ONES TO WATCH in ’94 : THREE THAT MAY BE KEY : He’s Riding Trend of Contracting Out Management Jobs : Administration: Howard Derman has found a comfortable niche as a free-lance personnel director.
Back when he worked for the Irvine Co. in the early 1980s, Howard Derman watched with interest as billionaire owner Donald Bren hired outside firms to handle property management tasks that previously had been handled inside the real estate giant.
He sensed a trend--maybe even a revolution.
A decade later, Derman has seen it unfold. As a personnel director for hire who spreads his expertise among more than 30 companies, the sandy-haired executive is riding the crest of the “outsourcing” boom.
Squeezed by the recession, companies have begun to look to outside vendors for far more than guarding the front gate or serving chicken enchiladas in the plant cafeteria. Many companies now turn to contractors for payroll, data processing, marketing and other functions they previously did themselves.
Some companies are going so far as to adopt the trendy concept of the “virtual corporation”--one in which the extraneous costs of doing business are shaved to an absolute minimum by outsourcing all but the most-core functions.
But personnel traditionally has been a ticklish area. The administrator presides over systems of hiring, firing, discipline and rewards--sensitive issues to which only the highest management is normally privy. Outsiders seldom are invited in.
Over time, though, personnel tasks have become increasingly complex. Today’s human resources directors face tangles of laws and regulations and the emergence of workplace issues like sexual harassment and drug testing.
That’s where Derman and his ilk come in.
To grow, many small- and medium-sized companies need expertise in personnel matters, yet they neither can afford nor need a full-time, $100,000-a-year expert.
So Derman rents himself out as their outside personnel administrator on retainer or as a consultant. He also practices what he preaches, contracting out to handle some of the more mundane work load.
In most cases, he said, being an outsider helps.
“I’m coming forward with the only opinion where I have no hidden agenda,” he tells company presidents who hire him. “I’m basically there to present an opinion as their confidant.”
As the sole employee of The Howard Group, the 38-year-old Derman said his business has doubled annually since he started three years ago. He won’t disclose details, but Derman says his income is comfortably in the six-figure range.
His clients range from a Mercedes-Benz design studio in Irvine to a doctor’s office in Beverly Hills. Because his clients are situated fairly close together, Derman manages to log only about 25,000 miles a year on his blue Infiniti J30.
When Eastwood Insurance Services increased its staff from 25 to 100, it called in Derman for special tasks, like creating an employee handbook and reviewing occupational health and safety guidelines.
“It’s just so difficult to keep up with all the federal and state guidelines. He is a godsend,” said Judi Partridge, owner of Fullerton-based Eastwood. “Now that my company is so big, we are going to use him to develop better people skills.”
Derman also works for Pick Systems, an Irvine company that has developed a computer operating system and has had its share of employee purges under mercurial founder Dick Pick. Derman’s duties there include both recruiter and hatchet man.
“We really use him to his fullest,” said Mary Carpenter, Pick’s executive assistant. “We couldn’t get along without him.”
Derman said he allows executives “to vent” so they then “settle down and can objectively move forward.”
Derman honed his skills at two of Orange County’s better-known computer-related companies--AST Research Inc. in Irvine and Micro D Inc. in Fountain Valley, forerunner of Ingram Micro Inc.--during their periods of peak growth.
Leaving those cushy jobs for the uncharted territory of self-employment was, he admits, a little scary. “I was strictly going by my gut instincts,” he said.
But he has no regrets.
“I can use my expertise and skills in different corporations,” Derman said. “When you can see positive results in diverse businesses, from an auto dealership to a manufacturing company to a hair salon, it’s very rewarding.”
Howard Group, At a Glance
* Company Name: The Howard Group
* Headquarters: Irvine
* What the company does: Acts as human resources administrator for small and medium-sized companies, allowing them to concentrate on their core businesses.
* Owner: Howard Derman
* No. of employees: 1
* Revenue: “In the six figures” in 1993.
* Quote: “Companies have seen they no longer have the in-house experience to handle problems that didn’t go away just because they have downsized.”
--Howard Derman
