November 4, 2020 | By Elia Hagen
Some companies shy away from outsourcing their HR operations under the assumption that doing so will somehow hurt employee engagement. The reality is that HR outsourcing, when done right, can actually increase employee engagement.
Engaged employees work harder, stay with their employer longer, and ultimately contribute to a higher profit margin for the company. Research indicates that an engaged workforce achieves 17% higher productivity and 21% greater profitability compared to a non-engaged one.
Beyond that, engaged employees often become "brand advocates" for their employer. This enhances the organization's reputation and makes the company an "employer of choice" for other job candidates.
Moreover, an engaged workforce typically results in lower absenteeism and churn rates. A Gallup survey indicated that highly engaged employees are 41% less likely to be absent from work, and highly engaged teams experience a 59% lower turnover rate than their non-engaged counterparts.
So, how can HR outsourcing contribute to increased employee engagement? There are three primary ways this occurs: strengthened company culture, quality HR practices, and streamlined onboarding and training.
A company's culture is disseminated from the top down. The HR department should play a key role in this process. An ideal HR division would spend its time maintaining an engaged workforce through creative initiatives that fit into the organization's culture and values. However, in many cases HR professionals are too busy fielding difficult questions about benefits, filling out forms, or trying to get a response from an insurance carrier.
An outsourced HR partner provides an extra layer of support to handle these and other critical tasks. In the end, your outsourcing partner can free up your in-house HR team to focus on retaining and attracting top talent in your industry by strengthening company culture. In turn, this can lead to a more stable and engaged workforce.
In some situations, an internal HR team may not have the resources to deliver world-class services to company employees. In contrast, an outsourced HR provider can typically provide high-quality HR practices that enhance employee satisfaction and reduce churn rate. One survey found that 73% of employees that work for outsourced HR clients recommend their company as a "great place to work" — five points higher than that of other businesses.
By enlisting the aid of an outsourced HR partner, your company can develop better recruitment practices, streamline the process of onboarding employees into their roles, and create better training opportunities for your workers. An experienced outsourcing firm can leverage innovative technology to streamline training and handle onboarding through an online portal.
A professional employer organization (PEO for short) is a type of outsourcing HR partner that helps clients focus on core competencies by handling HR operations such as payroll, workers' compensation, and benefits administration.
That leaves your in-house team with time to take care of the company culture.
Research indicates that PEO services are associated with an average ROI of 27.2% over businesses that do not utilize the services of a PEO.
A PEO can help its clients receive better benefits by grouping their employees under the "umbrella" of a large group medical plan with thousands of participants. Due to this unique structure, PEOs can provide access to superior benefits packages at only a fraction of what they would normally cost for small businesses.
When a business joins forces with a reputable, experienced PEO, then your HR outsourcing partner can make an impactful contribution to employee engagement. At the same time, the PEO can produce a positive ROI thanks to significant cost savings from HR administration and benefits packages. Moreover, the PEO can help its client attract top talent by offering superior benefits plans to prospective employees.
If you haven't already invested in HR outsourcing, now is the time to do so. By outsourcing key HR operations to a trusted 3rd-party vendor, you'll grow your business, keep your workforce engaged, and generate more profits.
Elia is a Human Resource Consultant with over 25 years of experience. She specializes in employee relations, training and development, legal compliance, and HR consultation.