The human resources head of your company is in charge of several crucial workforce-related issues. They have to identify, hire, train, and evaluate your personnel, as well as keep track of their performance. The HR team is also in charge of ensuring that the business abides by all labor and employment rules. In addition, they might manage payroll. HR serves as a point of contact between your business and the union if any of your employees are unionized. It would be an understatement to suggest that HR is responsible for the success of your business.
Do you need outsourced HR services?
Many small businesses opt to outsource their human resources. For a startup, specifically, it can be difficult to afford to hire someone to manage HR-related duties. When business owners try to delegate certain HR activities to other workers (such as by giving the finance director control over payroll or having department heads address employee issues within their own departments), the outcomes can be uneven at best and chaotic at worst.
The agreement between the organization and the provider will determine how the HR functions are outsourced. Usually, the client service agreement will instruct the contractor to handle payroll, including all tax withholdings and management. All W-2s may also be released to worksite employees by the HR firm. You can manage any kind of insurance or retirement plans for each employee using the outsourced service.
How to know it is time to outsource your HR services
Outsourced HR may be the answer you need if your business is expanding and your HR duties are becoming increasingly burdensome. Here are five signs that it’s time to outsource the HR function at your business.
1. You’re spending too much valuable time managing HR problems.
There is no denying the truth that running a business entails more than just supplying the goods or services for which you created your business. However, HR issues can take up a lot of time and interfere with tasks that generate income. The more time you spend trying to learn about employment law or looking for that full-time designer you need, the less time you have to focus on what your company does. By paying someone else to handle HR duties, you free up more time to work on your core revenue-generating operations.
2. You are worried about or have experienced liability exposure.
In addition to being able to discover job prospects to meet your staffing needs, a trained HR professional must have a thorough awareness of hiring guidelines, EEOC standards, collective bargaining agreements, recruiting, and training. Some HR managers are also in charge of payroll. The HR manager must be aware of any potential legal ramifications associated with employing or managing employees, and if they manage your payroll, they lower your risk of an IRS run-in. By outsourcing HR, you transfer accountability to a person who has received specialized training in the functional and ethical elements of HR. One year of outsourced HR could be funded by the price of just one infraction of tax reporting.
3. You need to save money.
The cost savings from outsourcing are numerous. You acquire the experience of someone you won’t have to train or provide with benefits when you outsource HR, for starters. You use the services provided by the HR person’s company, which may include laborious responsibilities like payroll. Spending money on an experienced outside firm to handle your business’ HR duties gives you more time to focus on your core operations and lowers your exposure to legal concerns. The end result is a better bottom line overall.
4. The HR lines of accountability are not clear in your business.
You may complete all of the HR responsibilities if you divide them up among managers and department heads, but you risk confusing who is responsible for what. Incorrect information may be passed along by managers, employees may not know where to report issues, and some HR responsibilities may get overlooked. When you outsource HR, your managers and department heads can focus on running their divisions without having to worry about HR-related duties, and you can be sure that you won’t run into any legal issues because of a carelessly distributed HR workload.
5. You can’t respond to changes as quickly as you need to.
Businesses in the twenty-first century need to be adaptable and quick to change. You might need to swiftly identify and recruit personnel if a terrific opportunity arises in order to fulfill your duties and support business expansion. When you outsource HR, you have access to a lot more tools that can help you swiftly identify and hire the people you need. Your competitors gain an advantage if you miss a chance because your busy HR manager is suddenly faced with additional hiring duties on top of everything else. A fantastic strategy to keep your company adaptable and open to new prospects is to outsource HR.
Which HR functions can be outsourced?
Employers have the option of outsourcing all of their HR requirements or only a portion of them. The kind of outsourcing you require will rely on your ability to provide each service independently.
Here are some of the HR tasks that are most frequently contracted out:
- HR administrative tasks (e.g., creating employee handbooks, implementing HR policies, terminating employees)
- hiring and onboarding personnel
- checking a person’s history
- Benefits administration for employees
- Payroll administration and processing
- Legal compliance and HR risk
- training and development for employees
Bottom Line
If you want to outsource some HR functions while remaining the sole employer of your staff, you can partner with an HRO.
SW HR Consulting has been helping companies to build their teams and values for over 10 years. Contact us to find out more about our unique hr outsourcing services and see how our expertise can benefit you.
