Outsource, Find a Consultant, Or Do It Myself?
As your organization grows and its needs change, human resources become a key consideration. Your ability to provide services, and to maintain the infrastructure supporting these services, becomes increasingly reliant on the knowledge and expertise of the people involved.
When its time to expand your workforce, how can you know whether it's best to hire or outsource? What type of work is best outsourced? When can a consultant be helpful? The following is designed to assist you in making these important decisions, and includes information that may challenge you to "see the world" in a little different way than typical.
An important consideration in outsourcing also is a very simple consideration: the cost. But true cost needs to be measured beyond the number of dollars to be spent. Dr. Linda Bamber, Accounting Professor at the University of Georgia, offers Three Relevant Considerations for determining whether or not outsourcing is an advantageous move for your organization. First, she suggests that you measure the degree to which keeping work "in-house" avoids incremental (net additional new or "avoidable") costs that are incurred by outsourcing. Second, consider the purchase price of attaining outsourced assistance. And third, think about any "profit" or benefit that will result from using "idle resources" (those freed up as a result of outsourcing) for another purpose. In other words, the economics concept of "opportunity cost" is important to consider: what are we foregoing by keeping this work in-house?
A simpler way to look at this decision is to understand that you have three options: KEEP the work in-house and performed by existing staff, HIRE new staff, or OUTSOURCE. This said, the pertinent question becomes, What is the maximum we can pay someone else to do this job, and be at least as well off as if we did it ourselves? This question implies that the purchase price of outsourced work must be less than or equal to the incremental, avoidable costs added to the derived benefit (i.e. profit) that occurs from freeing up resources. Thus, the considerations for outsourcing are both of a quantifiable and qualitative nature.
There are numerous pros and cons to hiring new staff versus outsourcing work. The situations in which outsourcing seem most advantageous include: work is seasonal or otherwise cyclical, and therefore not conducive to permanent employment; work is not substantial enough to require a full-time employee; work is easily separated from other functions of the organization (e.g. bookkeeping, janitorial services); expertise for the job is difficult to find and hire (grant writing, program evaluation).
There are practical advantages to outsourcing, including avoidance of the many IRS, unemployment, workers compensation and other federal/state requirements involved with employing workers. However, outsourcing is not without its legal considerations, as well, and it will be important to engage in such an arrangement with full knowledge of the inherent requirements.
The Chronicle of Philanthropy recently ran a cover story about the hottest jobs in the nonprofit sector. Fund raising, marketing and consulting came out on top - great news for those of us at Third Sector Innovations, as this largely covers the services we offer. But what does it mean to you? Is hiring a consultant, particularly for fund raising or marketing assistance, going to be the most productive use of your organization's resources? We submit that there are FOUR circumstances under which a consultant will be most helpful to your organization. These are when you desire an outside, yet informed and objective opinion; you desire skills and expertise, or fresh ideas, that you do not otherwise possess; you need short-term or sporadic on-going assistance; you are in the planning or evaluation phase of a project or operations.
Having worked with hundreds of nonprofit organizations, Third Sector Innovations is knowledgeable about the industry, and quickly can get "up to speed" with the issues specific to your organization, thus making consulting an affordable option for our clients.
When its time to expand your workforce, how can you know whether it's best to hire or outsource? What type of work is best outsourced? When can a consultant be helpful? The following is designed to assist you in making these important decisions, and includes information that may challenge you to "see the world" in a little different way than typical.
An important consideration in outsourcing also is a very simple consideration: the cost. But true cost needs to be measured beyond the number of dollars to be spent. Dr. Linda Bamber, Accounting Professor at the University of Georgia, offers Three Relevant Considerations for determining whether or not outsourcing is an advantageous move for your organization. First, she suggests that you measure the degree to which keeping work "in-house" avoids incremental (net additional new or "avoidable") costs that are incurred by outsourcing. Second, consider the purchase price of attaining outsourced assistance. And third, think about any "profit" or benefit that will result from using "idle resources" (those freed up as a result of outsourcing) for another purpose. In other words, the economics concept of "opportunity cost" is important to consider: what are we foregoing by keeping this work in-house?
A simpler way to look at this decision is to understand that you have three options: KEEP the work in-house and performed by existing staff, HIRE new staff, or OUTSOURCE. This said, the pertinent question becomes, What is the maximum we can pay someone else to do this job, and be at least as well off as if we did it ourselves? This question implies that the purchase price of outsourced work must be less than or equal to the incremental, avoidable costs added to the derived benefit (i.e. profit) that occurs from freeing up resources. Thus, the considerations for outsourcing are both of a quantifiable and qualitative nature.
There are numerous pros and cons to hiring new staff versus outsourcing work. The situations in which outsourcing seem most advantageous include: work is seasonal or otherwise cyclical, and therefore not conducive to permanent employment; work is not substantial enough to require a full-time employee; work is easily separated from other functions of the organization (e.g. bookkeeping, janitorial services); expertise for the job is difficult to find and hire (grant writing, program evaluation).
There are practical advantages to outsourcing, including avoidance of the many IRS, unemployment, workers compensation and other federal/state requirements involved with employing workers. However, outsourcing is not without its legal considerations, as well, and it will be important to engage in such an arrangement with full knowledge of the inherent requirements.
The Chronicle of Philanthropy recently ran a cover story about the hottest jobs in the nonprofit sector. Fund raising, marketing and consulting came out on top - great news for those of us at Third Sector Innovations, as this largely covers the services we offer. But what does it mean to you? Is hiring a consultant, particularly for fund raising or marketing assistance, going to be the most productive use of your organization's resources? We submit that there are FOUR circumstances under which a consultant will be most helpful to your organization. These are when you desire an outside, yet informed and objective opinion; you desire skills and expertise, or fresh ideas, that you do not otherwise possess; you need short-term or sporadic on-going assistance; you are in the planning or evaluation phase of a project or operations.
Having worked with hundreds of nonprofit organizations, Third Sector Innovations is knowledgeable about the industry, and quickly can get "up to speed" with the issues specific to your organization, thus making consulting an affordable option for our clients.
