The Benefits of Outsourcing Your HR Services

Aug 17, 2017
| Michael Altiero

HR Outsourcing Benefits

Human resources is more complicated, complex and regulated than ever before. Companies of all sizes have had to deal with the changing landscape of HR. Large employers have human resource departments that can consist of hundreds of employees to deal with all the intricacies that go into this key business function. SMBs, however, are another story.

Many smaller companies lack the manpower and resources necessary to properly execute HR in today’s business world. This can place additional stress on owners, leaders, employees and companies. Fortunately for SMBs, there is a solution to the growing complexities and stress involved in human resources: outsourcing your HR services.

HR outsourcing isn’t a new concept and it’s a common option for businesses today, especially SMBs. However, outsourcing HR services has been trending upward in recent years, especially as healthcare policies become more uncertain and complex. This is because of the many business benefits HR outsourcing can provide small businesses.

In this post we take a closer look at some of the benefits SMBs can get by outsourcing their HR services and help you answer this important question – Is HR outsourcing right for you?

1) Risk Management and Compliance Expertise

Perhaps the biggest area of HR where SMBs struggle is with risk management and compliance. The ever-changing landscape of employment law can cause major headaches for business leaders, especially when HR isn’t an area of expertise. Even having a dedicated HR person may not be enough to adequately stay on top of local, state and federal law.

Partnering with an HR outsourcing organization provides SMBs with access to risk and compliance experts who will help with this incredibly important area of a business. These experts can help with solutions that include workers’ compensation claims, ensuring safe work environments, Affordable Care Act (ACA) regulations, immigration law, and OSHA.

This provides a great deal of value to business leaders. By having a trusted partner to assist and plan for risk and compliance, SMBs are better positioned for success and growth.

2) Access to Better, More Competitive Benefits

Employees of small and mid-sized businesses want great benefits. However, this is easier said than done for many SMBs. This is another area where outsourcing HR can greatly assist small businesses.

Partnering with an HR Outsourcing company can allow SMBs to offer the same benefits (sometimes even better!) as Fortune 500 organizations. Needless to say, this can be a game changer for small businesses. Being able to offer great benefits allows SMBs to better compete with large companies for top talent. Not to mention that benefits can greatly improve employee retention and help lower turnover rates.

Whether it is better health insurance plans, improved 401(k) offerings, employee assistance programs (EAPs), or HSAs, being able to offer better benefits will have numerous impacts on an organization. Being able to compete with larger companies allows SMBs to grow.

3) Improved Payroll Administration

Another extremely important – and often stressful – area of human resources administration is payroll. Working with payroll software can be time consuming and challenging. And inputting incorrect information can cause issues with employee paychecks, which lead to internal problems for a business.

Many outsourcing companies provide their own payroll software and tools that are easy to use and allow for flexibility. In addition, these companies also take control of W-2 tax compliance and filing that meet local, state and federal requirements. This saves SMB owners time and resources that can instead be used to focus on business growth.

4) Training and Development Programs

Employees are the backbone of all successful companies. We have already discussed how outsourcing HR can provide access to better benefits, which can improve recruiting and retention. Another thing that can help in this area is providing employees with training and development programs.

Assisting with employee development is critical to business success. The costs associated with employee turnover, especially for SMBs, are higher today than ever before. By providing employees with access to training and development tools, not only are employees setup for future success, but so is the business.

These programs are also a great way to boost employee engagement and build a company culture that truly values employees. These benefits cannot be understated, especially for smaller businesses.

5) Access to Better HR Tools and Technology

This has already been mentioned and hinted at in the first few examples, but most HR services and outsourcing companies offer their clients innovative, easy-to-use technology and tools. Whether it’s for learning and development, payroll services, time and attendance, scheduling, or performance management and benefit administration, to name a few, technology enables clients to use and access all these services seamlessly.

The benefits of these tools extend beyond just business leaders. Employees, too, should have access to most of the technology, so offering easy-to-use tech will help employees take full advantage of all that is offered to them. Also, keep in mind that employees today, especially younger workers, have higher expectations when it comes to technology. Better tools and tech can help with recruiting and retention, too.

6) Save Money on HR-Related Costs

After reading the previous benefits, you may find this one hard to believe, but it’s true. A full-time HR department costs a lot of money, and while it makes perfect sense for large companies to invest in an internal human resources team, it may benefit smaller business to outsource their HR services instead. This is especially true for growing companies, as small businesses can save more money on outsourcing as they grow larger.

In addition, should an SMB run into any compliance or regulatory issues, the financial consequences could be devastating. As we have already mentioned, working with an HR services company can help take care of potential compliance and risk issues should they arise. It’s one less thing small business leaders need to worry about, all while saving money that can be used on other areas of the company!

Is HR Outsourcing Right for You?

While these benefits may sound appealing, it’s important to keep in mind that outsourcing HR services isn’t for every company. Each business is unique, and circumstances differ from company to company. The best thing to do if you are considering going this route is to take a step back, do proper research, and determine if HR outsourcing can help your business moving forward. You may find that the secret to growing your business is to partner with an HR services company!

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