Convenience drives outsourcing

When U.S.-based NASCAR SpeedPark expanded its operations into Canada, it shifted the responsibility — and the headache — for HR to an outsourcer
By Todd Humber
|Canadian HR Reporter|Last Updated: 07/21/2011

When NASCAR SpeedPark decided to go international, it chose Vaughn Mills, the new mega shopping centre just north of Toronto, as its first location outside of the United States.

The race-car themed amusement park’s HR department was ready to spring into action. After all, the Myrtle Beach, S.C.-based company had already launched four locations in the United States and its internal HR group was handling services for a workforce that numbered as high as 4,000 staff depending on the time of the year.

But it quickly became apparent that doing business in Canada was quite a bit different than in the U.S.

Jeff Rowles, accounting manager at Burroughs and Chapin, the parent company for NASCAR SpeedPark, said he started to open the door to outsourcers to see what services they could offer. It was the first time the SpeedPark had looked outside its own doors for HR help.

“We originally intended to research and look at just a payroll solution,” said Rowles. “We had intended to take care of human resources here on the stateside, but since this was our first international SpeedPark, we weren’t entirely familiar with the Canadian payroll laws.”

He got full proposals from a couple of vendors, and it quickly became apparent that a full HR outsourcing solution — not just payroll — made a lot of sense for the Canadian operation.

When he pulled the HR team together in South Carolina and told them they were considering completely outsourcing HR for the Toronto park, their eyes lit up like Christmas trees, he said.

“They said, ‘We don’t have to do the HR for Canada?’ They were very excited to hear about the possibility of outsourcing and not having to do that for themselves,” said Rowles. “We have felt like we have been able to effectively and efficiently handle HR in the U.S., but it was a bit of a scare going outside the country and dealing with laws we weren’t familiar with.”

The company chose ADP Canada to handle HR, and Rowles said SpeedPark was very happy handing over the work to professionals who understood the Canadian market. It also eased the liability on the company, Rowles said, because much of the liability for HR and payroll also shifted from SpeedPark to ADP.

How HR is handled in Toronto

Rowles said he doesn’t think the 90 employees at Vaughan Mills would notice much of a difference between HR whether it was handled by the company or by the outsourcer. NASCAR SpeedPark still handles the strategic HR functions, but almost everything else is handled by ADP.

“It’s almost 100 per cent turnkey with them,” he said.

Once a decision is made to hire a new employee, that employee is given a letter containing the terms of the employment. Once the employee agrees to join the company, that information is submitted to ADP and it takes over at that point.

ADP is fully versed on the company’s benefit plan and its payroll rules, and HR generalists employed by ADP staff a toll-free line open from 8 a.m. to 8 p.m. that SpeedPark employees can phone with HR questions.

“We handle everything,” said John Chang, vice-president of comprehensive outsourcing services for ADP Canada. “For new employees, for example, we walk them through all the required forms they need to complete, we handle the signing of the forms and forwarding of the forms for processing either to head office or to Canada.”

ADP even produces the employee handbook that SpeedPark gives to its Canadian employees.

“It’s a really cool relationship,” said Rowles. “We look at the ADP relationship as just an extension of us. They are the front-line defence. Employees might ask the accounting manager (in Toronto) an HR-related question, but he is attempting to train people to call ADP first.”

He said the Canadian employees are getting just as good — if not better — service than they would have if the company hadn’t outsourced HR.

“Employees tend to have as good as an experience as they would with an internal department,” said Rowles. “We would have had to bring on at least one more full-time person to handle the payroll in Canada, and we would not have been able to give employees the same type of service that ADP offers, so there’s no worries as far as getting good service.”

Employees who have a problem that isn’t being addressed by ADP can escalate it within the company, and the HR department in South Carolina will step in and help.

Rowles said the contract with ADP doesn’t tie NASCAR SpeedPark in, so if there are any major problems — something he’s not expecting — the company can walk away and look for another provider or bring HR in-house.

Does outsourcing save money?

Rowles said the jury is still out on whether or not the company has actually saved money by outsourcing its HR function in Canada.

“We do believe that we will save money, but it’s too early to tell,” he said. “It was done mostly for the convenience, but we do feel it’s very reasonable and we felt like it would be more cost effective. So far, everything has been excellent.”

At ADP, Chang said it is cheaper for most organizations to hand over administrative HR work to an outsource provider.

“They still retain the strategic role, such as taking on development of a compensation program or looking at a new benefits program. But they pass over all the administration functions to us, which is something that we are doing for many companies,” said Chang. “That’s why it is cost effective. We have the critical mass and we do it faster.”

ADP has been developing its HR outsourcing strategy for about two years now, starting with a few small pilot projects with companies with less than 200 employees. It officially launched its comprehensive outsourcing services last month.

Rod Dobson, president of ADP Canada Employer Services, said companies experiencing rapid growth are exposed to the inherent risk of shifting attention away from core competencies to manage complex internal processes such as HR and payroll administration.

“(Outsourcing) relieves owners and operators of back-office headaches so they can focus purely on managing growth,” said Dobson.

Add Comment

  • *
  • *
  • *
  • *