It’s the middle of 2023 and the recession that was predicted six months ago has yet to materialize. However, the economy is still unsteady, prompting wise business leaders to seek cost-effective strategies like outsourcing to reduce expenses. One area that consumes a significant amount of resources is payroll. But before jumping into outsourcing every aspect, it’s crucial to determine which positions should be kept in-house and which responsibilities can be transferred to third parties. Here’s a three-step approach to help manage talent spending, reduce costs, and create a conducive environment for business growth.
1. Align talent management framework with KPIs: A talent management framework integrates organizational processes that attract, motivate, and retain top talent for an organization. It encompasses not only basic recruitment but also engaging, motivating, and retaining employees. This framework helps align the hiring process with the company’s key performance indicators (KPIs), ensuring that each hire addresses specific organizational needs. By using KPIs to identify crucial internal positions and goals, companies can determine which roles should be maintained in-house and which can be outsourced.
2. Differentiate between tasks and professions: After aligning the talent management framework with KPIs, it’s essential to distinguish between professions and tasks within the organization. Professions require specific training, certifications, and qualifications, while tasks are defined actions performed by employees. Identifying secondary tasks within the company allows leaders to determine whether each position is carrying out essential responsibilities or secondary tasks that could be outsourced. For instance, content creation may be an important aspect of marketing, but the actual creation can be outsourced to a partner with expertise in that area. By analyzing the tasks assigned to each position, companies can optimize their use of internal talent and identify areas suitable for outsourcing.
3. Use performance management and analysis for an efficient team: The final step involves using performance management and analysis to track the effectiveness of internal roles and outsourcing decisions. Performance management involves assessing employee performance through tools and feedback loops, helping to identify strengths, areas for improvement, and gaps. Performance analytics takes this a step further by using data analysis, AI, and machine learning to measure employee performance against KPIs, diagnose concerns, predict future outcomes, and prescribe solutions. By utilizing performance management and analysis, companies can make data-driven talent decisions, maintain efficient teams, and identify positions suitable for outsourcing.
By following this three-step approach, businesses can effectively manage talent spending, reduce costs, and optimize the use of internal resources while outsourcing tasks that can be handled more efficiently by third parties.
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We are more than halfway through 2023 and we still haven’t come across the dreaded recession all prophesied six months ago. But the economy remains shaky, all the same. That said, wise business leaders are on the lookout for cost-effective strategies like outsourcing to help minimize costs for the foreseeable future. One area that absorbs a ton of resources is payroll.
However, before you start outsourcing everything in sight, it’s important to consider which positions your company should maintain internally and which responsibilities you should transfer to third parties. Here’s a three-step approach to help you manage your talent spend and keep costs down while maintaining the environment for your business to thrive.
1. Align your talent management framework with your KPIs
As detailed by factA talent management framework is “a model that integrates organizational processes that attract, motivate, and retain the best talent for an organization.”
In other words, this is a system you use to source the best talent for your company. This includes attracting and hiring quality workers. But it goes way beyond basic recruiting. A good talent management framework also includes engaging, motivating, and ultimately retaining your best employees over time.
While a framework is important for talent acquisition, it is also a key factor to consider when considering hiring costs.
Talent management frameworks make it easy to align with KPIs
A framework gives you a clearer picture of what you are trying to achieve with your recruiting. In addition to helping you find the right people for your company, this also makes it easier to align your hiring process with your company’s. KPIs (Key Performance Indicators).
If you want to be efficient at finding talent, the last thing you want to do is hire people simply because they are successful or have a certain trait or skill. You want each hire to address a specific need within your company. Your KPIs give you end goals and benchmarks to guide this process.
Using KPIs to identify key internal positions within your organization
You can use your KPIs in conjunction with your talent management framework to identify key roles that are best to have internally. Consider, for example, a small company in the technology sector looking to weather the current economic climate. (Technology has been particularly difficult hit this year.)
Financial KPIs at this point tend to focus on increasing revenue through new customer sales and preserving the cash trail. Taking these factors into account gives recruiting a clearer view of what they are trying to achieve.
It also allows you to identify key positions that are crucial to hold internally. One of them, for example, would be a CFO (chief financial officer) to oversee cash flow and maintain a stable tax environment. A CSO (director of sales) may oversee the acquisition of new customers.
At the same time, realizing that cash flow is a priority could make something like marketing easier to outsource. A fractional CMO could provide key third-party information and help guide the company for a fraction of a six-figure salary. By having a clear framework aligned with KPIs, you can ensure that every hire and outsourcing move aligns with the current needs of your business.
2. Differentiate between tasks and professions
Aligning your talent management framework and KPIs is a critical first step. It helps you start to identify which areas of your business are important enough to keep in-house and which things can be passed on to an outside professional. However, if your goal is to save expenses, you can dive deeper than just the hiring process. You also want to take the time to differentiate the tasks of the professions within your organization.
This is a subtle but essential clarification. A profession is an occupation that requires training, certifications, and other qualifications.
Rather, a task is a specific, defined action that an employee performs as part of their business activity. Creating a marketing strategy, hiring an employee, and taking out the trash are all chores. Someone has to do it for your business to run smoothly.
Identify secondary tasks within your company
It is important to differentiate between professions and tasks within the context of contracting and subcontracting for your business. Take the time to consider not only the question of whether or not to keep each position internally. Drill down and look at the specific tasks that each internal position is responsible for executing.
Contemplate, a full-service content solutions partner, notes that “adding certain tasks to your team’s to-do list can be too much of a distraction from your core responsibilities.” When he approaches his employees’ workloads from this perspective, it can be surprising how many secondary tasks exist within a company.
Often a mountain of work bogs down employees who are otherwise critical to an organization. This isn’t necessarily hard work (although it can be). The important distinction is that a worker often performs tasks that are not essential to its function in a company
Content creation is a good example of how nuanced tasks can set skilled employees back. Content, itself, is an important feature of most marketing strategies. It takes a knowledgeable and skilled marketer to develop marketing plans, frameworks, and even briefs specific to each piece of content.
The task of actually creating the content, however, is clearly different. It’s not necessarily easier, but it’s a different core competency. It may also be the perfect place to outsource work to a partner with experience in that area.
As you identify the positions you want to keep internally, take time to look at the details. What specific tasks are assigned to each position within your organization? Is that a wise use of the talents, skills, and experience that a qualified professional will bring to the position? If not, you may want to look into ways to provide third-party support within the post itself.
3. Use performance management and analysis to maintain an efficient team
In the first step, we aligned hiring needs and talent management frameworks with KPIs to discover which internal roles were necessary for success. In the second step, we remove the additional non-core tasks within the core jobs.
Once that’s done, it’s time to track everything using performance management and analytics. This is where the framework and KPIs come together at the back-end of your company’s hiring and outsourcing process.
The beauty of living in a data-driven world is that the refining process doesn’t have to stop at the planning stage. Tracking performance at a detailed level allows leaders to see if the positions they’ve held internally are paying off. And it allows them to see if outsourcing works for businesses too.
Get the big picture with performance management
One of the best ways to measure the effectiveness of your assignment of responsibilities to employees and outside contractors is through performance management. SHRM defines the term as “the process of maintaining or improving the job performance of employees.” The HR site adds that this occurs through tools designed to assess performance, as well as coaching, coaching, and perpetual feedback loops.
Performance management gives you continuous insight into how your team is performing over time. This can help you see employee strengths, areas for improvement, and gaps.
This also helps to differentiate tasks from professions. When a competent employee performs poorly, it’s often an indicator that he’s handling tasks that should be passed on or outsourced.
Use performance analytics to make data-driven talent decisions
Performance management is a broad term. However, if you want to approach your company’s talent management and outsourcing with the precision that leads to financial efficiency, you must also use performance analytics.
This combines the concept of performance management with innovative data analysis, artificial intelligence and machine learning capabilities. Performance management is data-driven to the point where you can assess employee performance and measure it against the KPIs you’ve set for those roles.
Performance Analytics is a diverse data analysis application that can look both backwards and forwards. It can help understand past behavior, diagnose concerns, predict future outcomes, and even help prescribe solutions.
This makes it an ideal tool for measuring employee performance. It not only allows leaders to identify problem areas and find solutions based on data. It also helps create data-backed expectations about how a successful employee should perform in each role.
When you use performance management and performance analytics, you can identify what’s working and where your team needs help. This makes it easier to maintain efficient teams that are effective and eliminate non-essential tasks. And it makes it easy to identify positions you can outsource.
Saving money, outsourcing work and keeping key positions
The current economic climate does not allow for indifferent leadership. If C-level employees and managers want to maintain a profitable business, they must carefully consider who they keep on staff and what tasks and responsibilities they outsource to other entities.
This requires an alignment of talent management frameworks with KPIs. Tasks and professions should also be deliberately separated. Additionally, performance management and analytics tools need to monitor results to ensure that the workforce is efficient, productive, and efficient. The result is a well-oiled machine that can survive economic downturns and be ready to thrive during future highs.
Featured Image Credit: Photo by Carolina Grabowska; pixels; Thank you.
The charge How to save business expenses by keeping key positions in-house and outsourcing to others first appeared in Earring.
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