Exploring the Benefits of HR Outsourcing: 8 Key Advantages

On average, small businesses spend one day per week or more1 on HR-related tasks. Combined with average employee salaries, an estimated $27 billion per year2 is spent on human resources tasks in small businesses. This can drain the resources needed to grow your business and negatively impact the success of your business. To help you get more out of your efforts, consider some of the benefits of outsourcing your HR department.

Which HR functions can be outsourced?

Human resources departments are responsible for a variety of tasks within a company. For small and medium-sized businesses, this means a lot of time and resources that could otherwise be used to grow the business or maintain customer relationships. Some of the HR functions that can be outsourced are the following:

Compliance

Human Resources is responsible for ensuring your company complies with dynamic employment laws and regulations at the local, state and national levels. This requires a certain level of expertise and a constant commitment to research and adjustments. Many HR outsourcing companies can help your company avoid harsh penalties or hefty fines with best practice guidance, but it's important to make sure your contract with them includes such benefits.

Employee relations

Human resources departments are also responsible for dealing with internal complaints and employee concerns. You must also respond to claims alleging harassment or discrimination in the workplace. These can be complex situations for which you need human resources best practice resources and guidance to assist you with your employee relations, responding to and handling such claims, and managing such situations.

Payroll accounting services

No business can function without a comprehensive payroll system for its employees. Outsourcing to an external HR department means that compensation, wages, payroll taxes and deductions are processed in a timely manner and in accordance with relevant laws and regulations.

Employee benefits

Part of the compensation for full-time employees includes various benefits. By outsourcing HR, you have the opportunity to provide your team with access to major company benefits, which can include retirement plans, health insurance, and other non-traditional offerings.

Workers' Compensation

If an employee is injured at work, it must be treated appropriately. This includes continued payment of wages in the event of illness, disability insurance and policies that cover medical care in emergencies. Outsourcing HR allows you to streamline this process and reduce problems if something happens.

8 Benefits of Outsourcing HR

1.Save money on administration costs

While there are costs associated with outsourcing your human resources, these are negligible when compared to the value that human resources expertise can bring. Standard human resources departments have many tasks that require a large number of employees to complete. As your company grows, your HR department must grow with it. When you hire a PEO, you gain access to scalable human resources professionals and experts who will grow with your workforce. Outsourcing can result in significant savings in overhead costs. Areas where you can make savings include payroll, training, and the salaries of the human resources professionals you would otherwise have to hire.

2.Offer more services to your employees

Small to medium-sized businesses don't always have access to benefits or employee services. This can lead to problems attracting and retaining top talent. When you work with a PEO, you get access to the comprehensive benefits of a large company that your employees deserve. This includes traditional and non-traditional services. Access to benefits can also extend beyond medical care to include dental, vision, life, disability, pension, transit and other voluntary benefits that help improve employee satisfaction with their compensation. This can reduce employee stress, increase productivity, and strengthen employee retention.

3.Stronger risk management

One of the most difficult aspects of running a business is keeping up with dynamic employment regulations at the local, state and federal levels. Even if some changes or updates are minor, you may still need to make adjustments within your organization to remain compliant. Human resources outsourcing strengthens your approach to risk management by giving you best practices to avoid fines, lawsuits or devastating penalties. PEOs can provide you with HR experts who are well-versed in ongoing changes to laws and regulations at all levels and can help you keep your policies and procedures current. This not only benefits your company, but also helps protect your employees.

4.Efficient performance management tools

Effective performance management is an important part of HR. However, every employee is different and responds differently to feedback. When you outsource your HR department, you gain access to a variety of performance management tools and modern processes that can help you conduct feedback loops and gain insights into how to retain employees by improving their overall experience. Tools that can be used for this include employee retention surveys, exit interviews, and even onboarding questionnaires. Not only does this help improve the overall efficiency of your business, but it also shows that you are investing in the development and overall well-being of your employees. Outsourcing HR management does not mean that your employees will be managed by an external team. You are still responsible for it, but you will receive tools and best practice support to make the process more adaptable and efficient.

5.Increased efficiency

One of the biggest benefits of outsourcing your HR department is the time it saves within your company. If you have an in-house team, they have to deal with a ton of paperwork, HR compliance, risk mitigation, employee benefits, payroll processing, employee complaints, and other important HR functions. Outsourcing can free up this time and increase the overall efficiency of your business. This gives you the opportunity to hire employees who will spend their time driving your company's strategic goals, increasing your revenue and improving customer loyalty.

6.Faster onboarding time for new employees

If you decide to expand into new geographic markets, certain PEOs have the HR expertise to help you hire new employees in any state and help you navigate the complex process of hiring and onboarding outside of your typical locations - all while complying with local, state and federal labor laws and regulations. Companies with a solid onboarding process improve new employee retention by 82% and productivity by over 70%3. Additionally, you need an HR partner that has technology programs that make it easier to manage HR in real-time, from employee onboarding capabilities to mobile apps and desktops to workforce analytics that help you make informed decisions meet.

7.Ongoing training and development

Employee retention is an important factor in a company's efficiency and productivity. Excessive turnover results in wasted time, money, effort, and loss of expertise. When you work with an external HR team, you have access to tools that help you develop a better understanding of how to create a people-centered workplace that promotes employee satisfaction. You also have the resources to provide your employees with hands-on training in best practices, business skills, software skills, and diversity, equity, and inclusion that promote both personal and professional development. This will help you prepare your employees for success and demonstrate your interest in employee development programs and your commitment to creating a diverse and inclusive workforce.

8.Access to experienced HR consultants

Overall, outsourcing offers unbeatable access to expert HR consultants. Because it is such a large and complex department, you want to make sure they have the skills and knowledge to help you carry out your HR tasks in the most effective way. HR outsourcing is the solution to this problem. Working with a PEO gives you access to a team of experienced human resources professionals who understand the intricacies of payroll, benefits administration, risk management, and various other aspects of human resources management.

IceHrm is a professional employer organization that offers comprehensive HR solutions to small and medium-sized enterprises (SMEs) in various industries. If you would like to learn more about how our human resources experts can help your business compete successfully, contact us today. If you know which human resources services can be outsourced, you already have a clear overview of the benefits. For more information, consider an external HR solution such as a professional employer organization.

Outsourcing HR tasks can revolutionize your business, offering cost savings, compliance assurance, and expert guidance. Consider IceHrm for tailored HR solutions.