Malzahn Strategic - Minneapolis, MN skyline

Outsourcing HR in a Hybrid Work Environment - Part 1

Outsourcing HR in a Hybrid Work Environment

A recent topic our client base is asking about lately concerns outsourcing HR in a hybrid work environment. The question of “should we outsource HR”? may be discussed in your strategic planning sessions also. Community financial institutions should focus on what they do best—banking and banking products. However, institutions also need to focus on attracting, retaining, and developing top talent in a hybrid work environment and that requires an investment of time, systems, and resources. In Part I of this two-part blog, we’ll focus on what activities to outsource and why. We will then focus on what HR functions to keep in-house in Part II.

Even though the institution where I was Director of HR outsourced several of the administrative tasks to various vendors, I still spent considerable time managing the vendors and logging in to multiple sites. This is a common challenge for HR professionals in institutions across the nation. Instead, I should have spent time on the “people side” of HR. The answer? Centralized outsourcing! Notice it’s not only about simply outsourcing but to centralize it with one vendor that can do most or all the administrative tasks while keeping the people side of HR in-house. With COVID-19 and the global trend of allowing staff to work from home all or most of the time, outsourcing the administrative part of HR is making more and more sense.

Reasons to Outsource:

  • Your HR staff only has time to do the administrative tasks.
  • There is no time to develop a formal Talent Management Program.
  • You need to digitize and automate employee onboarding processes for both local and staff who may never make it to the office.
  • You want all HR documents in one central system.
  • Employees want electronic access to their personal information such as paystubs, W-2, health insurance information and setup/changes to dependents, timecards, etc.
  • Your institution wishes to automate applicant tracking to simplify the hiring process.
  • Your institution needs a Learning Management System (LMS) to expand the availability of learning tools to local and remote workers.
  • Your HR staff needs legal counsel on employee matters such as employment contract review, and legal counsel on terminations, etc.
  • Your HR staff logs into multiple vendor sites and systems are not integrated.

Below is a list of activities that your institution can outsource:

Payroll Processing: Most community banks and credit unions are already outsourcing this key function. However, the system they are using is not integrated to anything else which creates a challenge for HR staff.

Timekeeping Software: Most institutions transitioned to automated timekeeping software. However, we still hear about institutions that have an internal manual time tracking system or the timekeeping software does not talk to the payroll system.

Recruitment Process: Even though it is crucial for the institution staff to interview candidates, you can outsource and automate the recruitment “process.”

Performance Evaluation Process: Ideally, you can automate and streamline the performance review process to eliminate manual forms and store all employee records in one central repository system.

Workers’ Compensation Insurance: HR vendors typically can provide better rates for Workers’ Compensation Insurance so you may want to check that out too.

Onboarding: Once your new employees are officially hired, then the onboarding process begins. This process can be cumbersome for the new employees if it’s not automated and if they must complete forms manually, let alone if they are remote. It is best to outsource the complete administrative onboarding process and focus on welcoming them to the team.

Training Tracking: Many institutions still track employee training in spreadsheets which is time consuming and difficult to maintain. Instead, outsource this task and allow employees to enter their own training or ensure the system tracks automatically based on employee logon information.

Benefits and 401K Administration: Managing the enrollment process for the health insurance benefits and retirement plans is time consuming. Even though you may have a third-party provider, you still have to collect all the forms and submit them, conduct informational meetings, and send multiple reminders to employees to sign up by the deadline. You can automate and streamline this entire process by outsourcing to a vendor platform that integrates to the payroll, timekeeping, and onboarding platforms. Remember the goal is to have centralized outsourcing!

One great company that helps you with your outsourcing needs is AssetHR. We know them and hear excellent testimonials about their services. They become an extension of your HR department. Another company that helps centralize your 401K administration is Fringe Benefits Design. We also know them and they help you with the three key aspects of 401K management: 1) Investment Performance; 2) Service Provider Fees; and 3) Quality of Service.

We hope this provided you with ideas on what activities to outsource and why. We’ll discuss what functions to keep in-house and why in Part II of this two-part blog.

 

Some of the links on this page are affiliate links. This means if you click on the link and purchase an item or subscribe to a service, we will receive a small commission at no extra cost to you.

Do You Really Know Your Vendors?

Vendor management - Do you really know your vendors?

Do you really know your vendors? I would like to continue my posts on the topic of vendor management and how vital vendors are to the success of every organization. Through the years I have worked with many vendors of all kinds and I’ve had the opportunity to form long-lasting relationships with many of them. As a best practice and one of the strategies I used when starting a De Novo community bank back in 2005 was to obtain bids from at least two to three vendors who offered the same services so we could choose the right one. This strategy served us well and we were able to choose, almost 100% of the time, the right vendor for the product or service the institution needed.

In addition to doing due diligence with each vendor to ensure they are the right fit, to know they will exist long-term, and that they will keep your data safe, it is also important to form a good relationship with your vendors. As the CFO and COO, I worked with all the vendors, including reading and signing every contract, learning about their services, and protecting the institution at every level. I took that responsibility seriously and considered getting to know the vendors at a personal level of great importance. I worked with the sales person initially but I also got to know other key people in the company. This proved to be a great strategy for when sales reps left the company or my lead relationship manager was promoted to other positions. For example, with the financial auditors, I formed a long-term relationship with the relationship manager/partner, the lead auditor, and some of the staff auditors who visited each year to do the audit work. I did the same with the compliance auditors at a different firm, the IT auditors, and even with the State regulators.

It is also very important (and a great vendor management strategy) to diversify your vendor base. For example, I made relationships with various local accounting firms who provide services to community banks and credit unions, choosing separate firms to conduct compliance audits, IT external audits, financial audits, loan reviews, and tax return preparation. This strategy works great when it’s time to rotate firms so they don’t get too familiar with your institution. It is also a best practice for checks and balances within your community bank or credit union.

Get to know your vendors at the personal level and form long-term relationships because it will pay off.

Books by Marcia Malzahn