The most predictable thing about the state of the workforce today is that it’s highly unpredictable. Major companies have been announcing layoffs and enacting hiring freezes in response to predictions about the economy and attempts to attract and retain top talent.
Whether a recession is in the future or not, many companies are preparing for the worst and downsizing to save money. And if companies aren’t downsizing for financial reasons, we have seen them increase salaries while also leaving valuable positions open, creating gaps in workflows.
Yet letting go of people or refusing to backfill empty positions in an effort to “recession-proof” your organization can be a tough line to toe. If you’re short-staffed in an area like payroll, for instance, you can end up with problems that impact your company in significant ways. And if you scale back on spending in places not seen as “central” to your core business—another common response to economic fluctuations—you may wind up saving money at the cost of finding yourself behind the curve later.
How have hiring freezes impacted business processes?
It’s not just the loss of employees that impacts a business; it’s the effect their absence has on the remaining employees.
Let’s say you’ve enacted a hiring freeze during an acquisition or a divestiture. If you’re in payroll, getting payroll executed on time just got a whole lot harder. If you’re in finance, you may start falling behind on accounts payable or other critical tasks. Unless you’re leveraging a partner in those areas, then at a certain point you’re going to start feeling the impacts of those cost-cutting measures, and your risk for errors may increase significantly.
How can outsourcing help?
What companies get by hiring an outsourcing partner is stability. When you’re short-staffed, tasks are bound to fall through the cracks. Think of your business as a machine. If one part stops working properly, the rest of it is going to be affected, too. But when you bring in a reliable partner, you don’t have to worry about backfilling positions you don’t have the budget for — that’s your partner’s responsibility. Outsourcing partners are contracted experts that will help get your machine running again, ideally at an even more optimal level.
What should you keep as in-house priorities and what should you outsource?
The departments that can benefit the most from outsourcing are the ones with the most repeatable, administrative tasks. When you know how to outsource successfully, you can utilize your existing employees effectively and make the best use of your budget. Focus on these three areas:
1. HR: Outsourcing HR tasks such as recruiting, hiring, updating employee records, training, etc., can free up HR managers to focus on what matters most. And having that extra capacity to focus on the right tasks could be the thing that sets your company apart from the rest.
Right now, benefits are a huge topic of discussion. More and more companies are now offering mental health benefits, earned-wage access, and other perks outside of normal benefits like health insurance and 401k matching. According to a survey by Handshake, “73% of [Gen Z] survey respondents said benefits is the #1 reason they would stay with an employer.” If HR professionals are unable to create a competitive benefits package, the companies they work for may fall behind and have difficulty retaining and recruiting employees.
2. Finance: There is a lot that falls under the umbrella of finance, but invoice processing takes up the most time by far. Depending on the technology available to them, employees may not only have to enter invoice data by hand, but also submit those invoices, save them to a general ledger, follow up, and verify approval.
Finding an outsourcing partner that can speed up these tasks through automation would free up your finance team to proactively analyze data, identify patterns, and propose budget solutions to save your company money in the long run. As the CEO of OneSource Virtual, I’ve seen time and again how valuable the finance team is to a company’s overall strategy. They’re looking at the numbers every day, and when given the time, can suggest areas where you should cut back on spending and areas where you should invest more, saving your company money and mitigating future issues.
3. Payroll: Payroll is the process of tracking hours, calculating pay, setting up direct deposit and dealing with all the issues that arise along the way. According to a 2020 survey by Quickbooks, 63% of small-business owners weren’t aware of the time it takes to process payroll. Additionally, 82% of business owners said they reviewed their calculations manually. Given all this, it’s no surprise that employees lose time when processing payroll.
By hiring an outsourcing partner to streamline this process, your payroll employees can have a better work-life balance, and we all know how valuable that is these days. Creating better work-life balance gives your employees the additional “brain space” they need to be more efficient and feel productive at work.
It makes sense that companies would want to reduce their labor-related costs at a time when everyone’s talking about a coming recession. Nevertheless, you can’t afford to risk your growth as a business by putting too much strain on your team. Strategic outsourcing gives you the advantages of extra resources and capacity without incurring the costs associated with hiring personnel—and may just allow you to thrive in a recession.