Running a business comes with more responsibility than most people realize. The administrative requirements to stay compliant while growing a successful business can overwhelm most. Some business owners will hire office managers, an HR generalist, interns, etc., but some completely put off the HR needs of their company. This can cause major issues down the line with compliance issues, payroll dilemmas, job description disputes, and the list goes on.
The Professional Employer Organization (PEO) industry exists to help business owners outsource their back-office functions to focus on the real reason they developed their company, which is to generate revenue.
In the 12 years that I’ve been working for GMS, I’ve met with thousands of business owners in hundreds of industries. While every company has their unique problems and issues, some issues tend to be universal. In the 26 years that GMS has been in business, we have found that most business owners…
- Think they’re paying too much in worker’s compensation premiums and not getting enough in return for it.
- Want to offer their employees great health insurance, but don’t want to pay the ridiculous premiums being charged.
- Don’t fight their unemployment claims because “it’s just not worth it and they’re going to get it anyway.”
- Hate the stupid bureaucratic paperwork they have to go through, keeping them from more important tasks.
- Have trouble finding good employees.
- Have a hard time keeping them when they do find them because they’re losing them to other companies with better wages and benefits.
Did I miss anything?
The end of a calendar year usually causes business owners to do two things: Review the past year and learn from its successes and failures. They also start looking to the new year and set their expectations of what they want to accomplish. While a Professional Employer Organization (PEO) can’t help you with the former, it can help you tackle the latter.
As the years go by, HR administration continues to evolve. The growing need for improved operational efficiency and compliance has led more business owners to turn to HR experts for help managing crucial business functions.
This expansion has been so great that the Professional Employer Organization industry has nearly doubled to around $168 billion dollars in the past six-and-a-half years. The need for human resource outsourcing isn’t just a need for one or two different industries, as HR providers saw a 23 percent or greater increase in business from blue collar, white collar, and grey collar businesses.
While businesses often turn to PEOs for help with benefits administration and risk management services, there are other additional HR functions and benefits that have become more popular in recent years. Two of the more intriguing recent trends in human resource outsourcing is a move toward investing in online payroll and workplaces wellness programs.
It’s difficult to run a small business without much support, which is why more employers are turning to human resource outsourcing. According to market research company Global Industry Analysts, Inc., the HR outsourcing market is projected to grow to nearly $54 billion by 2020 as business owners turn to other organizations for help managing important HR functions.
So why have so many businesses turned to HR outsourcing? Here are four big reasons:
- Time savings
- Improved compliance
- Better recruitment and training capabilities
- Cost savings
The benefits speak for themselves, so now it’s a matter of finding out exactly what business responsibilities you can outsource and which ones make the most sense for your business.
As a business owner, you get used to making tough decisions every day. One critical question is whether you should handle every human resource function internally or if it’s in your business’ best interest to consider outsourcing.
Why did you start your business? Maybe because you are good at doing something. Maybe because you can offer a service that not many others can.
You worked hard to grow your business, to show everyone why they should use your company for their needs. You are a professional, and nobody knows your business better than you do. So why would you ever consider outsourcing back office tasks to a PEO if you can do them yourself?
At the end of the day, we all want the same thing: to be successful. Sometimes, to succeed we need to embrace the fact that we can’t always do everything ourselves.
It’s likely that as a small business, you don’t have a dedicated HR team. You may divide the tasks amongst a group of people, you may spend your nights and weekends making sure you’re keeping up to speed on the various HR regulations out there, or, even worse, you ignore it all together and just ‘wing’ HR management.
If you find yourself spending more and more time dealing with HR functions and less and less time growing your business, you have a couple options: hire a professional employer organization (PEO) to handle the tasks for you, or hire someone dedicated to the management of your HR needs.
Of course, we’d love it if you chose the option of hiring a PEO, but if you opt for hiring an HR manager, we’ve compiled a helpful list of 8 traits you should watch out for.