureLawsuit Defense / Initiation

Real Estate

PEO – Expertise in:

Recruiting & SelectionTraining & Development

CompensationBenefits ManagementEmployee Relations

Gov’t Compliance / HR RecordsHealth & Safety

For Small- to Medium-Sized Businesses, Using a PEO Is Similar to Using a Law or CPA Firm

YourBusiness

YourBusiness

Business owners use a portion of the expertise of specialists to protect and help their businesses grow


Example of HROplus Account TeamG

ov

’t

Ag

en

cie

sV

en

do

rs

Employee Benefits Insurance Cos

Aetna, MetLife, VSP, Pre-Paid Legal, AFLAC,

Unum, Beechstreet, VPI Pet Insurance

Your Company

Sales Finance Admin / IT

Mark Spitz, SPHRVP, Human Resources

10 years HR experience

Kathy HollisBenefits Administrator

Gladys PerezBenefits Assistant

Kathy Perkins, PHRSr. HR Coordinator

Vanessa Segura, PHRHR Coordinator

Tammy Burns, PHRHR Coordinator

Rick Martin, PHRHR Coordinator

Human Resources(The Best HRO, Inc.)

John DoeCEO

20 years business owner

Operations

Employee Benefits

Bonny ParksVP, Benefits

(Insurance, Retirement, 125, Compliance)

Payroll

Paul Dunn, PHRHR Director

(Admin, Compliance)

Angela McDonaldSr. Account Admin

Crystal HumphreyAccount Admin

Colleen GeorgeAccount Admin

Susan BearCourier

Jackie EmighHR Assistant

Shannon ParkerAccount Admin

Mary Jane JohnsonAccount Admin

Luann NakaharaCourier

401(k) Providers and TPAs

Fidelity

Information Technology

PeopleSoft

Scott PhillipusIT Support Asst

HRIS

Howard SmithVP, Information Technology

14 years IT executive

Finance

John MinefieldCFO

16 years experience

M. MorrisonOperations Manager

B. NorthcrossTax Specialist

Tanya OrlanskyBookkeeper

Jung ParkAccounting II

Workers Comp Carriers / Agents

Zurich, Wausau

Safety / Risk Mgmt

Kathy Plumadore, ARMLoss Control Manager(WC, Claims, Safety,

Training, OSHA)

Valerie PyperLoss Control Asst

Strategic HRMaria Pierce, SPHR

Manager, HR Coordination(Recruiting, Interviewing,

Employee Relations, Policies, Unemployment,

Compliance)

Legal / Compliance

Bill Shinig, Esq.Corporate Counsel

Labor Attorney

Dilly, Dally, Delayin and Stallin

State Unemployment Agencies

Dept. of Labor (DOL)

EEOC

US Customs & Immigration Service

IRS (Employment Related)

State Workers Comp Agencies

CPA Firm

Crunch and Cash, LLP

Banking Institutions

Bank of America


Owner Wealth Accumulation(Shareholder Value)








vendors






(reactive)





What?

(HR Strategic)


Cost Containment

Strategies




LeverageResources

What This Means in Bottom Line Dollars







(reactive)






Cost Containment

Strategies




LeverageResources

Why?

(Company Strategic)










vendors



Cost Containment

Strategies




LeverageResources

Owner Wealth Accumulation(Shareholder Value)








vendors

How?

(HR Strategic)






(reactive)












Cost Containment

Strategies








(reactive)







vendors




LeverageResources



HR Capabilities Gained Through Outsourcing






(reactive)










Cost Containment

Strategies








(reactive)







vendors




LeverageResources



• Will vary widely between different types of companies

• Requires a realistic look at current HR issues (“Status Quo”)

• Requires some reasonable assumptions and estimates

• The financial impact IS REAL and can be dramatic


What's the Cost of "Status Quo" HR?

• 30-employee company• $5,000,000 annual revenue• Net profit of 8% = $400,000 per year

Example

Employee productivity

Administrative HR hours

Executive / owner HR hours

Turnover at cost of $8,220 per person

Budgeted annual health ins increases

WC exp. mod at 3.5% avg. rate

State unemployment rate

HR legal / consulting fees

Employee lawsuits / compliance fines

They’re achieving this

profitability and success

with some existing

“Human Resources

Profile”…

70%

500

50

30%

15%

1.1

3%

$10,000

None


Over 5 years,

if nothing changed,

$2,000,000in anticipated

Net Cumulative Profit


Five-Year IllustrationCumulative Net Profit

5 Yrs4 Yrs3 Yrs2 Yrs1 YrNow

$2,000,0000


Let’s switch from

Net Cumulative Profit

and look at

Net Cumulative

Profit Difference

Five-Year IllustrationCumulative Net Profit Difference


$0



$0

$1,311,059

$722,439

$233,165

$0

$600,000

$360,000

$120,000

$0$0

$612,821

$367,692

$122,564

$0

$616,026

$369,615

$123,205

$0

$1,201,409

$656,649

$201,235

$0

$985,926

$591,555

$197,185

$0

$1,248,659

$684,499

$210,685

$0

$1,361,059

$752,439

$233,165











• What if “status quo” went to “ideal”?• What’s the difference in net profit?• Is some of the money being left

on the table worth going after?

Status QuoIdeal

70%

500

50

30%

15%

1.1

3%

$10,000

None

100%

0

0

0%

0%

0.8

1%

$0





• Component Impact: “Status Quo” Versus “Ideal”• Profit Loss from “Non-Ideal” HR – 5-Year Impact

Legal & Compliance Costs (HR)

Employee Productivity

WC Exp Mod Reduction

SUI Rate Reduction

Health Insurance Increases

Turnover

Owner / Exec HR Hours

Administrative HR Hours

$50,000

$600,000

$47,250

$41,438

$224,586

$369,900

$5,872

$12,821

$0 $600,000


$0

$1,361,059

$752,439

$233,165

($200,000)($120,000)

($40,000)

$0

$1,361,059

$752,439

$233,165

($205,128)($123,077)

($41,026)

$0

$1,361,059

$752,439

$233,165

($211,538)($126,923)

($42,308)

$0

$1,361,059

$752,439

$233,165

($334,838)

($200,903)

($66,968)

$0

$1,361,059

$752,439

$233,165

($423,232)

($224,585)

($68,318)

$0

$1,361,059

$752,439

$233,165

($438,982)

($234,035)

($71,468)

$0

$1,361,059

$752,439

$233,165

($465,862)

($247,475)

($71,468)

$0

$1,361,059

$752,439

$233,165

($665,862)

($447,475)

($71,468)

$0

$1,361,059

$752,439

$233,165

70%

500

50

30%

15%

1.1

3%

$10,000

None


• What if “status quo” went to “at risk”?• What’s the difference in net profit?• Is the potential financial downside

worth proactively protecting against?










Status QuoAt Risk

60%

700

150

40%

20%

1.2

4%

$200,000





• Component Impact: “Status Quo” Versus “Ideal”• Profit Loss from “Non-Ideal” HR – 5-Year Impact

$50,000

$600,000

$47,250

$41,438

$224,586

$369,900

$5,872

$12,821

$0 $600,000($300,000)

Legal & Compliance Costs (HR)

Employee Productivity

WC Exp Mod Reduction

SUI Rate Reduction

Health Insurance Increases

Turnover

Owner / Exec HR Hours

Administrative HR Hours

($200,000)

($210,000)

($17,325)

($14,280)

($92,686)

($123,300)

($8,885)

($5,128)


Potential Profit Difference Swing:

$2,026,921over 5 years


$0

$1,361,059

$752,439

$233,165

($665,862)

($447,475)

($71,468)




Request for ProposalWill HRO work for my company?

Let's see…check out…

www.hroplus.com/quickquote

HROplus presentation - Why Outsource HR?

Business

Transcript of HROplus presentation - Why Outsource HR?