Outsourcing Archives

Since most nonprofit leaders haven’t seen a four hour workweek since Kindergarten — it’s a tempting fad right now. Tim Ferris promises it in a book that has topped all charts on Amazon. Could it work for us? Imagine ……..

Food provider? – Drop ship to client house and save onsite labor!
Counseling? – Make an app that clients can use themselves with a 5 minute phone consultation at the end.
Education? – On demand videos and educational games online!

Sorry —- Getting your NonProfit turned around requires passion and labor. If it were easy, you wouldn’t need us!

Does it ever get easier? Definitely, yes. I say that from experience.

After you fill your company with people that you would enthusiastically rehire, you will have more skills available from people who work together. Magical!
After you have clarity and discipline in your strategy, your leadership team energy will waste less energy on projects that are not that critical. Magical!!
After you have created a coaching system with staff that reduces errors and eradicates your time to repair problems, you double your leadership time. Magical!!!
After the nonprofit starts to turn around in the 2nd quarter, your cash improves and you sleep at night. Magical!!!!

I’m not sure about the 4 hour workweek. Frankly, I’d be bored. But I can promise you a normal workweek with time for fun and family – and the chance to do good too!

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PS. This link is a critique of the 4 Hour workweek.

The 4 Hour Workweek Mindset

I picture my work with a glass of wine and a cup of coffee on my desk. When I start the day, I reach for the coffee. I decide what tasks to do today and I place any of the hard, nasty ones at the top of the list*. I think you know the kind of work that I mean. I hate to respond to regulatory orders for audits and information so that needs to happen with coffee. Fire someone – definitely coffee.

At some point in the day, I can switch to the glass of wine. What’s the difference?

Reaching for wine is when I’m working on the stuff that I’m really good at and love. I’m thrilled to spend time out of the office thinking about the whole company. I’m good at the Strategic Plan and building systems to protect the company. That’s why I consult in these areas. It’s drinking from the wine glass.

Do you ever stop drinking coffee?

You can kill off your zeal and joy by only drinking coffee. We all have some hard tasks that need to get done. The trouble starts when you never have time to get to the wine that revives your vision and gives you new energy.

We are all exactly equal in one way. TIME

Maybe you read this as owner of a 10,000 worker company. I direct 150 staff. The President directs 4 million workers in the Executive Branch. It doesn’t matter. We all came in early this morning with the same exact amount 10 hours to work. The day marches forward for princes as well as paupers.

You are probably doing some coffee work that wastes your essential leadership time and robs the joy.

Outsourcing

I listened to one leader who tries to outsource everything except his core strategic tasks. What a fantastic idea! In my workday, I need to get more contracts for my company and build relationships with owners. Or I can spend the day hunting for the last audit and certificate of incorporation. Which use of my limited management 10 hours will move the company forward the most?

Outsourcing Benefits

The company that accepts your outsourcing knows how to do that one task
You don’t have to hire excess capacity or worry about hiring/supervision/unemployment because everyone is working for the other company.
Some outsourcing reduces criticism

Outsourcing Cautions

Choose an outsourcing company that is similar to your size. ADP is too big for most companies and they don’t really need your money.
Plan how to measure whether the outsourcing is effective and how often to monitor. If you fire the janitors and bring in a cleaning company, you will need to have clear measurements of success, monitoring, and fraud control for theft. If you just give some strangers the keys and go back to your Strategic Plan, plan for a lot of coffee in days ahead 🙂
Be careful of agencies which do so many kinds of jobs that they know a little about a lot of things. That’s like hiring yourself 🙂
Watch for business changes and make sure that the contracted outsourcing still meets your needs. I use Netflix and recently got Amazon Prime. Suddenly, I wonder why I am still paying monthly for Netflix which I don’t watch that often.

10 Good Outsourcing Examples

Payroll and Human Resources with a company such as APS. For us, APS is not too large so we can always speak to someone. Payroll is not that complicated for a payroll company. The software calculates taxes and pays employees. It’s ok not to watch them too closely since the employees and IRS are also watching. Many will also store required company documents and appraisals, training videos, time off requests. Etc. If it’s easy to use, then there is no downside to outsourcing.
Janitorial – your part time janitors may be the worst. Few really want the job and janitors know more places to hide than the building inspector 🙂 Sadly, the janitorial company has similar trouble so you have to set this up carefully.
Legal and Audit – you probably already outsource this
Consultants for planning, cash management, and fraud – me 🙂 Very effective if the practice areas match your needs. Be careful with consultants who think they can do everything.
Consultants to renegotiate loans, contracts and fire long term staff. Sometimes a fresh start is needed but consultants can be a buffer.
Food – I’m amazed at service companies who run their own kitchen with all the problems of spoilage, regulations and staff. Outsourcing can’t be worse than what you are doing.
Transportation and office equipment – lease everything and let someone else worry about repairs
Clerical – we use Dropbox to store all corporate documents. 137,000 files today. A staff member in Indonesia labels them. I don’t have a filing cabinet in my office.
Social media – there are a million eager workers in other countries who know more than you do about Google Analytics. Give it away
Accounting and Accounts Receivable – an accounting and budgeting package always balances. You don’t have to check the assets against debits and credits! Once you have accidentally dropped a major line in an Excel chart from the SUM function, you will outsource and never look back

Conclusion

You are probably hesitating because you have seen some expensive quotes for outsourcing. True. So it comes down to three choices

You hire another executive level staff member to take many of the coffee tasks while you save your 10 hours for leadership $$$$
You burn yourself out and don’t advance the company because your life is all about the coffee jobs and you don’t even look at the wine. Company hires new CEO $$$$$
You outsource and pay for some of the costs by reducing some operations staff and one less supervisor. $$

The coffee jobs are required but not essential. The wine jobs are all about the leadership and joy of the job. You have to find a balance that works for you and the agency. Outsourcing is one tool to take the 10 hours you are given today and invest it wisely. Start today.

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GDPR – Your email is collected by an automated system so that the One Minute Manager posts can be sent. You will be invited twice a year to a two hour Scaling Up workshop for CEOs and EDs. Annually, you will be offered an Ebook and asked whether the resources of TurnAround Business Coaching are helpful.

A maximum of 10 companies per year develop a relationship for Business Coaching to turn around their company or scale up past a growth barrier.

*Tracy, Brian. Eat That Frog!: 21 Great Ways to Stop Procrastinating and Get More Done in Less Time. San Francisco, CA: Berrett-Koehler, 2007. Print.

Summary:

Kindheartedness can kill your business in less than 15 years if you are paying for staff or salaries that you don’t need.

Compensation is your biggest cost

If your company is a nonprofit or service company, the biggest budget line is compensation. You only have one thing to offer the public – the actual service of your staff. For example, the cost of owning a barbershop is not the chair and the razor – it’s the barber.

You create savings or leverage for more results only on your biggest line item in the budget. That line is your biggest expense so that is where the profit or loss really happens. Your line item to watch is compensation. In the case of the barber, saving 30% on the cost of razors is very nice but doesn’t really change the bottom line. The cost of razors is a small cost compared to the cost of barbers.

A common way that labor can be changed is buying technology so that a manual task can be automated. We used to have a time clock and cards which were manually input into payroll with cards and work papers stored. We bought hand scanners which directly enter the online payroll program. We require direct deposit so there are no checks to distribute. We changed the pay date to twice a month instead of biweekly and went from 26 payrolls per year to 24 payrolls. The result is a reduction of 18 hours of labor per month.

Technology is only one way to leverage labor. Use your imagination!

Reasons Not to Change Labor Costs

It would seem logical to reduce positions, hours, or compensation when needed except that:

You’re a nice person and hate to cut hours even when staff have nothing to do
The staff member is 55 years old and you’re afraid she can’t get another job
You’re concerned about age or other discrimination
The staff member scares you and you’re worried that he will damage the company online after the termination
You have two sisters working in the same company so you will end up with two headaches while changing one job.

Since these are all real feelings, let’s look at each one –

Starting with two sisters – never hire related persons in the same department. Move one of them as soon as possible into a different department so that each can be supervised on their own merits. If the company is small, it can be very difficult without losing both of them.
The staff member scares you – I remember one staff member who scared other staff. When I fired him, I felt like a lion tamer facing an unusually hungry beast. He left the firing room to accuse other staff of hating him and sent notes to customers about my untrustworthy behavior. My only mistake – you need to escort the person off the property as soon as you finish telling them the news. Ignore the threats
Discrimination – you must follow labor law scrupulously. Consult your attorney. The money you spend on the attorney can be paid with the dollars you save from making the change. Document all your actions and employee responses.
Age – There are now more and more people working later in life in all companies. That is wonderful as long as they add value. You can protect the company and protect them with an immediate policy that they have to invest in their skills development every year to keep the position. In my first job, the company had a policy of requiring progress towards a Master’s Degree within 3 years of hiring or the 3rd year would be the terminal year. They wanted the freedom to change the work force as needed without damaging employees. What a graceful way to handle staff relations! I’ve always followed it.
The biggest problem in making change is your own feelings as a manager. It’s an awful feeling and responsibility to disrupt someone else’s life. And it’s part of the responsibility that comes with your compensation.

Conclusion

Our economy is changing rapidly. “The average lifespan of a company listed in the S&P 500 index of leading US companies has decreased by more than 50 years in the last century, from 67 years in the 1920s to just 15 years today, according to Professor Richard Foster from Yale University.” (BBC News). I can’t predict how your agency will manage external threats and opportunities. What I can say is that labor costs in a service organization are your major challenge. If you don’t manage those costs, your chance of survival is bleak. Good luck!

If you want One Minute TurnArounds by email, please sign up!

GDPR – Your email is collected by an automated system so that the One Minute Manager posts can be sent. You will be invited twice a year to a two hour Scaling Up workshop for CEOs and EDs. Annually, you will be offered an Ebook and asked whether the resources of TurnAround Business Coaching are helpful.

A maximum of 10 companies per year develop a relationship for Business Coaching to turn around their company or scale up past a growth barrier.

Outsourcing Archives - TurnAround Executive Coaching

4 Hour Workweek? — Not This Week

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Are You Throwing Away Cash on Labor?

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