Why HR Outsourcing Works
An expert's perspective on the benefits of outsourcing HR.
John G. Allen, vice president of sales for G&A Partners, recently spoke with NCR Silver, the makers of an award-winning, cloud-based point-of-sale (POS) system, to discuss the top reasons why businesses should consider outsourcing their human resources functions.
Read the full article over on the NCR Silver site.
What are the benefits of outsourcing HR?
Boosting the bottom line.
It's incredibly expensive for a small business owner to build the proper HR infrastructure they need internally. Partnering with an HR outsourcing provider or professional employer organization (PEO) allows employers to lower their operating expenses without experiencing any sacrifices in quality.
Access to high-quality benefits.
Outsourcing HR needs can allow you to gain access to Fortune 500-level benefits at an affordable rate. Employers who do engage an external HR company are able to take advantage of the firm's buying power on medical insurance and other employee benefit plans.
Expert HR guidance on complying with labor laws and regulations.
The costliest common HR mistake business owners make is waiting until something goes wrong to make an investment in their human resources functions, or dismissing the importance of new regulations until they are levied fines for noncompliance.
Outsourcing HR functions allows businesses to get expert help dealing with the complexities of human resources compliance and the hundreds of federal, state and local labor and employment laws, as well as to reduce their own risk by engaging with a partner that will share some of the liability of being an employer.
Freeing up time to focus on their core business.
Human resources management is an essential component of any business' success, but HR isn't typically a company's core business. Instead, companies are involved in manufacturing goods, marketing products or delivering services. Outsourcing those functions to a PEO or HR provider allows businesses to redirect and refocus the time and resources that had been previously dedicated to managing HR, payroll and benefits to other areas of their business.
Making the decision to outsource
Allen acknowledges that the decision to outsource HR is not one that should be taken lightly, and that choosing the right provider is essential to the decision-making process.
"When choosing an HR outsourcing provider, small business owners should primarily look at five main aspects: reputation in the marketplace; average client turnover rate; the breadth of available services; the technology platforms used to deliver services; and, of course, the price of services," Allen said.
"At the end of the day, small business owners need to carefully evaluate each of these aspects when making their decisions, because the relationship they have with their HR outsourcing provider is going to be key to the company’s success."
Setting a budget for outsourced HR services
Allen offers this advice for companies who are wondering how to set a budget when seeking outsourced HR services:
"Nailing down a budget for HR outsourcing services can be really tough at first for small businesses, mainly due to the fact that it can be hard to truly quantify what they’re currently spending to manage everything on their own. To put things into perspective, the average mid-sized business spends $2,000 per employee, per year on HR and related administrative functions when they manage them in-house. Depending on the level of service provided and the number of employees a business has, the price range for PEO services, specifically, can be anywhere between $100 and $150 per employee, per month."
Although it may be tempting for businesses to just go with the firm with the lowest rates, Allen cautions employers to make sure they evaluate every proposal carefully.
"While the firm with the lowest price may seem appealing at first, if they can’t really deliver the value or quality of services you’re looking for, it’s not going to be a successful partnership."
Ready to experience the benefits of outsourcing HR for yourself?
If you’re looking for a trusted HR partner that offers outstanding service, top-tier employee benefits plans and more than 20 years of HR experience, look no further. As a leader in the HR outsourcing industry, G&A Partners specializes in partnering with business owners like you who are in need of additional back-office support to design solutions that put time back in your hands – time to grow your business, time to develop new products, and time to spend with family and friends.
Learn how G&A Partners can help you achieve your business goals by calling 1-866-634-6713 or schedule a free business consultation.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.