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5 Reasons Why Small Businesses Outsource Human Resource Functions

Do you really need to outsource your human resources activities?

In the past, human resource management was simple requiring just common operations like payroll, hiring, firing, and minor office issues involving personnel. Unfortunately, this has become a complicated and time-consuming responsibility that often steal the focus of key decision makers from core competencies. With ADA, FLSA, FMLA, ACA, and ERISA; the business world, workforce management, and such other matters have become an ever-evolving compliance concern.

On top of that…

There's setting up performance management policies and dealing with staff related issues such as redundancy, legal claims, grievances, and dismissals. On the other hand, employees are a critical part of a business success. Neglect them and lower your staff retention rate!

Add paragraph text here.So what are you to do as a small business owner? Do you spend over 6 hours each week on payroll tax administration alone or ignore and focus on your core business? How do you strike a balance?

Well, outsourcing human resource services could be the answer. It has been established that outsourcing to HR consulting firms can see your business grow 9% faster with a success rate of over 50%.

Need more reasons? Here's why you should outsource HR services.

1) To better manage business liability, compliance, and risk

Focus on business activities

In business, you've to meet all legal requirements in terms of policies, contracts, and health. Unfortunately, it`s increasingly hectic to stay in compliance and risky and expensive to not meet requirements.

For instance, a single harassment/discrimination claim or OSHA violation can lead to huge fines or bad press for your business. This`ll, in turn, have a ripple effect on every organization you partner with for in the public eye, working with someone means vouching for their credibility. Who wants to be remotely associated with workplace lawsuits anyway?

Labor and employment laws change regularly which could be challenging for a small business owner to keep up the pace. Considering EEOC Complaints, workman`s comp, overtime law changes, and OSHA changes are enough to make your head spin. On top of that, there are union issues, unemployment claims, and workers' compensation!

How then do you best manage risk and compliance?

Human resources outsourcing firms could be the solution. They employ professionals whose responsibility is to stay abreast on a variety of state and federal employment laws. With their unmatched wit, these staff will then help the business comply avoiding costly lawsuits. HR consulting service providers also monitor company policies and work procedures to ensure your businesses and its staff best interests remain protected.

In addition, the HR consulting firm will be responsible for an effective compliance training – one focused on reducing liabilities by educating all employees, making policies clear, and setting up procedures for recognizing violation issues and suggesting appropriate action.

More to that, HR consulting services can help limit workplace injuries by incorporating safety training programs, guidelines that reduce injury risks and developing a safety manual. It`ll also properly educate employees on discrimination, general and sexual harassment in order to lower liability alongside providing a healthy work environment and culture.

What about those unemployment taxes on your bottom line? While unavoidable, unemployment taxes can be managed. HR outsourcing can better employee handbook and create detailed job procedures making work expectations clear. They can also keep a record of any written instructions, warnings, and other documentation that will help protect you against unemployment claims.

2) To save resources in terms of time and cost

Outsource HR to save resources & capital

Every company, every business want to pinch pennies wherever they can, right? Well, partnering with a reputable HR consulting service provider will have you enjoy a 21% cost reduction on HR.

How?

HR outsourcing converts fixed costs into variable costs, realizing capital for reinvestment and revenue-producing activities. This also helps avoid large expenditures when kick-starting your business as it cuts the cost of running non-revenue-generating offices. Whoa! Setting up a fully functional HR department is expensive!

More to that, outsourcing is handy when training or hiring for peripheral or short-term projects; an otherwise expensive process, allowing you to focus your labor where needed. This`s especially where the temporary workforce is out of the question. Also, hiring an HR professional specializing in a specific function is uneconomical in the long run making outsourcing of such function whether part-time or as need arise more sensible.
To top that…
A reputable HR consulting firm has the personnel and resources to start hiring right away. A process that, if done in-house, might take weeks to settle for, train, and fully support the right candidate.

3) To re-engineer your business

Focus on Business Growth

You can't do it all and still make progress. In fact, you might end up stalling the business I an attempt to save ‘big money’. Why?

Well, spreading yourself too thin with all administrative tasks eat away planning time. Time to focus on revenue generating activities.
Note, for your business to remain competitive, you have to look inward and identify areas and opportunities to better your services, products, systems, and processes. In short, you've to be in touch with the business core activities and outsourcing will ensure you do.
Outsourcing HR services allow business owners to focus on developing strategies to maximize the growth phase their business is experiencing. It helps you as a leader set your priorities more clearly. Create time for you to radically redesign your business processes and systems for dramatic improvement.

In addition, outsourcing HR services can help you expand the business reach through referrals – a key re-engineering strategy.

4) To better manage employees

Better Managing Employees

Outsourcing HR services help companies better manage the workforce. This`s by setting up clear guidelines and work procedures and ensuring employees comply with them to meet the required goals. HR outsourcing firms monitor employee performance periodically and report the outcomes to management.

While at it, communication can be enhanced by disseminating surveys to boost employee`s engagement to the evaluation. It`s in this process that their grievances will better be known.
These assessments in addition to training, career path planning, and reviews make employees feel valued, not neglected which in turn boost staff retention rates.
In addition, HR consulting service providers can connect business staff to a larger employee base that results in lower insurance premiums and better coverage. Retirement benefits increase in value too when outsourcing is in play as 98% of these firms offer retirement plans to employees. Is that important?

In reality, employees benefits are huge expenses for business owners, yet a necessity for a happier workforce and hence a high retention rate. So, if an HR consulting service provider can offer such as an additional pack, then go for it. This will boost your staff`s morale without you lifting a finger, lowering turnover rates by 14%.

5) To gain a competitive advantage

Gaining competitive advantage in business

HR consulting services help level the 'playing field'. As a small business, it`s unlikely that you`ll afford to match in-house HR services and support maintained by medium or large businesses, right?

Don't panic!

Outsourcing HR services will give you access to the same expertise, efficiency, and economies of scale that large firms enjoy. It will help you access the latest technology; from online employee portals to artificial intelligence and block-chain that would otherwise be too expensive.

Again, when tailoring your staff benefits package for maximum benefits, an experienced HR consulting firm can provide you with a perspective that ensures your benefits are tailored to attract the talent you need.

As we wrap up and …

With all honesty, you didn’t go into business to worry about performance reviews, regulations, and payroll errors, right? Instead, you went to focus on your skills and expertise and deliver specific services or products to customers.

HR consulting services exists to take over all back-office activities – those responsibilities unrelated to your business goals. By minimizing these worries, you`re left with ample time to better manage and re-engineer your business for maximum benefits.