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For many young companies, the pressing question is whether to commit precious resources to a full-time hire — or to outsource some tasks
It’s no secret that Colorado is an entrepreneurial mecca. The state was ranked fourth in startup activity nationwide, with 350 people out of every 100,000 adults becoming entrepreneurs every month, according to The Kauffman Index of Entrepreneurship.
These emerging companies are confronting the state’s tight labor market daily — often battling much larger employers for the area’s top talent. While most startups can offer flexibility and hands-on, high-opportunity environments, they often lack the infrastructure or comprehensive benefit packages of larger firms, making it difficult to compete, or to attract the right kind of talent.
So, it’s not unusual for me to get calls from start-up firms searching for innovative ways to solve their talent and workflow needs. For many, the question is whether to commit precious resources to hiring someone full time, or to outsource some tasks to a third-party.
My answer? It depends.
Before answering the question, I like to help startup founders assess their current team’s core strengths, attributes and strategic direction. Most startups are flat organizations where employees are asked to perform a wide variety of tasks. Eventually, however, some deficits begin to emerge, leading entrepreneurs to recognize the need for outside help.
My belief is that the founding team at a startup should be focused on what will make the business grow and succeed. Any tasks that lie outside that core competency are ripe for outsourcing. To be clear, outsourcing doesn’t always necessitate hiring a firm. In Colorado, we benefit from a large and growing “freelance” base. In fact, by 2020, more than 40 percent of the U.S. workforce will be so-called contingent workers, according to a study conducted by Intuit in 2010. These professionals can provide a startup with much needed, and often time-critical, expertise without requiring a permanent commitment.
As an example, one early stage marketing firm I assisted (starting at employee #18) lacked a human resources infrastructure, but didn’t feel they could allocate the proper resources for a full-time HR manager. Instead, we helped them hire a senior HR executive to work on a contract basis for six months to establish their infrastructure, at which point the company was able to transfer management of that program to someone in-house.
HR is a perfect example of something that can be better handled by external experts, but there are a slew of other functions that can be easily outsourced. Depending on the nature of the company, they include: payroll, tax accounting, IT, public relations, administrative support and marketing and recruiting.
Finding the right kind of talent is time consuming at best, but also requires the right mix of expertise and access, especially in a tight labor market. Some recruiting firms (including my own) can help companies source both permanent as well as interim or contract talent. Not only does this provide your core team the opportunity to focus on their area of expertise, it provides start-ups and small companies with a full menu of options to help them manage growth and resource allocation.
Once you decide that outsourcing is worth exploring, consider what kind of structure offers the best fit. For noncore functions that require support on a long-term basis, forming a relationship with a vendor that specializes in that area can be beneficial. Conversely, if the task is something that is critical to a company’s growth or core business, then hiring an independent contractor who may eventually become a permanent employee might be a better alternative. It’s not unusual for startups to employ a variety of these approaches. Again, it depends on the core strength of the existing team and the strategic direction of the firm.
Regardless of which option you choose, make sure the vendor or contractor you select is responsive and can work at the speed at which you’re accustomed to doing business — which for startups, is often faster than more established firms. It’s also important to hire someone with a proven track record of working autonomously. You don’t want to serve as a test case as they build their practice. And remember that while it’s tempting to simply hire someone to get the job done, it’s important to be more strategic and ensure that the contractor or vendor you select is aligned with your company’s vision and goals. They could end up being a permanent part of your team, so do the work upfront to make sure they are the right fit.
Finally, keep in mind that there are some functions — such as sales, business development and staff management — that may be best kept in-house. If those are areas of need, I suggest committing to a full-time hire and working with a recruiter to find the best fit.
So, if your organization is up to its ears in an area outside your scope or interest, talk to a trusted adviser about innovative ways to solve your talent and workflow needs. Outsourcing can be the elixir for your pain point.
Lauren Sveen is owner and president of Corps Team Denver, a national talent acquisition firm specializing in connecting high-growth firms with high-caliber talent. She is a sought-after speaker on employment trends, organizational strategy and work/life integration. Contact her at [email protected].