What Businesses Gain from a Strategic Human Capital Approach

With the media and other external entities scrutinizing companies’ diversity, equity and inclusion efforts, businesses are also managing the risks of internal and external reputational harm when HR compliance efforts fail.

Levine Leichtman Capital Partners-backed Resolution Economics (ResEcon), a provider of labor and employment and forensic accounting services, recently expanded its ability to address clients’ human capital strategy needs with the acquisition of Berkshire Associates. Columbia, Maryland-based Berkshire specializes in helping federal contractors meet their contractual affirmative action compliance obligations. Berkshire Associates’ President Beth Ronnenburg highlighted the importance of combining diverse areas of human capital expertise, emphasizing that “business organizations want a single human capital strategy that is compliant, mitigates risk, manages employee engagement and promotes the business’s overall corporate values. To achieve this, you often need a team of experts, such as compliance consultants, data analysts, labor economists and industrial/organizational psychologists who can look at the same problem from different perspectives.”

The broadened expertise and capabilities flowing from the acquisition allow ResEcon to serve as a “one-stop shop” for human capital management services. This results in several efficiencies for clients. For example, integrated HR outsourcing services deliver lower administrative and project ramp-up costs due to shared knowledge of companies’ data systems and HR processes. Similarly, using the same workforce databases to solve multiple HR compliance challenges results in fewer data transfer, maintenance and security concerns. Perhaps most important, an integrated HR outsourcing service develops deeper knowledge of an organization’s business operations and provides the organization with a continuity of practice among myriad overlapping HR obligations.

Integrated HR outsourcing services deliver lower administrative and project ramp-up costs due to shared knowledge of companies’ data systems and HR processes.

ResEcon Partner Rick Holt described the importance of these synergies: “Companies are seeking an HR services firm that can help manage multiple human relations concerns using the same workforce data, while solving complex problems that have implications for interrelated HR compliance obligations.”

An example of how integrated HR outsourcing services can help employers comply with various HR obligations more efficiently and strategically is management of pay transparency, pay reporting and pay equity obligations. In recent years, the U.S. Department of Labor and the Equal Employment Opportunity Commission have focused their enforcement efforts on ensuring fair pay for employees. At the same time, states such as California, Colorado, Illinois and New York, have passed robust pay transparency and/or pay reporting laws. For global organizations, the European Union requires that companies share information on employee salaries and act if their gender pay gap exceeds certain thresholds. In the past, many employers managed these pay transparency obligations individually, perhaps by state or country. With so many overlapping compliance obligations, more companies are seeking an integrated approach to compensation-related compliance that balances the full range of organizational and business objectives.

Since ResEcon’s acquisition of Berkshire Associates in 2022, several opportunities have already arisen to leverage ResEcon’s broadened capabilities and provide additional services to existing clients.

For one, ResEcon has worked for the past several years with a major U.S. telecommunication company to implement pay equity analyses on an annual basis. The company recently found itself in need of federal contractor compliance assistance and audit support. ResEcon was able to leverage its new capabilities in the contractor compliance space to step in and assist the client with affirmative action plans and mediation with the Department of Labor.

Berkshire also has worked with a major regional hospital system for several years, providing affirmative action plan support. When this client found itself involved in a contentious and potentially high stakes government audit of its hiring and compensation systems, Berkshire was able to pull in labor economists and IO psychologists with the statistical knowledge and litigation background to assist with rebutting the agency’s claims.

Finally, when the Department of Labor recently released a federal contractor audit list and immediately began scheduling organizations for review, the combined firm was able to quickly scale up and efficiently address the urgent audit support needs for the combined firm’s full range of clients.

As these case studies show, it has become increasingly apparent to U.S. corporate leadership that the escalating scope, complexity and consequences associated with HR compliance mandate a thoughtful, unified approach that leverages the best expertise available. This elevated demand for HR consulting services motivates and justifies consolidation in this space, including ResEcon’s acquisition of Berkshire Associates. The integrated HR outsourcing model built by firms like ResEcon will continue to grow as companies look to address a broad range of human capital strategy needs in an ever-changing environment.

Lynn Clements oversees the pay equity, HR services and audit defense practices at Berkshire Associates. Throughout her career, Clements has provided clients with strategic insight and practical compliance and risk management guidance.