We had a frightening situation develop on the Human Resources front last year. What became apparent to us quickly is that we had very little knowledge of how Human Resources worked and all the laws and regulations that could trip you up.
Small Business Problems
A3 Environmental Consultants is a small business. We grew through the 15 employee mark this year and with that growth we became responsible for living up to more regulations than we cared to learn about. We’re scientists first, after all. We knew we needed professional help but didn’t know what it cost or what would be provided.
To be completely honest, we procrastinated.
To be fair, we didn’t need to do anything. Millions of small businesses are very good at one thing but the finer points of running a business may be a challenge for them. The typical response is to execute badly because the alternative costs money. Business is a journey and sometimes you find yourself with a flat on the highway of life.
That’s never really been A3E Modus Operandi. We have aspirations of being A-Freaking-Mazing at what we do. So we work hard to recognize when we are probably not experts at a business practice. We figure out what we want, go shopping to see if the market provides it and if we can afford it. We check to see if it’s worth it.
Human Resources was on the 2021 goals list to address.
The task of finding an outsourced human resources provider seemed daunting for everyone on the executive team. It wasn’t my responsibility but after being in a few meetings, it became clear someone needed to jumpstart the process. That someone was me.
Laundry List of Wants
In order to appropriately match what we were looking for in a Human Resources service provider I made a list of 1) what we ARE looking for in a HR provider and 2) what we ARE NOT looking for in a HR provider.
You might fully understand why we wrote a list of what we ARE looking for but I often feel like writing a list of what we are not looking for is just as helpful. In this specific instance I knew that Human Resources is often an adjunct to payroll processing. Payroll processing is how these companies make money and it’s often the lead thing they want to sell you. In addition, the Human Resources company is in an amazing position to try to sell you health, life, vision, dental insurance, and financial services for 401k’s.
Our service providers for certain insurance and financial services *may* be good, fair or terrible but I didn’t want to get sidetracked or confused by services we weren’t trying to purchase while looking for services we were trying to purchase. Essentially, our Human Resource consultants would need to be amazing at HR and once they passed that hurdle maybe we’d be interested in entertaining a conversation about other services.
The following is our laundry list of wants:
What We are NOT looking for:
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- Companies who are all excited to sell us life, health, dental, vision insurance.
- Companies who are hell bent to do our payroll services.
What we ARE looking for:
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- Onboarding
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- Help us Find good employees
- Help us shock-absorb business highs and lows with temporary employees
- Help us become better interviewers
- Help us vet employee references, educational credentials.
- Create offer letters
- Find appropriate payscales for onboarding and current employees.
- Help us communicate appropriate payscales to our employees
- Help us talk through benefits packages with new and existing employees
- Help keep us on schedule with employee reviews
- Teach us how to do good employee reviews, what records to keep.
- Help us create a process around employee onboarding.
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- Off-boarding
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- Help us create a process around employee off-boarding
- Help us create a process around employee off-boarding
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- Advice & Strategy
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- Be on call with one person who knows our business well who can give us advice and strategy when needed.
- Handbook updated and relevant
- Compliance for 15 people with EEOC. ADA etc…
- Are we filling out the right forms?
- Documentation retention
- Employee files?
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- Grievance Management
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- Employee to call for grievances if they have them
- Employee Feedback
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- Executive Coaching for Alisa
- Tell us what we don’t know that we should know.
Our Outsourced Human Resources Candidates
I wanted a mix of candidates to talk with. I like learning from sales people and applying what I’ve learned to my questioning of the remaining candidates. My favorite question is “Tell me the answers to the question I haven’t asked but should have.” People are very excited to answer questions you ask but often the questions you are asking are the wrong questions to be asking and the wrong answers to be evaluating a service provider on. You don’t know because it’s really hard to ask a question you don’t know to ask. Your sales person, if they are good, should be nimble and versed in strategy enough to explain the strategy you should be thinking about.
I wanted to pick a large company, a boutique company, our existing (payroll) company, and a small company which may or may not be the boutique company. In the mix, we had to consider hiring someone which would be a hell of an expense but is a good data point on why we are outsourcing. We also had to think about what we are doing in terms of how much trouble we could find ourselves in if an employee situation went sideways.
Our picks were:
I’m going to leave the brand name of the local boutique Human Resources consultant out of this.
Our Process
First thing we did was give our laundry list of wants to the Human Resources vendors. I wanted them to prepare their presentations to the list of what we wanted. It was COVID times so most of this was done over zoom meetings.
Paychex
I has high hopes for Paychex. They are a small(er) than ADP payroll processing company which is semi-local to us in Naperville Illinois. They are known to be aggressive and have good software support with employee portals. I did research on the best Human Resources outsourcing companies and they came to the top in customer service. Truth be told, they were very disappointing. Essentially they had no sales pitch that didn’t include taking over our payroll services. It was essentially “Give us your payroll processing and we have some HR resources you could call if you need to.” CBIZ was our payroll processor and while they weren’t amazingly wonderful and I would never consider leaving, changing processors is a painful experience and unless you give me a damn good reason, I’m not changing. Paychex just didn’t give me a good reason.
CBIZ
As I mentioned, CBIZ was not amazing but they were not awful. They were adequately and competently doing a job for us. They also had Human Resources services they could provide and we owed it to ourselves to see what they could do. The presentation was forgettable, their interest was lackluster and the onboarding costs just to get ready to do the job was $7,000. That was before the month-to-month costs which were substantial and on top of our current costs for payroll processing.
Boutique & Local
I had high hopes for a local and small consultant. My assumption was it was possible to have 5 or 6 clients as a Human Resources professional. If each of them paid you $2000 a month, you could make a pretty good living providing personalized service. In my head, I wanted a person inside my office, strategizing with my executive team whenever and wherever I wanted them. I wanted our employees to know the face of their Human Resources person. For the record, I still think this is a do-able service model but I have come to learn, it doesn’t exist (around me at least). Our boutique provider wanted $25,000 for onboarding in the first 3 months, then we’d pay what I considered a “lot” every month, forever.
Hiring An Actual Human Resources Employee
Hiring an actual HR employee is not what we wanted to do but knowing the price would be handy as a datapoint in trying to understand what kind of value these other options were. I figured it would be about $85,000 a year in salary and benefits. We also didn’t have enough human resources work to make this a full time job.
Back to the Drawing Board
Bottom line, we didn’t really like anyone we talked to. In a moment of desperation, we called our accountant because they had been very helpful before. They also specialize in architecture, engineering and environmental companies which means they’ve seen the insides of businesses exactly like us. They also have seen the bills and know who’s using whom for what. They gave me the name of Human Capital Concepts
Human Capital Concepts
Why we liked them is not complicated if you read this far but it’s worth saying they exceeded our expectations in a few important ways. Remember “Tell me the answers to the questions I didn’t know to ask you”? Well, they did…
Human Resources First
HCC’s website and their sales presentation was human resources centric not payroll processing centric which I loved. They DO do payroll processing but they said we could purchase Human Resources consulting from them even without payroll processing. That kept me engaged with them to hear them out completely. They have a team of human resources professionals that they can bounce ideas off of. This is better than hiring a fractional Human Resources professional because when that person’s knowledge runs out, who do they call? Maybe nobody…
Legal Advice
They have their own labor lawyers who are on staff to guide you through what you should and should not do when you have an issue with the EEOC or IHRC. You don’t have to pay any extra for this service.
Built In Employment Practices Insurance
We did not know to ask about this but it’s fantastic. If you use HCC and follow their advice to the letter, they have an insurance policy that will be first in line to cover employment practices should you get sued. Let’s be clear, this doesn’t keep you from getting sued. You can get sued by anyone for anything. What this does is cover the costs of defending yourself should you find yourself in trouble with any level of the government.
We checked with our current insurance company which we like very much called Van Oppen 2. They had some interesting insight into the employee practice insurance cost and coverage. The first thing they said was that it was worth about $2000 a year on the open market. They warned us it was in theory possible to run out of coverage if HCC had enough claims in any particular year. Over all, my insurance company thought it was pretty innovative.
Good Software
The software portal for our employees is pretty good and intuitive. That’s important to me because we want to minimize questions internally and focus them on HCC instead of our leadership team.
Good Onboarding Process
The onboarding process was smooth. When we did hit a snag, the HCC team walked our people through their issue without leadership having to get involved.
Less Expensive Than Our Current Payroll Processor
Our current payroll processor is CBIZ. We’re obviously paying for that service and we were willing to pay more for Human Resources consulting but we gave HCC a shot at pricing our payroll processing and they beat CBIZ’s price. So combined, we are saving money. I don’t want this moment to pass buy without calling this out hard. HCC was less expensive than ANY human resources consultant option that we found but was ALSO less expensive in payroll processing.
Satisfaction? To Be Determined…
I have high hopes for HCC and they’ve done very well to date. We need to test them in some more scenarios to see if they have the time and staff to give us the level of service we want. I have a good feeling about them though. They came highly recommended and so far are doing a great job.
