Tuesday, November 29, 2011

Small-business human resources: In-house or outsource?

November 28, 2011 | Proquest LLC
By Ryan, Jim T   


Small businesses have a number of options for human resources services, but it's not always clear-cut as to whether an in-house, hands-on approach or a professional, outsourced strategy is the best way.

A company's size, resources and executive involvement in hiring are large factors in determining a strategy, human resources professionals said. But even if they do it themselves, some small companies may want to outsource human resources to professionals more familiar with rules and regulations to prevent problems and save money, they said.

For companies with fewer than 25 people, it might be best to work with an expert, said Christina Myers, president of the Lancaster County Association for Human Resource Management. She's also a senior human resources manager for Minnesota-based Scantron Corp., the data collection and standardized testing company that has a printing facility in West Hempfield Township.
"It's more cost-effective than hiring full-time HR staff ," Myers said.

Human resources encompasses more than hiring, firing and employee disputes, she said. There's also benefits management, unemployment insurance and accompanying regulations. Small-company owners may not have the expertise to handle those, she said.

Growing companies have more options, but also more responsibility to comply with regulations in the U.S. such as the Americans with Disabilities Act and the Family and Medical Leave Act, she said.   "That adds a layer of complexity," Myers said. "It's a lot to know and a lot to take care of, and you need someone who is an expert or has a strong grasp of the laws. That way you're doing what's right and not putting the company at risk."

Many small companies prefer handling their human resources issues in-house, executives said.
"If you keep everything organized and keep up on it, then it's not that hard to do," said Willie Erb, CEO of E&E Metal Fabrication Inc. "If you slack, then you'll find yourself in trouble."
Lebanon-based E&E has 23 employees and within the next year could begin hiring more to ramp-up production of industrial biomass burners that can provide electricity to manufacturers and offices. In February, it landed a contract to research, develop and build the burners for Florida-based Starlight Energy.

Even when E&E begins hiring for that production - expected to double its workforce - it plans to review candidates and make decisions for itself, Erb said.

Many owners want full control over those issues to make sure the people they hire fit with their corporate culture and values, Myers said. If companies use a third party for staffing, they must ensure that the consultant also understands those values, she said.

"Any time you outsource to someone, the company still has the liability," said Kimberly Nash, director of human resources services for Cumberland County-based Alpha Benefits Group. "So you have to make sure that whoever you're working with has a good reputation, that you're comfortable with them."

Executives considering whether to outsource should weigh the workload of their staff members managing human resources, she said.

Sometimes, outside factors force a small company's hand. The most recent recession and its lingering economy are good examples. The comatose economy has left many small companies understaffed, with each manager taking on much more responsibility than they would have in a ripe economy.

York-based Wagman Metal Products Inc., a manufacturer of manual and automatic tools and parts for the cement industry, has experienced such issues, said Jeff Snyder, the company's sales and marketing manager.

The cement industry was down about 60 percent without commercial and residential construction, he said. Wagman had to cut back, too. In 2007, it employed between 30 and 40 people, he said. Today, its workforce is between 15 and 20 people.

Everyone is wearing multiple hats and taking on more responsibility, Snyder said. That means it has to cut back where it can, so the company uses a staffing agency to find workers on an as-needed basis, he said.

"Its definitely more cost-effective to have some consultants do something in these areas every once in a while, as opposed to having a full-time staff person," Snyder said.

Companies looking to save additional money while getting more value from their outsourced services need to evaluate those business relationships, Nash said. If brokers and consultants aren't managing your human resources issues, or you only see them around renewal time, it's time to think about making a change, she said.

Small-company executives also have to look at what third-party firms are offering in terms of added service at no additional cost, she said. Many firms offer extras, and they can help better manage a business without hiring more consultants, she said.

"You should get service," Nash said, "and feel confident that what they're telling you is the real way it is."

"If you keep everything organized and keep up on it, then it's not that hard to do. If you slack, then you'll find yourself in trouble."

Willie Erb, E&E Metal Fabrication Inc.
Copyright:(c) 2011 Journal Publications Inc.

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