HR outsourcing comes in several forms depending on the functions the company wants to outsource. The most inclusive option is a Professional Employer Organization (PEO). You can pick and choose what works best for your company, including the services that most appeal to your employees' needs. Using a PEO saves time and money while allowing business owners to focus on core business priorities, rather than spending their time on paperwork and administrative minutia. Equally importantly, HR outsourcing can help businesses become employers of choice since PEOs allow them to deliver the excellent quality of service and benefits that the top employees in their field want.
Studies find that PEO clients experience a return on investment of 27.2%. Businesses with PEOs can grow anywhere between 7-9% faster and have a 10-14% lower turnover. These stats are possible through the unique benefits associated with a partnership with a PEO.
Cost Savings
Partnering with a PEO allows businesses to access the PEO’s healthcare and benefits plans, negotiated on behalf of thousands of worksite employees by experts. As a result, employers that work with PEOs experience significant cost savings while still delivering the benefits they need to attract top talent.
Companies with great benefits and compensation see 56% lower attrition than those who do not receive high ratings in those areas. Proper benefits are the second most important factor when it comes to selecting a new employer. For employers, that means that great benefits package is essential--but they can also quickly prove costly. Working with a PEO drops those prices.
Instead of working with multiple systems and middleware, employers who work with a PEO gain access to an all-in-one, user-friendly HR software. This software takes a great deal of the administrative burden from companies who might otherwise need to struggle to accomplish those tasks. Much of the cost savings from working with PEOs comes from the fact that companies no longer need to hire additional HR representatives to function at full capacity.
Working with a PEO can also offer several other cost-saving opportunities:
PEOs help avoid payroll errors. Misclassifying exempt vs. non-exempt employees, for example, can lead to substantial fines for an employer. You may also end up needing to correct multiple costly errors when that misclassification comes to light.
Pay-as-you-go workers compensation insurance. You won't have to worry about coming up with an expensive down payment, so you can keep your cash outflow low.
Unemployment claims management. This strategy can help prevent unnecessary claims from raising your unemployment insurance rates.
Access the PEO's SUTA rates and SUTA rate management. This helps decrease the overall cost of your unemployment insurance.
Time Savings
In addition to cost savings for your business, partnering with a PEO can provide considerable time savings as well. A PEO can:
Allow your HR team to focus on creating a positive company culture. This company culture is critical to attracting and retaining top talent for your business. When you fail to focus on those important aspects of your business, you may be left struggling to bring the top talent --and you may not be able to keep employees when you hire them.
Handle benefits administration. Often, your employees have complex questions about their benefits. You don't want to steer them wrong, but your HR employees may not be experts in that specific program or policy, either. By using a PEO, you can delegate benefits administration, preventing your HR team from spending unnecessary time pouring over the complexities of those benefits.
Take over payroll and taxes. Handling payroll and tax responsibilities can leave your team with little time for other tasks. By turning it over to a PEO, however, you can ensure that everything will be done correctly with each cycle as well as freeing your team up for other important tasks.
Integrate time and attendance software. At Zamp HR, for example, we offer a mobile-friendly time and attendance software that contains geo-fencing and integrates with payroll to create a seamless user experience.
Risk Management
In addition to financial and time savings, your PEO can help mitigate many of the risks your business faces regularly. Risk management can help keep your business going strong even during times of uncertainty. A PEO may:
Provide on-site employee training safety for safety, sexual harassment, discrimination, and more. Make it clear that your company will not tolerate sexual harassment or discrimination in any form, and provide employees with the training needed to avoid those situations.
Ensure compliance with federal, state, and local laws. Make sure your team is up to date on the latest laws and regulations.
Prevent fraudulent unemployment claims. Fraudulent claims can carry a high price tag and substantial risk for your business, but a PEO can help you avoid them.
Human resource outsourcing with a PEO means more affordable and better benefits, HR representatives focused on creating positive company culture, and compliance with all relevant regulations. In short, outsourcing HR through PEOs provides everything needed to become an employer of choice while saving time and money on the side.
