The business case for an HR consulting engagement or outsourced services depends on where you’re at today and where you think you’re going tomorrow. We’ll review 4 cases where there is a clear ROI for working with an external partner for your people strategy and processes. In these examples, we are able to show why investing in an HR engagement pays off.
Operational Run and Support
Traditionally, this sort of work has been firmly planted in the hands of PEOs (professional employment organizations), however new arrivals in the marketplace are poised to breakthrough with solutions that are more customized, offer better solutions for benefits and truly partner with you as you build and scale your company. We strongly encourage all business owners to think twice before blindly signing on with a PEO. Do your due diligence carefully and ask questions about customer retention, average cost increases on healthcare year over year, and how customer service is structured for after sales support. If they won’t provide you with key statistics on annual cost increases and number of companies managed per support resource, then this is a warning signal. When evaluating an HR supporting service, always include two non-PEO solution providers to better understand your options – both in terms of the investment and service levels.
Customer Service is Key
The true ROI for operational run and support services is getting the customer service and experience that you want and need at a price point that you wouldn’t be able to touch with an internal hire. It supports overall employee engagement and satisfaction simply by having a resource dedicated to providing Human Resources support.
If your business has fewer than 50 employees, you probably don’t need full time HR. You need someone to manage the administrative services that support operations through either an office administrator or a manager and then a reference person to work with the leadership team on an ongoing basis to define processes and ensure policy compliance.
Also keep in mind, as a small business, you may struggle to attract the talent you need to design and implement your processes. What you can do is hire someone junior and develop them with the support of your external partner. Your partner can manage the on-the-job training and development needed to build their experience and fit your company culture and values.
Pricing
Pricing ranges widely here, but we can share information on how we price for our outsourced HR services subscription services. Our highest level of support services is $25,000 per year when purchased annually and provides enough HR support for a 30 person company across the entire employee lifecycle. This does not include payroll and benefits costs, however we do provide support for vendor source and selection for no additional fees.
Interim Management
Interim Management is similar to operational run and support, but designed to be full management of the HR function for a specific period of time. Most often, this is reserved for organizations that have lost their head of HR and need someone to step in quickly to take the reins until a permanent replacement can be found.
Interim projects offer an opportunity to take a fresh look at policies and processes. Often the interim head has greater experience than a permanent hire and can bring a fresh perspective to the function and how it integrates with the overall business and longer term goals for the company. In addition, the Interim manager has no political skin in the game. Their only goal is to make the organization and the overall business better than it was. They will push harder and work more closely with other leaders to drive the change that is needed for overall organizational success.
The other side of interim is when there is corrective action required. Most often, this occurs when there is a change in senior leadership (CEO or CFO) and with that, a required change in the approach for the HR function. This can also include changes in processes and policies, but more often, this change is more fundamental; with work on leadership behaviors, values and culture, as well as the process and policy change that supports the behavior change. In these human resources engagements, typically more than one consultant works with the internal leadership and HR team to drive the behavior and culture change successfully.
Seasoned Talent is Key
The ROI for interim engagements is based on the calibre of talent brought in for the engagement. A seasoned expert can not only bring the process and policy changes needed, but can assess and develop the existing HR talent base and drive the behavior changes needed to support the strategic business goals that leadership is trying to achieve. The real win here is in employee engagement, however. A seasoned interim manager can successfully turn a dysfunctional workplace into a team of engaged employees by showing them that they are valued. By helping the CEO drive overall business changes through clear and carefully planned communications, they create alignment and understanding across the company.
Make no mistake, this will cost you more than a direct hire (probably 2x as much), but it will also mean that when our engagement is completed you will likely be able to target a job profile that is less experienced and less expensive than you had thought. You may also find your interim manager has identified cost savings through headcount reductions you didn’t know were possible. The greatest long-term ROI, however, is the on-the-job development for the internal leadership and HR team through the experience.
Pricing
Pricing is typically based on time and materials for interim HR engagements. Solopreneurs are at the lower end, typically between $1500-$2000 per day for the services of an experienced HR professional. They generally work full time onsite and charge for any time over 40 hours per week. Our All Access engagements are fixed price per month based on the number of days required per week. Our engagements are typically 6 months in duration and include the sourcing and selection of the permanent hire as well as onboarding and handover. Our pricing depends on the size of the organization, the number of processes we are tackling, and the consultants assigned.
Restructuring / Reorganization
Restructuring is a game of survival. It starts with a problem…usually one that involves both money and people. Sometimes the problem is external to the company – the market or other economic factors have changed and the way you did work yesterday is not the way you need to do work tomorrow. Other times, it’s internal to the company – a fundamental transformation of how and where you produce and deliver products or services in order to remain competitive in your market.
At Red Clover, we start all restructuring projects with the definition of a financial business case that clearly outlines the overall goals for the project with a clear case for change. If there are headcount changes or job / organizational design changes then there has to be a clear return on the investment for the People Transition effort. These projects can be complex, but are relatively short term for the design phase. We can prepare a restructuring plan in about 12 weeks, including an assessment of the current organization mapped to the future job roles, development plans for the retained organization and restructuring plans for employees impacted by layoffs. We use our own methodology for this – with a combination of organizational change management and work planning and estimating for transforming the organization from current to future state.
Outside Perspective is Key
The ROI for restructuring projects is based on the quality of the solution. Outside perspective from a firm that works across a number of industries and designs these solutions as part of their core business will bring a result that exceeds the well-intentioned but often short-sighted results of an internal task force. It also cuts through organizational politics in a way that an internal team cannot and, for bonus points, you have access to someone who can deliver tough messages that CEOs sometimes need to hear. Honest counsel is critical to these strategic engagements. We’ve got your back.
We work very regularly with employment attorneys on a range of projects for our clients. In fact, we never begin a restructuring project without an employment lawyer on retainer for the client. We can work with your current counsel or select one that is specifically experienced in your industry or people transition problem.
Pricing
A 12-week engagement typically includes a roadmap for implementation, assessment of the current organization and development planning, cost estimates and ROI calculations. It may also include alternative approach evaluations if outsourcing is a part of the design consideration. At the end of the design phase, clients have the option of continuing on their own for implementation or working with us on implementation, including full support for the organizational changes and employee notification process. This is traditionally a fixed price, based on the projected length of the engagement.
Rapid Response
This last category, HR Rapid Response, covers the emergency intervention that is sometimes required for companies in crisis. Sometimes related to restructuring, but more often related to external factors, we can plan and execute swiftly with a minimum of disruption. Our seasoned consultants are capable of managing employee notification of termination, running point with legal support for separation and general release agreements, oversight for workplace investigations, and coordinating external support for workplace violence prevention and security needs.
Once the emergent issue is resolved, we engage in a follow up conversation to address the root cause that created the issue in the first place. Often the engagement continues with either an Access Plus or All Access engagement to create an environment where the organization can flourish and the business can scale.
Pricing
Pricing for Rapid Response is based on an hourly rate with an up front retainer. We guarantee our ability to mobilize resources within 2 business days from signature of the engagement letter.
There is tremendous value in tapping into the expertise that comes with an HR consulting engagement. If you think that now is the right time to think about getting some external help, please contact us for an initial consultation.
Written by Jen L’Estrange.
Learn more about Jen on LinkedIn.
