HR Outsourcing: A Valuable Management Tool For Nonprofits - Part 2
For executives still on the fence regarding the advantages of outsourcing their Human Resources (HR), there has never been a better time to reflect on this option. Today’s economic pressures have forced many nonprofits to reduce their staff and stretch their workforce over areas for which they may not be qualified. Add to this the complex regulations introduced by healthcare reform and specifically the “Patient Protection and Affordable Care Act,” and nonprofit management teams are really drowning in a difficult situation. HR outsourcing can help significantly. Additionally, and apart from its role in addressing these challenges, HR outsourcing provides considerable benefits.
| Posted in Management on Aug 2, 2012 by Louis Basso and Barry Shorten
|| 0 Comments |
Value-Added Benefits of a PEO/HRO Relationship
The 2009 Nonprofit Employment Trends Survey, conducted by Nonprofit HR Solutions, a Washington, DC-based HR consulting firm, found that the recent economic downturn has caused nonprofits to reduce hiring and increase downsizing. Based on the survey, nonprofits who indicated intent to layoff staff in 2009 was up 18.5% from the previous year as were those who intended to reduce staff through attrition which was up 13% in 2009 over 2008. The reason cited by 53.9% of the nonprofits surveyed for eliminating positions was budget shortfall.
Addressing Employee Concerns with HRO
Clearly, staff reductions have an impact on employees and even on volunteers serving in a nonprofit organization. When the management of a nonprofit demonstrates a commitment to its employees – even if their number has been reduced – it goes a long way. It helps boost employee morale and motivates staff to give their best. Through the robust services and value-added benefits derived from a PEO/HRO relationship, nonprofit management can effectively signal to its employees that they are valued. In turn, the organization can expect a greater return on their employee investments.
Benefits Derived from the PEO/HRO Relationship
A study conducted by the technology research firm of Gartner, found HRO is expected to grow by approximately 25% in 2010. Its findings were based on the derived benefits organizations who outsource their HR function are realizing. For example, it is estimated that most organizations will save up to 20% is workers' compensation payouts, up to 20% in employee benefits and up to 10% in basic HR functions.
These figures notwithstanding, there are many other valuable benefits the PEO/HRO relationship provides. They include:
- Affording nonprofit management the ability to focus on functions that help the organization achieve its mission, raise awareness and raise funds.
- Assuring the nonprofit will remain in compliance with current and new state and federal regulations.
- Reducing potential lawsuits and violations and related costs associated with litigation, penalties and potential awards.
- Gaining access to the best advice from experienced, credentialed HR professionals and employee communications tools (e.g., employee handbooks, forms, online information, etc.).
- Giving employees a better selection of benefits which in turn, builds morale and helps in employee retention and recruitment.
- Giving management information tools and documentation for easy access to employee payroll, benefits and insurance data for better financial budgeting and controls.
For nonprofits, managing risks and related exposures is critical. PEOs assume an important role in this area and should demonstrate a strong commitment to instituting policies and procedures which help mitigate potential risk. This includes training of managers regarding various employment laws and lawful workplace behaviors in order to prevent potential claims of employee discrimination, sexual harassment, wrongful discharge, etc.
Another area of risk management in which a PEO helps a nonprofit is workers' compensation. A PEO that holds the "PEO Workers' Compensation Risk Management Best Practices Certification" reveals its adherence to best practices in workers' compensation risk management based on the insurance industry's practices of quality risk management services for clients and their worksite employees. It should be noted that workers' compensation insurance premiums have increased 50% over the past three years along with other costs associated with workplace accidents. Keeping these premiums in check by advocating workplace safety with employee training, safety inspections and related practices is an important aspect of the HR outsourcing partner's role.
HR Outsourcing: A Building Block for The Early Years Institute
Since outsourcing its Human Resources (HR) functions to The Alcott Group, a Professional Employer Organization that provides comprehensive HR services, The Early Years Institute (www.earlyyearsinstitute.org, Plainview, NY), a 50l(c)3, has realized many important benefits. The organization has as its mission, "To be a catalyst for new ideas, partnerships and resources that ensure all children have what they need to succeed, and to expand the public will to increase investments in young children." President Dana Friedman, Ed.D recognized that achieving that mission would require her management team's full focus on core operations and development activities. HR outsourcing was viewed as a valuable management tool that would allow them this focus.
"Outsourcing our payroll, tax and benefits administration, along with our regulatory compliance to an organization with experienced HR specialists was the right decision for our organization," said Dr. Friedman. "In the past, I've had individuals handling this area who simply did not have all of the necessary qualifications to manage these complex tasks. Now, we have a complete team of HR professionals who are always there when we need them."
In addition to having direct access to qualified and credentialed HR professionals, The Early Years Institute has gained confidence in knowing that their various HR-related functions are being managed properly.
"Probably one of the greatest benefits gained in a relationship with a qualified and responsive HR partner is confidence," stated Dr. Friedman. "With our payroll, for example, we are assured that it is being handled correctly and with complete accuracy. We receive monthly reports to keep us informed. It's seamless and painless."
Risk management is another area in which HR outsourcing has provided The Early Years Institute with greater peace of mind. "With the guidance of Alcott, we're secure in knowing our Employee Handbook contains the right information – that we are compliant in our workplace processes and employee relations," added Dr. Friedman.
Dr. Friedman cited a recent situation which required the organization to let go one of its employees. "We contacted Alcott to be sure we were following a fair and just process. Everything was properly documented. On the other side, our new hires are met with a very impressive orientation that includes a full explanation of our benefits and information about how to access their plan information online."
Finally, through HR outsourcing, The Early Years Institute has been able to provide its employees with a choice in benefits that enables members to select a plan that best meets their individual needs. Dr. Friedman noted the choice in healthcare plans, for example.
"Alcott offers us four different healthcare plans each of which has appeal to one or more of our staff members who are of different ages and circumstances," said Dr. Friedman. "They also appreciate the additional benefits such as shopping, travel and transportation discounts provided by Alcott. From a management standpoint, we value having access to big company benefits that extend beyond traditional ones to include those that are voluntary as well as many value-added employee perks that demonstrate that we really care about our employees. Through Alcott, we even have an "Employee of the Month" program which has been very well-received."
Dr. Friedman concluded, "The personalized service and accessibility to knowledgeable HR professionals is one of the greatest advantages gained from HR outsourcing."
Nonprofit Management Nonprofit Employment Trends Risk Management Human Resources Outsourcing HRO Professional Employer Organizations PEO Employer Services Assurance Corporation
Submit A Comment