Human Resource Outsourcing

Human resource outsourcing is becoming a more common practice every year.  In most cases it is more cost effective to outsource human resources functions to an external company who are HR professionals.
Workforce Solutions is a Utah peo company that can fulfill most of your human resource outsourcing needs.  Some examples of services you can outsource are as follows:

1. Online Payroll Processing – allows us to process your payroll checks, this could save you time and money.
2. Risk Management Services –
3. Workers Compensation Fund – we can process workers compensation claims & checks.
4. HRIS Outsourcing – we can set up an employee self service or manager self service system to enable your company to manage human resource issues easily and effectively.
5. Human Resource Employee Benefits – If you need life insurance, health insurance plans, dental plans, etc. we can assist you with setting up these programs.
6. Employee Management Outsourcing – if you need assistance in hiring, training, or managing employees let us know.

We provide human resource outsourcing services inlcudnig payroll processing, employee benefits, insurance outsourcing, self service programs, workers compensation fund, and other PEO services.

Workforce Solutions is a human resource outsourcing company with headquarters in Salt Lake City Utah. We have offices in several other states as well. We primarily provide outsourcing services to medium to large sized businesses.

There are many advantages to hr outsourcing services.  Some benefits include the following:

1. Allows a professional experience team to handle hr issues.
2. Frees up time for you to focus on your business.
3. Less stress of dealing with hr management.
4. Saves time and money in the overall perspective.

Outsourcing Disadvantages:

There may be some disadvantages of hr outsourcing services.  Some that are perceived as a disadvantage are:

1. It may appear that you have less control over hr items.
2. The direct cost of outsourcing services seems to be a lot.

HR Outsourcing Services

There are many services you can outsource, here are a few examples:

1. Online Payroll Processing
2. Risk Management Services
3. Workers Compensation Fund
4. Employee Self-Service
5. Manager Self-Service
6. HRIS
7. Employee Benefits

2006 HR Mangement Trends

There were a number of trends seen in human resources in 2006 that HR professionals and business owners should be knowledgeable about.   Many of the trends involve HR staff learning to meet the needs of their employees and management with reduced resources of time and money.

These trends include:

• Outsourcing to PEOs – companies continued to try to tighten their budgets and to provide better service to their employees and managers by outsourcing work to Professional Employer Organizations.  This outsourcing allows HR staff members to draw on the expertise of professionals that are focused in a particular area, such as workers compensation, benefits administration, risk management, HRIS, etc..  It also allows them to have more free time to deal with higher priorities and strategic work that needs to be done within the management team of a company, instead of constant interruptions to answer repetitive questions or deal with time consuming paperwork processes.

• Using an HRIS – human resource information systems (HRIS) continue to be an increased need for any company with more than a few employees.  These systems are designed to allow HR staff to be more productive and to reduce the amount of paper that has to flow between individuals and departments.

The HRIS system also is increasing the availability of manager and employee self-service options, which allow HR staff to give permissions for people to access important information via computer.  In some cases, people are also given the ability to update or enter information, which can then be transmitted to HR for approval before it officially enters the system.  This can again be a great timesaver for HR, as well as allowing managers and employees to play a larger role in the organization.

• Insurance Plan Design – HR professionals are also having to become more creative with the insurance options that they are offering to employees.  Companies are finding that they are no longer able to pay as much as they have in the past and yet employees are not able to absorb much more of the costs either.  Changes continue to be looked at in areas, such as co pays for office visits and prescriptions, size of the network, and monthly premium costs.

Some companies are choosing to go with alternative plans such as cafeteria plans or a high deductible health plan combined with a Health Savings Account (HSA) to put more of the choice for how medical expenses are paid into the hands of the employee and allow them to drive how they spend their money during the year.

• Wellness Programs – another trend in HR work is the introduction and creation of wellness programs.  As insurance costs increase, companies are looking for ways to cut medical costs and claims.  Many are turning to wellness programs as one possible answer.  These programs can be very formal ones that are cost money initially or can be more informal or even employee-led/contributed ones.

These programs are focusing on helping employees to make healthier choices about their lifestyle, including what they eat, how they eat, quitting drinking or smoking, getting more exercise, etc.  There are many inexpensive ways to implement a program and HR staff are getting creative in order to use resources available.  This can include forming an employee/manager wellness committee, doing team challenges and activities, having guest speakers on particular topics, sponsoring memberships at local gyms, etc.  Larger companies may even do things such as creating an onsite fitness center or paying for an entire gym membership for an employee and their family.

HR professionals have found that these programs can generate great enthusiasm and commitment from employees, but need to be communicated and “worked” constantly in order to make them a long-term success.  The more HR and employees/managers partner together to make it a company-wide created and maintained program the better it will succeed.  Employees need to have buy-in and feel that they are a part of creating the program.

It is expected that all of these trends will continue in 2007 as HR departments continue to be placed in a position of having to do more with less time and financial resources.  By continuing to be creative and “think outside the box,” HR professionals will find ways to meet the needs of the employees and managers in their organization.

Key Tax Changes for 2007 for Human Resources

There are several tax changes that will be occurring in 2007 that are important for HR personnel and small business owners to know about and study.

• Social Security Tax Change – the maximum amount of 2007 that is subject to social security tax is now $97,500 (up from $94,200 in 2006).  After an employee has hit that threshold neither the employee or employer has to pay taxes on that wages.

• Standard Mileage Rate – the mileage rate for employees using their personal vehicle for company business has been increased to 48.5 cents per mile.

• Health Savings Accounts (HSAs) – there are several changes that were signed into law by President Bush around HSAs.  A Health Savings Account is a savings account that employees and employers can place money in to pay for unreimbursed medical expenses.  This account is partnered with a high deductible health plan (HDHP). 

The changes that occur in 2007 include:

• Employees are permitted to make a one time rollover of IRA, HRA or FSA monies into an HSA account. 
• The maximum contributions for both individual and family accounts were increased

• The full maximum contribution can be contributed no matter what month the health insurance is bought.

There are also a number of changes being made to individual tax rules that people should be aware of including:

• Adoption Credit – people adopting a child or a special needs child can now take a credit of up to $11,390.

• Adoption Assistance Program – employees may be able to exclude up to $11,390 from their gross income for adoption expenses that are paid or incurred by their employer in connection with the employee adopting a child.  This exclusion begins to phase out with an adjusted gross income of $170,820 and does not apply to those with an modified adjusted gross income of $210,820 or more.

• Charitable Contributions – all cash contributions must now be supported by a dated bank record or receipt.

• Earned Income Credit – the maximum amount of adjusted gross income an employee can have and still get the credit has increased.

• Exemption Amount Increased – the amount that employees can deduct for each exemption has increased for 2007.  The new amount is $3400 (compared to $3300 in 2006).  There are income limits where part of the amount begins to phase out, which are dependent on filing status.  But in general, it is over $115,000.

• Hope and Lifetime Learning Credits – the amount of this credit that is phased out if the modified adjusted gross income has increased to between $47,000 and $57,000 for a single return.  

• Itemized Deductions – If an employee’s adjusted gross income is higher than a certain threshold, they may lose part of their itemized deductions.  However, this amount has increased for 2007 compared to 2006.

• Long-Term Care Premiums – the maximum amount of premiums that can be included as medical expenses has increased and depends on the filer’s age.

• Medicare – Premiums paid for Medicare Part D are now able to be included as medical expense deductions.

• Standard Deduction – Many employees that do not itemize deductions will find that their standard deduction will increase for 2007 depending on filing status and other variables.

Those that want to learn more about any of these tax changes and whether they apply in certain circumstances can visit the IRS website at www.irs.gov or call the customer service center 1-800-829-1040 for individual tax matters or 1-800-829-4933 for business related matters.

If you want to receive a free quote on some hr outsourcing services from Workforce Solutions please contact us about hr outsourcing services.

Common Mistakes in Human Resources Outsourcing (HRO)

One of the hottest trends in business today is the practice of companies outsourcing their HR services. EquaTerra, a global outsourcing advisory and research firm, estimates that 2.5 million employees are currently served by HR outsourcing (HRO) arrangements, with a total contractual value for those services estimated at $15 billion (EquaTerra, “Taking the Pulse of Today’s Human Resources Outsourcing Market, April 2007 PDF.)  In fact, many argue that Human Resources outsourcing (HRO) is no longer at trend at all, but has become the standard business model for employers of all sizes. David Rhodes of Towers Perrin made a prediction in 2004: “The writing is on the wall: In the future, the vast majority of benefits administration at large companies will be done through outsourcing vendors” (Tom Anderson, “Outsorcery.” Employee Benefits News, June 2004). His imprecise “future” date notwithstanding, it is indisputable that HRO is here to stay and is an important and growing part of the way companies of all sizes do business.

Caution is the watchword

Some organizations buy into the hype and marketing too quickly and make costly mistakes in the process of outsourcing some or all of their HR functions. And there is plenty of room for error: outsourcing is a complex and intricate process involving several stages, each of which has potential pitfalls for the unwary. Procurement, contract negotiation, assessment, and vendor oversight all require ongoing attention. This article discusses some common mistakes made by companies at various stages of the HRO process.

Hasty decisions

HRO is not a decision that can be made quickly or carelessly. Organizations must take care to thoroughly research the market, the process, and their own company culture to maximize their chances of success. Part of the preparation process is ensuring that stakeholders and employees have a clear understanding of the goals and objectives for the outsourcing arrangement. You should be able to spell out the goals clearly to yourself and team members before you can expect to negotiate a contract that meets them. The senior manager of global benefits for a drug development services company with 7,500 FTEs advises, “Thoroughly document all internal processes first and who performs them so that nothing is missed when scoping the services to be outsourced” (“How to Maximize…” HRFocus, April 2007)

There are service models to fit nearly every configuration of HR functions to be outsourced. One key to success, according to EquaTerra, is that “buyers avoid taking a one-size-fits-all approach to HR transformation or play follow the leader in HRO without adequately assessing opportunities in light of their own needs and requirements” (EquaTerra “Taking the Pulse of Today’s Human Resources Outsourcing Market,” April 2007 PDF.) This organizational introspection is an indispensable part of the preparation process.

Unrealistic expectations

Some decision makers, having thoroughly read available material, buy into the marketing hype too fully, setting unrealistic expectations about what HRO can accomplish for them. HRO is just one tool of many possible tools; it is not a magic pill to address all of a company’s HR woes. Due to the complexity of HR functions and their notoriously difficult metrics, it can be 18-24 months before organizations can see clear results of their outsourcing decisions.

Moreover, in a 2007 survey by EquaTerra, companies reported mixed success in achieving the benefits they sought with outsourcing initiatives. The top benefits sought by companies (and also the top value propositions advertised by HRO vendors) are cost savings and freeing HR to focus on strategic initiatives. These benefits scored well, but neither they nor any other of 9 polled benefits scored higher than 3 in a scale of 1 to 5. Remember, though, that these benefits should be measured not only against expectations, but also against pre-outsourcing conditions—a comparison in which they rank quite well.

Survey respondents provided criticisms of their HRO vendors, such as the following:
“Although they handle norms well, they have difficulty dealing with exceptions and providing the required attention.”
“I do not feel the industry has proven that whole house outsourcing has demonstrated the savings and value as promised.” (EquaTerra “Taking the Pulse of Today’s Human Resources Outsourcing Market,” April 2007 PDF.)

The disappointment of unrealistic expectations can be avoided or mitigated by careful planning before a contract is signed. Again, organizations must clearly spell out goals and objectives, then ensure that the contract is crafted in such a way that those objectives can be met.

Failure to sufficiently manage outsourced services

Some companies make the mistake of thinking that once its HR services are outsourced, they are free of responsibility for those functions. Nothing could be further from the truth. “Invariably, outsourcing requires vigilance on the part of the purchaser of the services,” reports the HR administrator of a mid-size firm. “We have had numerous occasions where we identified errors and waste, particularly in the area of health benefits administration. We believe that outsourcing requires as much, if not more, oversight than doing things in-house.” (“How to Maximize…” HRFocus, April 2007)

The EquaTerra survey found similar results, with respondents reporting that oversight of the HR service provider was a major challenge. It is sometimes difficult to ensure that in-house and outsourced services “talk” to each other—it requires ongoing training of staff to teach them how the different services interact and impact each other. It is also difficult to retrain internal HR staff in their new roles as strategic managers rather than transactional overseers. And significantly, the pressures that led to the decision to outsource do not go away, reported one EquaTerra survey respondent. “[The] same cost reduction pressures that drove to outsourcing stress the retained organization. With extensive HRO, the development pool of jobs is largely gone. How will we groom and grow new HR talent?”

These three mistakes, hasty decisions, unrealistic expectations, and failure to sufficiently manage the HR services once the contract is signed are merely three of the most common mistakes. Many more obstacles to success have been identified, including:

A short-term focus on savings rather than on balanced short/long term benefits
Relying on future negotiations to re-position the deal rather than getting it right the first time
Relying on “free” and subjective providers’ advice
Taking shortcuts to facilitate the deal (EquaTerra “Taking the Pulse of Today’s Human Resources Outsourcing Market,” April 2007 PDF.)

To overcome these obstacles, organizations considering outsourcing must appreciate the complexity of the decision and should commit sufficient resources to the project from the beginning of the process to ensure its success. Furthermore, EquaTerra advises, companies should change their paradigm: you are not merely looking for a vendor to provide services. “View HRO as more akin to a joint venture—or marriage—with the service provider and not an adversarial, client/vendor relationship.” If your organization can successfully adapt to change and realistically plan its HRO objectives, you can expect to achieve your business goals.

If you wish to find out more about Workforce Solution's human resource outsourcing call us at 1.866.637.3900 or contact us regarding our human resource outsourcing.