We’re more than halfway through 2023, and we still haven’t run into the feared recession everyone was prophesying six months ago. But the economy remains shaky, all the same. That said, wise business leaders are keeping an eye out for cost-efficient strategies, such as outsourcing, to help minimize costs for the foreseeable future. One area that soaks up a ton of resources is payroll.
Before you start outsourcing everything in sight, though, it’s important to consider what positions your business should keep in-house and what responsibilities you should pass off to third parties. Here is a three-step approach to help you manage your talent expenses and keep costs down while still maintaining the environment to let your enterprise thrive.
1. Align your talent management framework with your KPIs
As detailed by Indeed, a talent management framework is “a model that integrates organizational processes that attract, motivate and keep top talent for an organization.”
In other words, this is a system that you use to source top talent for your enterprise. This includes attracting and hiring quality workers. But it goes far beyond basic recruitment. A good talent management framework also includes engaging with, motivating, and ultimately retaining your best employees over time.
While a framework is important for talent acquisition, it’s also a key factor to have in place when considering hiring costs.
Talent management frameworks make it easier to align with KPIs
A framework gives you a clearer picture of what you’re trying to accomplish with your recruitment. Along with helping you find the right people for your company, this also makes it easier to align your recruitment process with your company’s KPIs (key performance indicators).
If you want to be efficient as you seek out talent, the last thing you want to do is hire people simply because they’re 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 in-house positions within your organization
You can use your KPIs in concert with your talent management framework to identify key positions that are best to have in-house. Consider, for instance, a small company in the tech sector that is seeking to ride out the current economic climate. (Tech has been particularly hard hit this year.)
Financial KPIs at this point tend to focus on increasing revenue through new customer sales and preserving the cash runway. Taking these factors into account gives recruitment a clearer visual of what they are trying to accomplish.
It also makes it possible to identify key positions that are crucial to keep in-house. One of these, for instance, would be a CFO (chief financial officer) to oversee cash flow and maintain a stable fiscal environment. A CSO (chief sales officer) can oversee new customer acquisition.
At the same time, realizing that cash flow is a priority might make something like marketing easier to outsource. A fractional CMO could provide key third-party insights 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 each hire and each outsourcing move lines up with your business’s current needs.
2. Differentiate between tasks and professions
Aligning your talent management framework and KPIs is a critical first step. It helps you begin to identify which areas of your business are important enough to keep in-house and which things you can pass off to an outside professional. However, if your goal is to save expenses, you can dig deeper than just the hiring process. You also want to take the time to differentiate tasks from professions within your organization.
This is a subtle but essential clarification. A profession is an occupation that requires training, certifications, and other qualifications.
In contrast, a task is a specific, defined action that an employee performs as part of your business activity. Creating a marketing strategy, hiring an employee, and taking out the trash are all tasks. Someone has to do them to keep your business running smoothly.
Identifying non-core tasks within your company
It’s important to differentiate between professions and tasks within the context of hiring and outsourcing for your business. Take the time to consider not just the question of whether you should keep each position in-house or not. Dig deeper and look at the specific tasks that each in-house position is responsible for executing.
Contiem, a full-service content solutions partner, points out that “adding certain tasks to your team’s to-do list can be too much of a distraction from their main responsibilities.” When you approach your employees’ workloads with this perspective, it can be surprising to see how many non-core tasks exist within a company.
Often a mountain of work bogs down employees who are otherwise critical to an organization. This isn’t necessarily grunt work (although it can be). The important distinction is that often a worker executes tasks that aren’t essential to their role at a company.
Content creation is a good example of how nuanced tasks can hold up otherwise skilled employees. Content, in and of itself, is a major feature of most marketing strategies. It requires an adept and skilled marketer to develop marketing plans, frameworks, and even specific briefs for each piece of content.
The task of actually creating the content, though, is distinctly different. It isn’t necessarily easier, but it is a different core competency. It can also be the perfect place to outsource the work to a partner who is skilled in that area.
As you identify the positions that you want to keep in-house, take the time to look at the details. What specific tasks is each position assigned 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 for ways to provide third-party support within the position itself.
3. Use performance management and analytics to maintain a lean team
In the first step, we aligned recruitment needs and talent management frameworks with KPIs to discover what in-house positions were necessary for success. In the second step, we weeded out additional non-core tasks within core positions.
Once that’s done, it’s time to keep track of everything using performance management and analytics. This is where the framework and KPIs come together on the back end of your business’s recruitment and outsourcing process.
The beauty of living in a data-driven world is that the refining process doesn’t have to stop in the planning stage. Tracking performance on a detailed level allows leaders to see if the positions they’ve kept in-house are paying off. And, it allows them to see if outsourcing is working for business, as well.
Get a big-picture perspective with performance management
One of the best ways to gauge the effectiveness of your allocation of responsibilities to employees and third-party contractors is through performance management. SHRM defines the term as “the process of maintaining or improving employee job performance.” The HR site adds that this occurs through tools designed to assess performance as well as counseling, coaching, and perpetual feedback loops.
Performance management gives you continual insights into how well your team is performing over time. This can help you see employee strengths, areas for improvement, and shortcomings.
This also helps with differentiating tasks from professions. When a competent employee is underperforming, it is often an indicator that they are handling tasks that should be passed off or outsourced.
Utilize performance analytics to make data-driven talent decisions
Performance management is a broad term. However, if you want to approach your business’s talent management and outsourcing with the precision that leads to financial efficiency, you should also utilize performance analytics.
This combines the concept of performance management with innovative data analytics, AI, and machine learning capabilities. Performance management is data-driven to the point where you can assess employee performance and measure it to the KPIs you’ve set for those positions.
Performance analytics is a diverse application of data analysis that can look both backward and forward. It can help understand past behavior, diagnose concerns, predict future outcomes, and even help prescribe solutions.
This makes it an ideal tool to gauge employee performance. Not only does it enable leaders to identify trouble areas and find data-driven solutions. It also helps create data-backed expectations for how a successful employee should perform in each position.
When you use performance management and performance analytics, you can identify what is working and where your team needs help. This makes it easier to maintain lean teams that are effective and weed out non-essential tasks. And, it makes it easier to identify positions that you can outsource.
Saving Money, Outsourcing Work, and Maintaining Key Positions
The current economic climate doesn’t allow for lackadaisical leadership. If C-level employees and managers want to maintain profitable business activity, 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 must be purposefully separated, as well. In addition, performance management and analytics tools should monitor results to ensure that a workforce is lean, efficient, and productive. The result is a well-oiled machine that can survive the economic lows and will be ready to thrive during future highs.
Featured Image Credit: Photo by Karolina Grabowska; Pexels; Thank you.