Nine Advantages of HR Outsourcing

Nine Advantages of HR Outsourcing

posted by: America's Back Office date: Nov 11, 2016 category: Blog comments: 0

Most business owners agree that their employees are their most valuable assets. As such, managing human resources has become a critical role in managing a business. Yet for some businesses, the various functions of the HR department are too comprehensive and complex to maintain in-house.

Keep in mind, there are several HR specialty areas, including payroll, recruiting, benefits, compliance and more. In some businesses, an HR generalist may be asked to perform more than one of these HR functions, and that can often result in less than optimal results.

In these situations, a business can achieve the same level of efficiency and workforce management by joining a professional employer organization (PEO) and outsourcing HR. The benefits of outsourcing HR are plentiful and can have a significant impact on your bottom line.

Here are the top ten advantages of outsourcing HR functions.

1. Cost Savings

Overhead costs associated with performing HR services are typically very high. A fully-functional HR department requires additional office space and highly trained and experienced HR staff. Many small businesses simply can’t afford this expense and find that it’s more cost-effective to outsource HR functions. Outsourcing HR helps reduce your costs and helps you avoid trying to financially maintain nonrevenue-generating back-office expenses. Furthermore, HR outsourcing costs are variable and can be reduced when business needs warrant.

2. Payroll and Accounting

The cost of outsourcing payroll is very cheap compared to the cost of maintaining an in-house payroll staff. The outsourced company can be responsible for employee pay slips, advising on tax and deduction questions and also offer a payroll analysis for accounting purposes. This frees up time in calculating the payroll and dealing with different and sometimes difficult employee situations.

3. Global Talent

One of the great benefits of outsourcing is expanding your perspectives. When HR functions are outsourced to PEO companies, you get your HR services performed by the best talent around the globe.

4. Risk Management

Employment and labor laws change regularly, and it can be difficult for you to remain up-to-date on regulations that affect your workplace. Outsourcing firms employ HR professionals whose purpose is to stay current on federal and state employment laws. This will help you comply with these laws and avoid costly lawsuits brought on by employees. HR firms also maintain and audit company policies and practices to ensure your organization and your employees’ best interests are protected.

5. Efficiency

Maintaining an efficient and productive workplace is critical. Outsourcing HR functions creates greater efficiency within human resources systems. Advanced human resources technology utilized by outsourcing providers, helps streamline important HR functions such as payroll, benefit administration and compliance management. Outsourcing helps you and your managers spend less time on paperwork and more time dedicated to improving the efficiency and effectiveness of your workforce.

6. Employee Development

Outsourcing HR functions can help you manage employee performance and development. HR providers implement performance management plans to ensure employees comply with company policies and procedures and successfully meet your business goals. Outsourcing firms periodically monitor employee performance and report findings to management. This reduces the workload of your managers by minimizing their administrative responsibilities.

7. Help with compliance

This is one area where many small businesses really struggle to keep up, especially with the changing laws pertaining to hiring, insurance claims management, and benefits regulations. The greatest challenge is that failure to comply can lead to serious financial consequences. Outsourcing HR functions to a trusted provider can help you understand and take action to comply with these laws and regulations.

8. Reduce Employment-Related Expenses

While there are hundreds of corporate cost-cutting areas to consider, labor costs account for one of the largest operating expenses in a business. Beyond payroll and tax overhead, other expenses are related to health insurance premiums, workers’ compensation insurance, recruiting fees, payroll processing, and legal costs.

9. Health Insurance Benefits

As our economy improves, employers are looking for ways to incentivize and motivate their staff. PEO firms provide small employers the unique opportunity to offer their staff a robust and comprehensive array of employee benefits that are typically available to only the largest corporations. These robust offerings include a wide range of major medical plans and voluntary benefit offerings.

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