Guide to Outsourcing Your HR Function

Most small business owners and professionals don't want to be bothered by the headaches and red tape involved in managing their human resource function. Savvy owners are turning to the emerging Professional Employer Organization (PEO) Services.

A PEO provides an integrated, cost-effective approach to the management and administration of the human resources functions of its customers. It does this through the practice of “co-employment” - contractually assuming substantial employer rights, responsibilities, and risk by establishing a long-term, employer relationship with its customer's employees.

Under a co-employment relationship, the PEO:

Handles payroll and employment taxes

Ensures human-resource compliance

Manages workers’ compensation, work place safety, and risk management

Provides and manages employee benefits and retirement programs

Monitors changes in and provides guidance regarding compliance with employment-related laws

...and much more

Yet, the customer retains sole responsibility for such key functions as managing worksite employees, product development, distribution, marketing, sales, and services.

Most outsourcing companies can provide your employees with online access to view their benefits, enroll, and conduct basic transactions. Almost all have toll free 800 numbers.

Most of the large consulting firms handle HR outsourcing but they are still trying to digest all of their Fortune 100 clients and their "backrooms" are being pushed to the brink. Many of the well managed and capable outsourcing companies are not yet household names and therefore are best found by your HR broker. Usually they can deliver several competitive bids within a few days. Some brokers will work with you to better understand the bids and help you make the right choice for your business.

Outsourcing is no longer and IT issue. If you are not talking to your broker about how to save money and leave it to the pros you could be making a big business blunder.

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

Society For Human Resource Management

This is the mother of all web sites for human resource professionals. A lot of their education is free, but some pages will require professional membership subscription. If you a small business owner and do not have a dedicated HR professionals, give your acting HR staffer a membership and you will not regret it.

I recommend: www.shrm.org

An Inside Look at HR Outsourcing

Learn more about outsourcing your HR with this professionally written book available at Amazon. You can preview the contents and decide if it is right for you and your staff.

I recommend: Out of Site: An Inside Look at HR Outsourcing

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

• Start your HR outsourcing with something simple if you want to reduce risk. You should consider outsourcing COBRA compliance which is a regulatory nightmare and can be very costly if you are not in compliance. Your Employee Assistance Program and Flexible Spending Accounts are other areas of HR that lend themselves to easy outsourcing but relieve you of the administrative burden.

The official source of Outsourcing Your HR Function is
the Human Resources Outsourcing page at Business.com