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.

What Falls Under Human Resource Outsourcing?

Human resource outsourcing can involve more than just the hiring, training, and potential firing of employees. While those are important tasks, human resource management covers a wide range of other crucial administrative functions. 

However, not every outsourcing company can handle every aspect of human resources. Some specialize in specific focus areas, leaving you out of luck if you need help with some tasks or forcing you to find another vendor if you have multiple functions where you could use assistance. 

A Professional Employer Organization (PEO) allows you to turn to a single, trusted partner for all your human resources needs. A PEO provides comprehensive HR services for business of all sizes, including all the following functions.

Traditional HR Responsibilities

Your employees are a critical part of the success of your business. That’s why 78 percent of business leaders name retention as an important or urgent area of focus for their company. The right HR outsourcing partner can offer the HR support you need to improve retention rates. 

Outsourcing traditional HR responsibilities to a PEO can help your business find the right employees for your business and prepare them for their roles through employee recruiting and training services. From there, a PEO can also provide performance management services to keep track of performance, develop rewards programs, and assist with promotions and terminations. 

Payroll Outsourcing

Payroll management is a time-consuming task that can consume your work schedule, with nearly 30 percent of small business owners spending more than six hours each week on payroll tax administration alone, according to the National Small Business Association. Failing to pay taxes on time or other related mistakes can also lead to financial penalties.

A PEO can help you save time and money through payroll administration. This allows true payroll experts to manage your payroll taxes so you can reduce your tax liabilities and responsibilities and make sure that you’re compliant with any payroll rules and regulations. A PEO can also give you access to online payroll services, allowing you to keep track of payroll information, offer access to paystubs, and track time in one web-based location.

Risk Management Outsourcing

Another advantage of outsourcing HR is that it can help you can safeguard risk management practices associated with both workers’ compensation and unemployment claims. When it comes to workers’ compensation, you should worry about not only limiting injuries in the workplace, but also the ongoing costs of workers’ compensation insurance. 

Whether you run a construction company or a quiet office, there is always the risk of a workplace injury. According to Occupational Safety and Health Administration, “it has been estimated that employers pay almost $1 billion per week for direct workers’ compensation costs alone.” A PEO can help you limit workplace injuries and rising costs through a combination of cost containment and loss prevention strategies. These include workplace safety measures, such as safety training programs, developing a safety manual, and creating guidelines that reduce injury risks. By minimizing exposure and keeping good records, you can receive rate discounts, as well as making your business a safer place.

Another issue is the impact of unemployment taxes on your bottom line. While unavoidable, these taxes can be managed, you can still take measures to reduce them so that you limit the financial damage to your business. A PEO can create or improve employee handbooks and detailed job descriptions that make work expectations clear. PEO’s can also keep records of any written warnings, examples of poor performance, and other documentation that can help protect you against unemployment claims that will lead to higher rates.

Benefits Outsourcing

A good benefits package plays a key part in attracting and retaining key talent. Just consider the following information from a 2017 Harvard Business Review article on employee benefits:

• Nearly three in five people name benefits and perks as a top consideration before accepting a job
• 80 percent of employees would choose additional benefits over a pay raise
• 88 percent of people said better health, dental, and vision insurance would receive either some or heavy consideration when choosing a job

Employees appreciate great benefits, and outsourcing benefits administration to a PEO can provide you with more buying power to offer a better group health insurance coverage to your workers. Not only will this please your employees, it will as save you from spending time administering the plan yourself. A PEO can also offer assistance with other attractive benefits, such as:

• 401(k) plans and profit sharing
• Supplemental insurance plans
• Workplace wellness programs
• Telemedicine

A Single Human Resource Outsourcing Partner

Once you decide to outsource HR functions, you need to figure out who you’re going to turn to for help. With a PEO, you can work with a single company for all your HR outsourcing needs.

As you can tell, there are several HR functions that require regular attention. Partnering with a PEO gives you access to HR specialists who specialize in all areas of human resources, allowing your business to take advantage of any or all the services we provide. Contact GMS today to talk to one of our experts about HR outsourcing and what we can do to strengthen your business and take the burden off your shoulders.

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. 

To insource or to outsource may not be as difficult of a question as you may think. Here are four reasons why it may make sense for your business to consider human resource outsourcing.

Time

Your time is crucial. The problem is that you only have so much time to spread around, even if you’re working extra hours each week. 

A survey by business advising organization The Alternative Board found that the average small business owner worked around 50 hours per week, but that only 32 percent of that time was spent working on the business itself. According to a survey by the National Small Business Association, roughly 30 percent of small business owners spend more than six hours each week on payroll tax administration, and that’s just one of many HR functions that you have to deal with. 

You can’t slow down time, but you can outsource key HR functions. Not only will this free up critical time for you to spend on core business needs, your HR functions be handled by people who are experts in their respective fields.

Compliance

Let’s face it; you likely didn’t train to be a HR specialist. You may be able to handle many HR functions, but you might not have the time or know-how to keep up with labor and tax laws, compliance regulations, and avoid mistakes that could lead to everything from financial penalties to litigation.

Regardless of if you run a small five-person organization or a business with 50 employees, there are specific HR processes that you need to follow. Over the past five years, compliance rules and regulations have increased, adding even more concerns for your business. These compliance laws cover everything from proper employee classification, safety requirements, and more. A PEO can help you track everything you need to know and help you stay compliant so that you avoid future penalties.

Recruitment and Training

A good company needs good employees. Outsourcing certain HR functions can help your business attract top talent and retain the workers you already have.

Recruitment is about more than just hiring a job candidate; it’s about hiring the right candidate. A PEO can help you set up an efficient, organized process that allows you find people who are a good fit for your company. These experts can deal with the interview process, review applications, post job ads, evaluate candidates, and other time-consuming tasks, allowing you to speak to the most qualified candidates so that you can decide who’s right for your company.

Once you hire a new employee, a PEO can also ensure that they receive proper training. The Society for Human Resource Management cites that “66 percent of companies with onboarding programs claimed a higher rate of successful assimilation of new hires into company culture.” A PEO can set up training programs that are customized to your business. This helps your new employees be properly prepared for their jobs so that they are more likely to stay at your company and succeed.

Money

Of course, the decision to outsource HR functions can come down to the investment. While some business owners might think of hiring an outside company as just another expense, professional HR management can result in notable savings across several HR functions.

Remember how we already discussed how HR outsourcing helps you save time, stay compliant, and improve recruiting and training? There are plenty of savings to be found in all those areas.

To start, time is money. The ability to free you up to work on building your business can be a huge asset to your business. That free time can be spent focusing on strategic planning, marketing efforts, and sales tasks, all of which can help you bring in additional revenue. That’s better than spending hours staying up-to-date on the latest compliance laws.

Speaking of compliance concerns, those penalties can really cost your business. Avoiding HR penalties keeps you out of the government’s crosshairs, protecting your business from unexpected fees, such as payroll tax fines or penalties associated with a safety violation. In addition, a PEO can also employ cost-prevention strategies to help lower unavoidable expenses, such as unemployment or workers’ compensation rates. 

There’s also all the costs associated with recruitment and training. In 2016, SHRM found that the average cost per hire is $4,129. Add that to an average cost of $1,208 for training and development and you have a pricey investment. A PEO can help your company make that investment worthwhile, finding and training the right person so that your new employee doesn’t leave in less than a year and force you to start the process all over again.

Outsourcing your HR to a PEO can also lead to additional cost savings due to economy of scale. Since a PEO manages benefits administration and other HR functions for several companies, they can give your company greater buying power that can allow you to get more for your money. For example, your newfound buying power can give you access to a better benefits package, which can help you attract and retain that top talent you want.

Invest in Human Resource Outsourcing

Business owners have plenty to worry about. HR outsourcing is an investment that can help you strengthen your business and save you money in the process. Contact GMS today to talk to an expert about how a PEO can help your business through HR outsourcing.