Six Advantages of HR Outsourcing
There are many benefits of HR outsourcing for small and medium-sized businesses. Human resources outsourcing can include outsourcing functions such as payroll, calling in a specialist for a specific project or issue, or working with a professional employer organization (PEO).
On the one hand, HR outsourcing can allow small businesses to compete with much larger organizations for talent. On the other, it can protect them from risks.
Human Resources is a complex and specialized field that requires a wide range of skills, talent, and expertise. Too often, small businesses must break up these essential functions and embed them in the jobs of managers and executives. Everything can seem like it’s running fine until regulation changes, noncompliance, or growth stops your business in its tracks.
Small and medium-sized businesses that outsource their human resources operations often perform better than those choosing a 100 percent in-house HR solution.
According to the National Association of Professional Employer Organizations (NAPEO), businesses that partner with a PEO are fifty percent less likely to go out of business. In this article, we will explore why HR outsourcing may be so advantageous to a small business.
Reasons Why Outsourcing HR Functions Strengthens Your Business
HR outsourcing gives your business access to HR experts. Some small businesses are fortunate enough to have designated staff. Others have spread HR tasks and functions to their back office, managers, and supervisors. Even with a designated HR staff, small businesses usually rely on generalists that handle every aspect of human resources, from recruiting potential candidates, hiring and onboarding, benefits enrollment, and payroll processing to ensuring compliance with all federal, state, and local requirements. Each of these different Human Resources functions requires competencies: excellent communication, technical expertise, deep knowledge of labor laws and regulations, data analysis, and attention to detail. The list goes on. When you outsource human resources, you have access to HR professionals who are specialists with deep knowledge and a passion for excellence in human resources.
With the support of HR professionals, your business can respond to the unexpected. Even small companies with HR teams can find they are stretched beyond capacity when the unexpected arises. When the Covid-19 pandemic hit, small businesses that outsourced human resources found they could better respond to changing demands and regulations than organizations that handled everything in-house. Firms with HR outsourced to PEOs were 58% less likely to close than comparable businesses.
HR outsourcing is scalable and supports business growth. When businesses grow, the in-house human resources team often feels the pinch. When you need more human resources capacity, they are stretched too thin to meet the need. Geographic expansions require knowledge of local regulations and flexible payroll systems for different local withholdings. If you are planning for growth, HR outsourcing makes sense.
Outsourcing human resources reduces risk. Outsourcing human resources shields your business from risk through access to world-class workflows and systems. All companies share the risks that could lead to fines or litigation. Vulnerabilities include wage and hour violations, software security breaches, incomplete background and I9 checks for new hires, harassment and discrimination, termination, and protected leave and accommodation issues. Larger organizations have highly qualified staff and state-of-the-art processes that reduce their risk. Outsourcing human resources brings the risk management strategies of larger organizations to small businesses.
Outsourcing human resources can bring high-quality training to your employees. Many HR service organizations offer training solutions that meet the mandated requirements, build skills, and increase engagement. And Human Resources Specialists can work with you to enhance culture and increase employee satisfaction and engagement.
Outsourcing human resources lets you and your employees focus on your core business. The time freed up by contracting with a human resources organization can be used to innovate to meet emerging needs, expand into other regions, develop employees, and secure funding.
Contact Us Today
TANDIUM Corporation has comprehensive experience meeting the human resource needs of small and medium-sized businesses and nonprofit organizations. We offer PEO, ASO, Payroll, Benefits, and Human Resources for all types of employers. Whatever the nature of your business, we will customize a Human Resources, Payroll, and Benefits program to support your needs.
If HR outsourcing may suit your business, contact us today to schedule a free initial consultation.