How to Empower your People, Productivity and Profit

We didn’t exactly run up the stone staircase in our gray flannel sweats to the theme of Rocky at the JW Marriott, but the theme of the Conference was not wasted on us. It is what we do all day, every day, on nights and weekends.

A PEO is an interesting beast. It includes all of the facets and products of the entire Human Resource Services business in one package for the small and medium sized businesses to enjoy. Our owners (me) and many of our team grew up supporting the industry, which means we learned the entire spectrum of what a HR Services provider could possibly offer.

Here are a few interesting observations we heard this year – and more than once:

Margin compression is here to stay, with the arbitrage (short-term by definition) in State Unemployment long gone, most have given up on any substantial hardening of the workers’ compensation market.
We all tightened the belt operationally, but it wasn’t nearly enough and our best people are stressed.
Consolidation will only continue, and even if the multiples aren’t great, the deals are happening and the end result will probably be lower administrative fees to boot.
It isn’t all bad, and many believe that the combination of health care reform and possible federal legislation could bring credibility and new customers to the PEO fold.

However, something remains slightly askew.

We tell our clients to buy our product to outsource “transactional” HR. Put it all with one vendor and spend your time worrying about bigger and better things like new revenue and customer service, not 401(k) plans or paying taxes.

Yet at the same time, we don’t eat our own cooking.

A PEO should be a client-facing business focused on sales and service. Our best people should be empowered to turn their productivity towards customers, not busy work. Want better retention? Then you need to give your clients that extra effort and help their business problems, not just cut a paycheck. Like it or not, they see payroll as a commodity, not a core competency. So why don’t we?

The global economy allows you access to the resources you need to achieve that goal. Turn your focus to the people that pay your bills. Get your best and brightest talking to your customers about finding, motivating and retaining their best and brightest.

To do so, you have to find a partner who knows your business inside and out, and has operated “hands on” in a global setting. Cognet is that rare breed. Rather than managing more transactions, with Cognet you can get:

Guaranteed Cost Savings, in writing and in a contract. You save in process cost per unit and hard dollars.
Increased Productivity on both sides. Your people take on high value added tasks while we assume responsibility for exceeding your current productivity with some room to spare.
More Focus on Clients is the result. We let you talk to clients about more important stuff, we make sure the rest runs smoothly.
So, if you want to recover those hard-fought-for earnings that have trickled away the past few years, talk to us. No capital required, just bottom line savings in your pocket and more time to get and keep customers.

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Productivity Schmoductivity

Improving productivity is simple – do more with less. Imagine buying tube socks without the invention of the cotton gin. I mean, we all know that Wal-Mart is good, but they surely wouldn’t be selling socks for $1.99 for a half dozen if they were still made by hand. Productivity can be increased by more than one factor. The impetus can be a technological advance or a simple improvement of management and process, but is usually a combination of the two.

Not to sound like a complete nerd or enter into any sphere of politics, but economist Paul Krugman knows a thing or two, and the missing piece of most conversations regarding jobs or competition is almost always Productivity.

We sell productivity to our customers, and in such a highly competitive and transactional business as HR Services, it is the only competitive advantage. Now, let us introduce a similar and slightly better concept of Comparative Advantage and discover what that has to do with productivity in your business.

Productivity is simple, do more with less. Imagine buying tube socks without the invention of the cotton gin. I mean, we all know that Wal-Mart is good, but they surely wouldn’t be selling socks for $1.99 for a half dozen if they were still made by hand. Productivity can be increased by more than one factor. The impetus can be a technological advance or a simple improvement of management and process, but is usually a combination of the two.

The concept of Comparative Advantage was introduced in 1817 to look at trade between Portugal and England, but the evolution of the global marketplace has brought it from a theory in a book to reality.

What the heck does that have to do with my HR Services business? Everything!

Take any two parties, whether they be countries, companies or playmates. Now add products or services they trade in relation to each other, knowing of course that we all aren’t the best at everything.

Let’s bring back a blast from the past with NAFTA for an example, and there are two goods being produced but not traded between the U.S. and Canada, and those could be oil and whiskey.

In the U.S. it takes 10 hours of labor to make a barrel of Texas Tea, and 15 hours to make a barrel of fine Tennessee whiskey.
In Canada it takes 15 hours to get oil out of the cold hard ground, and 20 hours to make whiskey due to the short summers.
So far so good, but the trick is to decide if there is any advantage to trading.

The answer is much easier than crossing the border and all based on math.

In the U.S. it takes 1.5 more hours to get a barrel of whiskey than it does to fill that oil drum, but it takes 2/3 the time to get oil versus whiskey.
In Canada it takes 1.33 more hours to get a barrel of whiskey than it does to get some heating oil, but it takes 3/4 the time to get oil versus whiskey.
What does that all mean, eh? If all other things are equal (wages, inflation, taxes etc.) then:

Canada can produce more barrels of oil per hour than whiskey (75% vs. 67%), they have the crude Competitive Advantage with oil.
U.S. can produce more barrels of whiskey per hour than oil (1.5 vs. 1.33) then it should return the favor to our neighbors and send some whiskey to the Great White North.
The bottom line is that one party/country/company is better at something than another and has an advantage, and the great equalizer isn’t always foreign exchange rates or taxes, but productivity. When that exists in balance, like the example, both parties trade and win.

Again, what in tarnation does that have to do with HR Services?

Easy, we can become trading partners. You focus on your sales and service and do what the U.S. economy is good at, service. We trade highly productive and cost efficient labor to make you look good.

That means that you now have the Comparative Advantage over your competition.

Cutting Costs to Serve Without Sacrificing Service

Learn how our client, a top national insurance brokerage within a diversified banking and financial services company, is spending more time developing sales and marketing strategies and delivering quality service to their customers. All this while enjoying significant cost savings.