Startups Should Outsource HR(jackg.org)
jackg.org
Startups Should Outsource HR
http://jackg.org/startups-should-outsource-hr
8 comments
I have never met an HR person inside an organization who was particularly competent or at all fun to be around. Maybe they exist within a few of the bigger/more successful recruiting organizations (Palantir, Facebook, ...), but in general, any good HR person will end up being an externally-facing recruiter. Internal HR people exist to help the company fire people they want to fire, maintain regulatory compliance, and that's about it.
" Internal HR people exist to help the company fire people they want to fire, maintain regulatory compliance, and that's about it."
Sadly this is true. I had a startup that was acquired and we went from being a 50 person company to being a 250 person company, and later nearly a 1500 person company. And our original HR person who was more of the morale/culture/lets stay balanced kind of person, quit after the 'real' HR people explained to her what her job in HR was. I was helpless to change her fate and that really bothered me for a long time. After that and later Sarbanes Oxley and "Regulation FD" stuff were on everyone's mind, the people that called themselves 'HR' became compliance officers. Their job is/was to protect the company. That was sad for me.
Sadly this is true. I had a startup that was acquired and we went from being a 50 person company to being a 250 person company, and later nearly a 1500 person company. And our original HR person who was more of the morale/culture/lets stay balanced kind of person, quit after the 'real' HR people explained to her what her job in HR was. I was helpless to change her fate and that really bothered me for a long time. After that and later Sarbanes Oxley and "Regulation FD" stuff were on everyone's mind, the people that called themselves 'HR' became compliance officers. Their job is/was to protect the company. That was sad for me.
We use Accretive Solutions in Mountain View -- they have an outsourced HR/accounting/admin service. They can use TriNet if requested, but I've found a lot better deals (if your employees are in multiple states) going direct.
The zero value add admin/compliance parts of HR are what you should outsource -- absolutely not the value-add parts like recruiting, internal culture management, picking unique benefits, etc.
The zero value add admin/compliance parts of HR are what you should outsource -- absolutely not the value-add parts like recruiting, internal culture management, picking unique benefits, etc.
Services like these are ultimately short-term solutions. Our office manager was #7 to join and she's been a godsend in helping manage basic HR as the team has grown.
My advice to any founder is to seriously consider making an OM hire sooner rather than later.
My advice to any founder is to seriously consider making an OM hire sooner rather than later.
Definitely hiring a good OM is a crucial move that lets the founder/manager focus on more important tasks than administrative stuff. However in case of 'hard' HR where up-to-date knowledge of legal, taxes, insurances etc. aspects is required, OM is not enough.
The $150/month seems very low. Every plan I've looked into in my area (AZ) is the >$500/month/employee range just to run it (no services), and has a minimum of 10 employees.
Someone could make a mint doing an good job of this online.
Someone could make a mint doing an good job of this online.
Does anyone else have experience with using full-service outsourced HR? Even with an accountant and a good law firm, its amazing how complex HR can be, given all the nuances of payroll, benefits, contractors, etc.
We've had an excellent experience with TriNet - highly recommended.
My employer also uses TriNet. We switched from ADP at the beginning of this year, and it's been a much better experience. They just seem to be more on top of things and can get us actual answers when we have questions. Their website for employees is a little funky, but is much easier to use than ADP.
Do you know how much they are charging per employee?
In addition to being a major lurker here, I'm also a marketing assistant at an HR consulting and employer services company. There really is a TON of stuff that these companies can offer startups.
Most interesting though, in addition to dealing with compliance, taxes, etc. a lot of HR companies are looking to offer a wide range of services. I'm thinking of things like manager leadership training, employer handbook development, onboarding, compliance assessments, job descriptions and postings, employee satisfaction surveys, etc. etc.
Most interesting though, in addition to dealing with compliance, taxes, etc. a lot of HR companies are looking to offer a wide range of services. I'm thinking of things like manager leadership training, employer handbook development, onboarding, compliance assessments, job descriptions and postings, employee satisfaction surveys, etc. etc.
If you're at the stage where you need employee satisfaction surveys and an employer handbook, you're no longer a startup, you're a bona-fide company.
A lot of that stuff sounds not only unnecessary for a startup, but downright wasteful. If you have 8 guys working for you, is that really the most productive place to put money?
A lot of that stuff sounds not only unnecessary for a startup, but downright wasteful. If you have 8 guys working for you, is that really the most productive place to put money?
Legally you DO need crap like an employee handbook, documentation of signing off on training or compliance documents (NDA, etc.), tax and insurance compliance, etc.
It is because that stuff is such pointless crap, yet mandatory, that it is a productive place to put money vs. founder or employee time.
It is because that stuff is such pointless crap, yet mandatory, that it is a productive place to put money vs. founder or employee time.
I have no experience in this area, but I think that a HR company finding employees for start-ups can be problematic. Normally, if you are not a 100+ people start-up, the kind of people you are looking for are not exactly the ones that are doing well in a standardised, corporation-style application process. So it's possible you end up with a bunch of corporate people, where you actually wanted some creative nerds.
This is true to the extent that the PEO takes care of administrative things that aren't critical to the culture of the company.... but there should always be someone at the company whose an employee ombudsman / morale officer, whose mission is to make sure employee issues don't become problems, and who helps install a good company culture.
One startup I worked with had a person like this who was bot the recruiting person and morale person, and they had a dedicated morale budget. Rather than spend the budget on a monthly pizza party or something repetitive, he'd often save up a couple months of it and surprise us with something completely unexpected.
That one guy-- who was not a founder-- had a larger positive impact on the culture and effectiveness of the company than most of the founders (who at least get credit for knowing they needed someone whose mission was to create a good company culture and keep morale up.)
One startup I worked with had a person like this who was bot the recruiting person and morale person, and they had a dedicated morale budget. Rather than spend the budget on a monthly pizza party or something repetitive, he'd often save up a couple months of it and surprise us with something completely unexpected.
That one guy-- who was not a founder-- had a larger positive impact on the culture and effectiveness of the company than most of the founders (who at least get credit for knowing they needed someone whose mission was to create a good company culture and keep morale up.)
In most companies this role is taken by one of the founders (along with heading recruiting); I'd say the odds of success of the company can be judged by how long a founder does this vs. hiring someone to do it. Otherwise, it's usually someone who wasn't hired specifically to do morale (at least in smaller companies), but someone like an office manager or other manager who does it as a side project.
It's basically NEVER anyone in HR.
It's basically NEVER anyone in HR.
How did this role get identified and created? Recruiting is easily identified as a need, no matter what size the organization is, but morale is something that I've never seen get the attention it deserves. Was this something you sold this company on, nirvana?
This really hurts the company, it blows my mind how such a seriously important part of the company can be treated so casually. If the person(s) in charge of hiring at a company aren't putting 100% into it then the ENTIRE company is affected.
Any opportunity to put HR in the hands of people who know what they're doing should be taken.