Many small businesses contract professional employer organizations (PEOs) to handle their human resource management functions. These organizations provide payroll, hiring, training and benefits programs for these employers so they can focus on their core competencies. It doesn’t matter if your business is new or is established, outsourcing these functions to a PEO may help you in a number of ways.
Whether you have an in-house HR department or not, your company will save time by working with a PEO. Consider all the responsibilities of an HR manager. They have many administrative duties, including ensuring your compliance with federal regulations, researching and securing employee benefits and payroll. Then, add in hiring and training new employees. In addition, your management team may experience disruptions when team members leave and new staff need to be onboarded. Outsourcing even a fraction of these duties will free up time for your HR department and managers, allowing them to focus on increasing sales, expanding the company and meeting company goals.
Reduce Your Costs
HR functions are necessary, but they are expensive. For example, you may pay a $75,000 salary for a good HR manager. As your company grows, you will also need to add additional departmental staff.
A PEO typically charges a set fee for the services you seek to outsource, such as payroll or hiring and training employees. The fees you pay, even if you outsource every HR function, are much lower than you would pay for your staff’s salaries.
Improve Your Hires
PEOs are experienced at hiring new employees, and they have databases full of great candidates. They have access to individuals with more experience, stronger skills and greater knowledge. These companies also handle the hiring process, and you are only involved in final interviews. They often onboard and train new employees.
PEOs also offer better salaries and benefits for job seekers; your company may have a hard time providing equivalent benefits. The benefits package you offer may determine the level of talent you can hire.
As a small business owner, you may be trying to handle your HR functions yourself, but if you don’t have the experience and understanding of these tasks, it could cost you. The law has specific requirements for payroll and employee paperwork. You are also required to implement specific management policies. In addition, business laws are constantly changing, and noncompliance with any of these laws can result in costly penalties or lawsuits.
PEOs are well versed on these functions and legal requirements, so they don’t typically make administrative mistakes that can cost you money.
Whether you have a new or well-established company, you can benefit from outsourcing your HR functions.