An HR consortium can be a cost-effective HR solution for smaller organizations who need HR expertise but lack the resources for a full-time HR team, as outlined here.
This article highlights how to set up and manage an HR consortium so that every participant receives the maximum benefit.
Start With Funding
Starting and managing an HR consortium starts with two fundamental questions: Who will be part of the group, and how will the costs of hiring outside expertise be handled?
In some areas, especially for nonprofit organizations, grants and other funding programs—often administered by the federal or state government—can cover some or all of the HR services.
Even with no outside funding, organizations will find that sharing an HR expert or team provides much greater value than hiring full- or part-time HR staff.
Of course, there’s a trade-off. An in-house, full-time person is easy to access. A consortium is splitting the resource among members. How quickly can you access that resource?
But for many non-profits, there are hard limits to the percentage of revenue an organization can spend on administration. The limitations of grants and contracts can make it hard to hire a full-time person. A less experienced—and thus less expensive—individual may not have the range of expertise needed.
Individually, organizations may only be able to afford a less experienced HR person, even someone just out of school. In a consortium, members get someone with a wealth of experience and demonstrated outcomes. If you need an in-depth manual of policies and procedures researched and written, you want a senior expert who works for the consortium. Ultimately, that’s a much greater value.
Determine Participant Needs
Will participants want someone to manage policies, procedures, benefits, and payroll? Do they want someone to provide training, or to help member organizations share best practices? Do some participants want a recruiter, while others don’t share that need?
If there isn’t unanimous agreement, can members choose to only use, and possibly only pay for, some of the services that an outside HR expert is providing?
There is no single right answer or best practice. But all participants should agree on what services are needed and how each organization will access them.
Understand Expectations and Obligations
All participants should understand what they need to give and what they should expect to receive from a consortium.
The first rule is to be present and to participate. All participants must be accessible and share information.
When all organizations participate and share information, the outside HR expert can analyze and come back with meaningful recommendations. Participants must also be willing to listen to the analysis and to provide real feedback, to be honest and say, “yes, this might work,” or “no, I can’t, and this is why.” And be open to debate with the HR consultant, who might push back. Members must commit to take that information and use it to improve life for their workforce.
The HR expert can also serve as an unbiased, neutral advisor dedicated to what’s best for each organization.
Maximize The Value
Organizations, especially non-profits, can realize the value of forming an HR consortium in three ways.
- First, rather than paying the full-time salary of an HR expert or a team of experts, each participant is only responsible for a fraction of that cost.
- Second, a group of organizations is far more likely than a single organization to qualify for federal (and some state) grants that cover some or all of the cost.
- Finally, with employee benefits, a consortium that represents a larger pool of employees may be able to find more favorable rates. An HR professional may be able to connect the group with a broker who can get better programs for employees and dependents.
An HR consortium can be a huge problem-solver for many organizations and be a cost-effective strategy to obtain critical HR resources. In a future article, we’ll outline who should consider an HR consortium and how participants should choose an HR expert or consultant.
The Lindenberger Group has extensive expertise in helping organizations manage an HR consortium and get the maximum benefits from the shared expertise of HR professionals. For more information or to discuss your HR needs, please contact us at 609-730-1049 or send us an email.