Human Resources: When do you need Internal HR Expertise?

Janet,

In my experience, and I don't know Inspirity particularly so do take it with that grain, after 20-ish employees there is a $60K - $100K benefit from in-sourcing. That doesn't mean do it all yourself; that means hire the vendors yourself. Inspirity may have competitive rates, so the benefit may be smaller. If Inspirity is set up like an independent accounting firm, and not a PEO, the net cost to you will likely be closer to $20K. The tasks you indicate probably cost about that if you internalize it; this depends on whether you can have this as a part of someone's role, or if you need to dedicate a resource to it.

So, that is my experience.

My specific advice is:
-Calculate how much time / employee cost you are spending on doing this yourself. If you outsource, how much of that will be saved?
-Get from them a bid on providing these services. If they are structured like a PEO, you will need to get their pricing on the benefits themselves, as PEOs very often mark-up the benefits to add hidden costs, so that you are paying more fees than they are quoting you (note, I personally find this practice extremely unethical. If they quote you for known items at a higher rate than you are paying...run. Either they are incompetent or unethical)
Based on the differential between realizeable savings and their quote, are you saving money? If it is significant, move. If not....keep bidding the business until it is. This is something you *do* want to outsource in the end, because your value proposition is not being the best benefits provider, so there will be someone who can make a $ by being better at it.

Cheers,

KP

Ps...feel free to contact me if you want to walk through any details.

Janet,
Keith gives some good advice on evaluating this from a cost standpoint. I would add though that you need to get to a "total" cost not just your time/employee cost. For example, if you are outsourcing payroll, what is your total annual cost for paychecks, tax filing, w2 processing. Do you have software and IT cost that would be eliminated? You need to take a wide view of what the entire process involves and what is costing you in order to get to an apples to apples comparison.

It is good advice to have the quote from a PEO breakout you insurance and benefits cost. My experience has been that it is difficult to realize the cost savings claimed for the insurance and benefit related components.

I would caution you on making this simply a cost analysis. Once you reach 25-50 employees, your compliance and regulatory burden increases. You always have the risk associated with even one or two employees from an employment practices standpoint. It is critical for you to evaluate the level of expertise you have access to internally, including your attorney, and decide how much you can rely on these resources for compentent HR/payroll/benefits support. You need to really understand the level of support offered by the PEO or other outsourced provider and how it will be delivered.

I would be happy to discuss this further if it would help.

Tim

If your need is related to payroll processing and tax payments, there are multiple services. However, if you are looking for HR guidance, a highly recommend a PEO, as employment law is complicated and ever changing. I posted a blog on this site which may help - "A PEO is not a “Set it and Forget it Process.”

Janet, in my previous reviews of PEOs, such as Insperity, we find that they make it very hard for employers to make a true apples-to-apples comparison. They like to bundle services into one fee. This causes many employers to save a bit for one product or service but overbuy on another. I actually have a meeting with a company this week that wants to get out of their Insperity contact and unbundle their services so they can negotiate for each benefit related service directly and only buy what they want. For you, this doesn't mean a huge amount of extra work or administration if you use the right partners and vendors.
Hope this insight helps.

You should also review the closely-related postings at https://www.proformative.com/questions/what-has-your-experience-been-insperity-formerly-administaff.