Fast growth characterized the experience of Kara Homes in recent years, but HR struggled to keep up with its rapidly expanding workforce. That is until the company began outsourcing payroll, which opened the doors to so much more than paychecks.
As one of the fastest-growing builders in the U.S., East Brunswick, NJ-based Kara Homes faces the usual growing pains any similar company experiences: keeping up with employee services as the number of workers swell. Founded in 1999, the home builder in the past seven years has rapidly grown headcount during one of the most explosive real estate growth periods in the state’s history.
But as a small business with about 300 employees today, the company struggled to meet its HR needs. Because growth has been exceptionally robust, Kara Homes found itself grappling with payroll services that required significant manual attention when it came to issues such as 401(k) contributions and other payroll deductions. Furthermore, the company did not have its time and attendance system integrated into payroll. Another one of its needs was for capturing detailed financial information for payroll activity.
“We at any one time have about 30 construction sites,” explained Bob Kessler, the director of HR for Kara Homes. Having so many different crews made it difficult to allocate labor costs to each job and made time and attendance more complicated, he pointed out. The company needed to improve process efficiencies without making significant investments to meet those needs.
That’s when the company decided outsourcing could offer the process knowledge and efficiencies Kara Homes needed to help with its rapidly growing business. In April 2003, it turned to CheckPoint HR, an Edison, NJ-based provider of mid-market payroll and other HRO services, to help realign its processes and cut costs. Kessler said the vendor quickly brought the company up to speed.
Kara outsourced payroll and additional services to CheckPoint HR initially for 130 employees. Since then, the number of lives has more than doubled, with the provider offering payroll processing, access to its HRMS system, and benefits administration. But the real value to Kara has been more than just having outsourced services; Kessler said improved services have brought other benefits to employees.
“We basically looked at CheckPoint HR as a way to automate a lot of what we were doing,” he said, noting that one significant improvement was in how 401(k) contributions were made. “We were able to have CheckPoint HR develop a [payroll] interface for us to electronically transfer funds to the record keeper and get those contributions invested a lot more quickly and cut down a lot of manual intervention here.”
One form of automation is integrating time and attendance data generated by the company’s Datamatics software into CheckPoint HR’s payroll services. This allowed for more accurate payroll processing. In addition, the provider helped integrate all payroll-related expenses into Kara Homes’ general ledger, enabling company officials to easily access detailed reports that they couldn’t get before. As a result, HR was able to save about eight hours on each payroll processed.
Time savings also came from processing worker’s compensation claims. Because it uses four comp codes, annual audits had taken one or two days to complete. When the company began outsourcing, it was able to reduce the audit time to a mere hour. CheckPoint HR’s HRMS also allowed Kara Homes to easily generate quarterly reports. “It allowed a non-programmer to write reports,” Kessler said.
Kessler admits that he hasn’t tapped into all that the provider has to offer. For instance, he said, the company may be able to scan documents electronically to keep on file or develop management reports for dissemination in the field. Self-service, while available, has proven more difficult for the company to implement because of the field nature of the business. He noted that outsourcing has provided the company with more payroll functions than ever before and that its service provider makes continuous improvements in functionality.
Tim Padva, the president of CheckPoint HR, said Kara Homes, like many other mid-market buyers, see the value of outsourcing beyond cost savings and transactional services. “The goal for Kara was to reduce costs and streamline operational efficiencies. We have worked toward that goal from the beginning and expanded beyond that each quarter,” said Padva. “We live, drink, and sleep our system so that we can seamlessly provide integrated services, not only in payroll, but all functions of HR and benefits. CheckPoint HR’s web-based system enables a client like Kara Homes to reduce their administrative workload and think more strategically.”
And that’s the point of HRO—buyers get the best practices developed by providers without having to exert the effort. It’s a benefit that buyers such as Kessler and others are leveraging everyday.
