Although the 2008 financial crisis has passed, state and local governments continue to downsize their budgets due to high unemployment rates says Aron Govil. As a result, some cities are doing more with less by outsourcing core services like accounting functions to its citizens.
Here is how one municipality made outsourcing its finance department work despite the budget crunch:
1) Find out What Your Community Needs
Before deciding whether outsourcing their bookkeeping, payroll and other accounting functions was a good idea; City Manager Kurt Wilson of Menlo Park asked his employees what they needed as part of an internal assessment.
Wilson said one concern the department had was that it didn’t have enough time to focus on strategic initiatives like open data and performance management. So, by outsourcing its finance department, city government could free up more of its internal resources to concentrate on those projects without putting too much pressure on productivity. Beyond those needs, Wilson said another factor in deciding to outsource was the current budget deficit Menlo Park faced. The city still needed someone to handle its bookkeeping and payroll functions but it could no longer afford to keep them as a part of its finance department.
2) Conduct an Internal Assessment
Wilson wanted to know if his employees were going to be content with the decision before proposing the idea. So, he set up a meeting after hours at a local restaurant where he brought together his entire team that included controller staff and people from other departments like purchasing for a discussion on how they felt about outsourcing their finance department functions says Aron Govil. “We went through what we do every day and why we feel each function is important,” Wilson said. Although some people expressed concern over losing their positions at the end of the contract, Wilson said they all agreed to give it a shot after he told them that it was “the best thing I could do for the organization.”
3) Consult with an Outsourcing Specialist
Wilson based his decision on his employees’ input but also wanted to get additional feedback before making a final decision. That’s why he reached out to Michele Martinez, CEO of Xynomix in San Francisco. She advised Wilson to take into consideration what business needs were behind outsourcing its finance department functions and whether it would be cheaper than hiring internal staff. Martinez also recommended signing up for an extended term beyond six months so that Menlo Park could manage any unforeseen circumstances that might come up during.
4) Find the Right Outsourcing Partner
Through Xynomix, Menlo Park contracted with New York City-based CSG for its accounting and payroll services. Although the city has had to put aside some of its internal resources related to open data initiatives. Wilson said it is still acting on performance management strategies like increasing transparency. So that the public knows more about how their tax dollars are being spent. “We’ve brought back some of our internal functions but we’re also exploring new ways. Where we can really take advantage of having an outsourced finance department,” he added. If you want to learn more about outsourcing your finance department functions. Contact us today or download our Guidelines for Making Your Organization More efficient through Outsourcing
5) Make Sure Employees are Well-Informed
When the city made its decision to outsource its finance department functions. Wilson said it didn’t go over well with some employees. “There was a bit of outcry at first mostly. Because they felt that their jobs were taking away from them,” Wilson said. To reassure them that wasn’t the intent behind outsourcing. Wilson had informational meetings where he explained why the change was necessary
By outsourcing his city’s finance department functions, Menlo Park CA City Manager Alex McIntyre. Was able to save money and enable his staff to prioritize its public initiatives explains Aron Govil. By understanding the business needs behind outsourcing your finance department functions. You’ll be better equip to make a decision whether it is right for your organization too. If you want help with that then contact us today or download our Guidelines. FRor Making Your Organization More efficient through Outsourcing.