January 15, 2021 | By Brandon Hartsaw
As the year draws to a close, businesses and individuals are starting to think about the goals and challenges that will come in the New Year. For many companies, this is a time to create new plans and start the new year on the best footing.
Is outsourcing HR functions part of those plans?
Because if it isn’t already, It should be.
How does HR outsourcing benefit your business and impact your planning for the new year?
You've assessed the performance of your HR team and determined that as your business grows, their workload is starting to get excessive. Outsourcing administrative burdens, benefits administration, and keeping up with the latest rules and regulations is a far cheaper alternative to hiring another full-time professional. It costs less than their salary, and you avoid the costs and time spent recruiting, hiring, and onboarding another person.
According to the SHRM, it costs an average of $4,129 to hire a new employee and $1,200 to train them. A relatively small business can quickly lose hundreds of thousands of dollars just on salary and benefits for HR personnel, without going into the cost associated with office space and other related overhead expenses.
Your insurance and benefits administration costs will also go down. Because the staff employed by your HR outsourcing partner have high levels of experience dealing with complicated insurance and compliance issues, they will spend less time on these functions than your own team.
One myth is that HR outsourcing replaces your current team. If correctly done, it complements your team. Routine tasks such as payroll and administering benefits are taken off your team’s plate. Trusted HR advisors are one phone call away to assist with any questions or concerns you may have.
This gives your team more bandwidth to deal with things that require their intimate knowledge of your company. They will be more available to employees who need their assistance and advice. That also means that they will be free to make their own plan for the new year, without having to spend the time handling mundane matters. They can focus on strategic activities rather than answering copious benefits questions.
If you don't have a certifiedHR team and are instead spreading HR functions through administrative staff or burdening the owner with it, then their time can be dedicated to doing their actual job. Business owners often spend only 30 percent of their time on core business functions, with much of the rest devoted to administrative issues including HR related tasks.
One of your new year goals may be to get everyone better health insurance, but you aren't sure how to do it within your budget. HR outsourcing can help by allowing you to get richer benefit coverage for the same cost or even less.
In addition to improving morale, this will allow you to attract better talent and fill new positions in faster. It also improves retention. Nothing derails your plans faster than having a top candidate poached by another company that offers benefits you don't. Your overall costs drop when employee turnover is reduced. The lower your voluntary turnover, the better, from a strategic perspective. It also helps cement a strong company culture. A strong culture means having everyone on the same page and working together to achieve your company's goals. It also increases engagement, which is correlated with increased productivity overall.
The market of benefit costs is unpredictable and can vary drastically from year to year. When a company is on an open market medical plan they are at a higher risk and will experience much steeper increases in their renewals year after year. Partnering with a PEO gives your company the protection of less drastic renewal rates. Similarly, instead of your plans being derailed by an expensive compliance issue, you can be confident that your HR costs will stay relatively the same through the year, or fluctuate along easily-predicted seasonal lines. This makes budgeting easier for your entire company. Compliance issues in particular, can result in significant financial losses that can even damage your company's viability.
Outsourcing your HR is one way you can start the new year right. You can reduce costs, offer better benefits to new and existing staff, reduce employee turnover and avoid expensive compliance errors. The resources you free up can allow you to achieve more ambitious goals and grow your business faster. Make outsourcing HR one of your New Years' resolutions. You won't regret it.
Acting as the Chief Operations Officer, Brandon actively promotes an environment of creativity, collaboration, and individual ownership to empower Questco team members to deliver exceptional client experiences.