Vendor Consolidation Management
The decision to source work to an outside vendor is a big decision. The objection most often cited by key executives is loss of control or push back from their employees. While this is very understandable, perhaps looking at some facts from the last thirty years regarding Human Resource Management (HRM) tasks might be an appropriate place to start.
Something is happening in the employment market that few of us had anticipated and does not fit within our current paradigms. It also does not fit the way traditional human resource departments of most employers were designed or meant to function. What is driving this change?
Growing Burden of Rules and Regulations for Employers
Clearly one of the driving forces is the growing burden of rules and regulations for employers, especially in the State of Michigan.
According to the Small Business Association, the annual cost of government regulations, paperwork and tax compliance for U.S. businesses with fewer than 500 employees was $5,000 per person in 1995 (the last year which figures are available). This equals a 25% surcharge on top of wages, healthcare insurance, 401K, etc. Since 1995, the average cost of employment related paperwork is estimated to have gone up 20%!
More onerous then these direct costs are the enormous demands that the government regulations place on management’s time and attention. In the 30 years between 1980 and 2009 the number of U.S. laws and regulations regarding employment practices grew by 60%. All of these require reporting of some sort and threaten fines and punishment for non-compliance, even if unintentional.
A natural outcome of this regulation intense environment is that small business owners began to believe that part of the job of owning a company included their personal management of the tasks associated with employing people. In larger corporations, key management began to build departments to handle the various tasks associated with this mountain of red tape. It should come as no surprise that the payroll industry was founded as a result of this massive trend. What was once considered a task to be strictly handled inside the company (for fear of loss of control and sensitive information) is today commonly outsourced. For that matter, many of these human resource tasks are now outsourced to third parties:
- Payroll, W-2’s and other government compliance
- Benefits administration
- Worker’s compensation insurance and claims administration
- Health insurance
- Vision insurance
- Dental insurance
- Unemployment claims administration
- 401K/Retirement account administration, etc.
And while individually outsourcing each of these tasks does create some efficiency, often they are handled by multiple vendors which waters down the potential impact this could have for your organization. By using a single source expert like Axios HRS to handle all of these HRM tasks, an organization can truly optimize its time and resources while lowering your overall cost of doing business significantly.
Axios HRS stands ready to assist you with the business of employment and as your organization continues its battle in the global economy. We would be honored to discuss your company and solutions that have assisted other companies like yours. To have a conversation with one of our HRM experts, complete our online form or contact us at 616-949-2525.