HR outsourcing comes in many shapes and sizes, from outsourcing basic payroll processing to a local CPA to working with an HR partner that offers the full suite of HR administration, HR technology, Benefits, Outsourcing, and more. This type of relationship offers all-things-HR under one roof is typically provided through a Professional Employer Organization or “PEO.”
But not all HR Outsourcing providers are created equal, offer the same range of services, or even provide the same level of support. It’s important to understand the key differences and what works best for your organization's specific needs.
Human Resource Outsourcing is growing rapidly in popularity due to the increased complexity and cost of HR-related administration and compliance, among other factors. While outsourcing just a few aspects of HR isn't uncommon, outsourcing the majority of HR functions to a PEO offers a very unique ability for the partner to address a wide range of HR while reducing overall HR costs for their clients. A PEO can reduce costs by grouping all clients together for greater buying power with insurance carriers.
The question of whether HR outsourcing is a good fit for you depends on a number of factors. Below are some of the most common.
HR Outsourcing is Good Fit for Your Organization if...
You need to focus more on growth over HR and paperwork.
The need to focus on growth is important for any business. But often, HR activities can pull key employees or resources away from a focus on growth. Also, organizations may not have the HR infrastructure to be positioned to grow efficiently. Partnering with a team of HR specialists across numerous domains is a fast and highly effective solution.
You need to control HR-related costs like Workers' Compensation, Benefits, Labor, and Wages.
Your workforce is likely your greatest expense. A PEO is one the best partnerships an employer can forge to maximize performance and minimize the cost of labor and HR. Whether it's to gain control over labor and overtime expenses, reduce human error, reduce the risk of future costly violations, increase workforce efficiency through technology, or many other areas, HR can drive company profitability related to your workforce. Outsourcing HR is an excellent way to address workforce efficiency and profitability.
You’re too small to offer competitive, affordable benefits.
In most cases, your people are the most important driver of your business’ success. As such, it comes as no surprise that your ability to attract and retain the best people hinges on your company benefits. A PEO offers savings on various benefits programs for small, medium and large employers alike.
As households stress continues to increase regarding the rising costs of healthcare, the importance of benefits offerings for employers cannot be overstated.
You need access to a team of HR professionals, including safety, payroll, benefits and employee relations.
HR professionals today are expected to be experts across numerous domains, and each can constitute a full time job. With HR Outsourcing through a PEO, employers gain access to a full team of HR experts for a fraction of the cost, including safety, wage and hour, employee relations, payroll, tax and benefits.
You’re interested in minimizing paperwork, payroll and HR administration.
By partnering with an organization that specializes in payroll and HR administration, your company alleviates significant non-revenue producing tasks. At a basic level, organizations are able to decrease costs associated with payroll processing while maintaining proper, accurate records. But also, employers gain access to experts who can assist with tax reporting, deposits and garnishments, and the implementation of HR technology, ultimately reducing paperwork and outdated processes.
You’d like to reduce employer liability and employment-related risk.
Whether it’s safety, wage and hour, employee relations, or beyond, your financial well-being is constantly at risk when you employ a workforce. Workers’ Compensation management, safety, and employee relations are just some of the most common liabilities and risk areas employers manage each day.
HR Outsourcing can be an invaluable resource in keeping you on track and in compliance. Certainly, administering payroll in accordance with federal and state law, including proper reporting of federal, state, and local tax is important. How you manage unemployment claims, ACA compliance, OSHA practices, and more takes resources from your business. HR Outsourcing through a PEO can address these challenges on your behalf. It starts with your Employee Handbook and HR processes.
You want access to modern HR technology.
Your company may still be operating on the timeless tradition of spreadsheets and filing cabinets. But many of your competitors are leveraging HR technology to minimize staff disruption, increase measurement, improve results, and attract the right type of workforce. If you're still managing spreadsheets for employee records, scheduling, and timesheets (countless other examples exist), you're spending endless hours of unnecessary time and real wages that could be avoided with HR technology. Innovation has hit the HR department as much as any other in the past 10 years. For companies not currently using a modern HR platform the opportunity cost and real cost can be sizable.
Consider a Professional Employer Organization for HR Outsourcing
A PEO relationship is an innovative and exceptional approach to HR outsourcing and benefits for employers. It offers unique and cost-effective ways to make HR a strength of your small, medium, or large organization, so that growth of the organization becomes priority.