Human Resource Outsourcing | How-to Guides for running your business from Business.com

Most businesses with fewer than 50 employees don't have a designated human resources (HR) manager, let alone a full-fledged HR department. Instead, business owners often hand off HR tasks to employees who have little or no experience in the arena or simply tack them on in addition to an employee's regular job requirements.

Either way, these methods don't produce the best results. A better solution, which more and more small businesses are discovering, is outsourcing HR tasks to professional employer organizations (PEOs). PEOs can handle a single HR assignment or cover the gamut of HR duties. Outsourcing your HR needs can:

Reduce labor costs
Allow owners and managers to focus on core competencies
Improve compliance with state and federal laws and regulations
Increase productivity
Eliminate employer liability
Increase employee retention

Action Steps
The best contacts and resources to help you get it done

Get to know PEOs

PEOs provide a wide range of HR services, including: payroll; risk management (workers comp, safety inspections); HR management (recruiting, hiring); and employee benefits (health care, 401(k) administration).

I recommend: Discover how to select a PEO at the National Association of Professional Employer Organizations (NAPEO), which also includes a search function to find a PEO in your area. StaffMarket.com provides an overview of the various types of PEOs, the services they provide and their pricing methods. HROplus offers free assistance in helping businesses locate the best PEO for their needs.

Outsource employee benefits administration

By outsourcing benefits administration, you not only save time, but you also gain bargaining power for competitive rates in health and dental plans, flexible spending accounts, 401K plans, employee assistance plans and life insurance.

I recommend: TriNet offers all benefits administration and manages annual enrollment for companies large and small. Administaff handles adoption assistance, credit union membership and educational assistance in addition to typical employee benefits, such as health and dental plans.

Outsource recruiting and hiring

Streamline the process of hiring new employees by outsourcing the recruiting process.

I recommend: Locate headhunters, executive recruiters and staffing agencies in your area by searching the Headhunters.com directory. Find out how to choose a staffing firm at the American Staffing Association (ASA) Web site. Search the ASA database by location, type of placement and occupational category to find a staffing agency that fits your needs.

Outsource risk management

Risk management refers to the development and administration of safety programs and workers compensation programs.

I recommend: Workforce Solutions provides job site safety inspections, development of safety and workers compensation programs and assistance in OSHA record-keeping. HR By The Hour supplies HR support as you need it in areas such as sexual harassment training, legal terminations and preventing employee lawsuits.

Outsource payroll

Handing off payroll functions is one of the oldest forms of HR outsourcing and also one of the most important.

I recommend: ADP, one of the leading payroll companies, has a small business division that provides the specific services, tools and resources you need. SurePayroll offers online payroll management for small businesses and enables you or a manager to input employee hours and, within minutes, print checks or have money direct-deposited.

Tips & Tactics
Helpful advice for making the most of this Guide

By hiring a PEO, you aren't relinquishing control. PEOs will simply provide HR support for you and will consult with you in making decisions.
To decide if you can afford to outsource, make a list of all of the administrative HR tasks that you and your staff currently perform, the time they require and what isn't getting done. Then assess how much this time costs in the form of man-hours to determine what you're currently paying for HR. Also take into consideration the discounts and better rates a PEO can obtain for numerous benefits.
Make sure your PEO is a member of NAPEO; members are provided with up-to-date laws and regulations for HR issues.
If you can only afford to outsource one task, make sure it's the one that's the most time-consuming or the one where the most mistakes could be made, such as payroll and tax withholding.

The official source of Human Resource Outsourcing is
the Human Resources Management page at Business.com

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