Many companies experience times when they find their accounting departments short on staff or short on expertise. Sometimes emergencies and financial needs arise that are beyond the capability of their financial personnel to address. This is particularly true in times of economic turbulence.
Some companies encounter major opportunities that they need expert help to evaluate and pursue. Other companies want experienced professionals to provide training or mentorship for their financial employees. Still others want to upgrade their accounting software but do not have the technical knowhow to make the transition.
One of the best and quickest ways to remedy such situations is through staff augmentation. This increasingly popular method of strategically leveraging resources and expertise can be invaluable in helping a company to achieve its financial goals.
What Is Staff Augmentation?
Staff augmentation is a way to quickly fill a company’s staffing or expertise needs through outsourcing without the expense and headaches of hiring full-time employees. Companies manage their augmented staff just as if they were regular employees, but with fewer liabilities and generally at lower cost. The outsourced employees may work in-house or remotely, full time or part time, long term, on a temporary basis, or as needed, depending on your company’s requirements and resources.
Staff augmentation is becoming increasingly common in nearly every industry. It has become the go-to solution allowing a business to bring on a highly experienced professional on a temporary basis for less than it would cost to hire an employee with the same qualifications. Staff augmentation can be a solution for seasonal fluctuations and to bridge the gap between times when needs exceed current staff capabilities but do not yet justify additional full-time hires.
How Does Staff Augmentation for Financial Teams Work?
Finance-related staff augmentation begins with an evaluation of the company’s financial needs and the capability of the current staff to meet them. This exercise can point out areas where needs are unmet or where additional resources are required.
Once the needs have been identified, the company must determine whether to hire new employees or seek outside help. Hiring can be a risky, time-consuming, and expensive proposition—especially when seeking a high-level expert such as a CFO. This is not always a viable financial move for the company, particularly if the need is immediate or short-term.
A better option may be to use the services of a financial outsourcing company. Such a company will have a team of highly experienced CFOs, controllers, and bookkeepers, and can quickly find the right person to join your team either on a short-term or long-term basis.
Financial staff augmentation can provide your company with fractional, interim, or consulting financial services at less cost than hiring a full-time expert, and with less risk. If the relationship with an outsourced expert doesn’t work out for any reason, the outsourcing company can quickly make a change with minimal impact on your business. For companies seeking the expertise of high-level positions such as CFOs, financial staff augmentation allows companies access to a higher level of expertise and experience than they’d be able to afford or justify if hiring for a full-time, in-house solution.
What Benefits Can Staff Augmentation Provide?
Staff augmentation offers a flexible solution to the ever-changing need for allocation and training of personnel. It can help you meet deadlines and avoid the risks associated with hiring, firing, and layoffs. Some other benefits are listed below.
Outsourced staff often work remotely. Any benefits they receive, such as health insurance, bonuses, and 401K, or contributions are paid by the outsourcing agency. Thus, staff augmentation makes it possible to decrease overhead expenses, including payroll, utilities, equipment, and software, particularly in the case of short-term staffing. Outsourcing also makes it easy to increase or decrease staff as business ebbs and flows.
When employees leave or become unavailable for significant periods, staff augmentation can help your company rapidly compensate and maintain momentum. A qualified, experienced professional can be brought in quickly, minimizing the time-consuming processes of hiring and training.
It can be a big advantage to augment company staff with one or more seasoned professionals who are well equipped to deal with problems and have experience with multiple companies in your industry. They will also have valuable contacts in the industry as well as support from the outsourcing company. Often, they will have access to top-of-the-line software as well.
Staff augmentation is a great way to fill temporary knowledge gaps within a company. If an opportunity or challenge arises for which your team doesn’t have the required expertise, bringing in a consultant or fractional expert can help fill your needs for the duration of the project. For instance, if your company is planning to raise funds, implement an ERP solution, determine short-term or long-term cash forecasting, or make the change from cash to accrual basis accounting, it can be beneficial to temporarily augment your existing team with someone who has the knowledge and expertise to support these initiatives.
New and existing employees can benefit from the experience and broad knowledge of an outsourced expert. Companies often bring in outside resources to train their teams and bring them up to date on processes and technologies. As accounting teams become more proficient in their tasks, the entire enterprise is strengthened and profits increase.
This training can be especially useful when an internal employee is promoted to a controller or CFO position. These highly specialized jobs can be very challenging to someone who is new to the role. An outsourced expert can provide the necessary support and coaching until the promoted individual is fully adept.
An outsourced professional will have experience with a number of companies and projects and can provide new insights and recommendations for improvement of existing procedures. A fresh pair of eyes can often make a huge difference in outcomes by identifying opportunities for cost savings and increased efficiencies.
The augmented staff is fully accountable to you, just like your regular employees. You have complete control over their assignments and can monitor their results. If a problem should arise, you have the support of the outsourcing company, who can work with the individual, provide additional resources, or replace the person with someone better suited to the job.
Augmented staffing can facilitate company expansion, new projects, or the reassignment of existing staff members. They can alleviate the burdens of employees who are overworked and allow business executives to focus more on their core business responsibilities and less on monitoring the accounting team. Augmented staffing can help your company gear up quickly for a new project, and then ramp down when the project is finished.
How to Maximize the Benefits of Staff Augmentation
The most common drawbacks of staff augmentation are lack of accessibility to remote workers, miscommunication of expectations, and misunderstanding of long-term costs. Here are some things you can do to ensure a positive experience with staff augmentation:
1. Set Expectations Clearly
Make sure you have a clear picture of what you want each outsourced worker to do, what your end goal is, and how long you expect the working relationship to last. Communicate this clearly to the outsourcing agency so that they can help you select the right person, set an appropriate schedule, and get a good cost estimate. Once you have chosen an outsourced employee, make sure that person fully understands those same expectations. It is best to communicate your expectations in writing so that you, the outsourcing agency, and the employee all have the same understanding.
2. Fully Understand Costs
For short-term and as-needed projects, staff augmentation can be much less expensive than hiring full-time employees when accounting for hiring costs, benefits, bonuses, and termination costs. However, on long-term projects, especially those with a top-level CFO, the cost of staff augmentation may be similar to that of hiring a less experienced CFO in a full-time role. Also remember that, while training and management needs are usually reduced by staff augmentation, some level of onboarding and supervision will still be needed, depending on the project. Be sure to take all of this into consideration as you calculate the full cost and determine whether staff augmentation is right for you.
3. Hold Regular Meetings
It is important to remember that outsourced employees that work remotely may have contracts with other companies and/or live in a time zone different than yours. Having regularly scheduled online or phone meetings can make communication and accountability much easier.
Financial staff augmentation can be a great way to quickly ramp a business up or down. It can provide needed personnel and expertise while reducing the expense to hire, dehire and minimize risk. It can help a company become more resilient and flexible in uncertain times. As with any business decision, there are pros and cons to consider. If you are considering augmenting your financial staff, we invite you to visit PreferredCFO.com or contact us to learn more.
About the Author
Eric Dorfman is a growth- and results-driven CFO with over 20 years of diverse experience in strategic finance leadership for public & privately-held companies in a wide range of industries.
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