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
Get to know PEOsPEOs 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).
Outsource employee benefits administrationBy 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.
Outsource recruiting and hiringStreamline the process of hiring new employees by outsourcing the recruiting process.
Outsource risk managementRisk management refers to the development and administration of safety programs and workers compensation programs.
Outsource payrollHanding off payroll functions is one of the oldest forms of HR outsourcing and also one of the most important.
- 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.