As your company grows, there are hard decisions to make, such as whether to add employees, departments, or partners. One of those decisions is whether to outsource HR tasks or to invest more deeply in your own HR department. Here are four clues that indicate outsourcing HR is the right move for your company.
1. HR Tasks Take Employees Away from Key Revenue-Generating Tasks
The more employees you have, the more work the HR department is responsible for. Every day, your HR employees are tackling a huge number of tasks that will only continue to grow, including:
- Answering complex, detailed questions on benefits administration
- Working with insurance carriers to respond to requests and resolve issues
- Reporting that requires moving data between programs such as Excel and Quickbooks
- Managing payroll
Your HR employees should be focused on building company culture and helping you advance your business goals, not on time-consuming administration. An HR outsourcing partner can relieve those administrative burdens and allow your employees to do what they do best: enhancing the success of your business.
2. HR Has Trouble Staying Compliant
HR compliance is no small task. There are a variety of governing bodies that dictate how your business operates to create a fair and safe workplace. Failing to comply with these laws can lead to penalties and unexpected financial burdens. For example, failure to uphold the regulations under the Fair Labor Standards Act, which governs minimum wage, overtime pay, family and medical leave, and more, can result in a payout of hundreds of thousands of dollars in back wages.
Meanwhile, the Occupational Safety and Health Administration (OSHA) enforces standards on preventing injury and illness in the workplace, and the Equal Employment Opportunity Act ensures you use fair and non-discriminatory hiring practices and also recognize and deal with workplace harassment. There are also a variety of state and local laws you must abide by. Many businesses find the overlapping patchwork of regulations to be intimidating, and even overwhelming. Rectifying violations are time-consuming, expensive, and hard on your business and employees, so you need to make sure you're following all regulations. Otherwise, consider outsourcing that function to an HR partner who has regulatory compliance experts on staff.
3. Payroll Costs Are Adding Up
Payroll is one of the most commonly outsourced HR tasks. Payroll is time-consuming with enormous potential for error, and the cost of that time plus the technology costs (i.e. software, online pay stubs, pay cards, and more) can add up. The time involved in correcting errors adds up too.
Furthermore, your payroll cost per employee is likely larger than you might expect. Most calculations for the cost of doing payroll in-house ignores the cost of collecting and consolidating the relevant information.
Your HR outsourcing partner can provide not only payroll expertise but also HR software which consolidates your technology. This integration saves time which translates into lower average cost per employee check.
4. You're Offering Less-Than-Competitive Health Benefits
While 63 percent of employees see healthcare benefits as "very important," only 31 percent are very satisfied with what their employers offer. In another survey, 80 percent of people said they would choose a job with good benefits over a job with a higher salary and no benefits.
If you're trying to negotiate with medical insurance companies on your own, your health benefits package will probably not be very competitive. When your HR outsourcing partner is a Professional Employer Organization (PEO) like Questco, you gain access to better benefits and more affordable healthcare plans.
In the end, deciding whether to outsource HR tasks depends less on the size of the company and more on what your company can do. Hiring an HR partner means your employees face less administrative burden and can spend more time on the duties that actually generate income for your company.
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