Human resource functions are essential to the well-being of your company. While the size of HR departments can vary from one person to a whole team, they can be bogged down with tasks that prevent them from getting the most important work done. This is where outsourcing becomes a great option.
What is Human Resources Outsourcing?
Human resource outsourcing or HRO occurs when an outside firm takes on the responsibilities of your HR department. These HR tasks can include anything that deals with employees. It may seem counterintuitive to let a third-party handle such an interpersonal area of business but outsourcing human resources doesn’t take away from the human aspect. Outsourced HR companies specifically target administrative tasks that are difficult to manage — like monitoring compliance or administering benefits — so that your focus can remain on your people and growing your business.
Why Should You Consider Outsourcing HR?
When first starting your business, you probably filled the roles that were crucial to building the product and growing your business. Salespeople, marketers, and engineers all help to move the bottom line and improve your company. However, it is essential that you take care of the administrative tasks to avoid paying costly fines associated with both Federal and State Laws. HR covers a lot of ground, so it can be difficult to find all the skills needed for this job in one person. Outsourcing HR addresses this problem and offers many more benefits.
What are the Benefits of Outsourcing HR?
HR provides immense value to your company. They play a large role in developing your company culture while recruiting, hiring, and onboarding new employees. HR also provides employee benefits and keeps your company in compliance with the Department of Labor. Here are HR functions that are commonly outsourced:
Helping your employees earn about and understand their benefit options is a large task that requires a lot of time. HR companies explain health coverage, 401(k), and other benefits to your employees in depth. Outsourced HR companies can also offer access to higher quality benefit programs that typically only much larger companies can afford to provide.
There are many laws and regulations on the state, federal, and local level which employers need to comply. Examples include hiring compliance, workers comp, and holding sexual harassment prevention trainings. HR companies make sure your business is adhering to these laws and workplace regulations and ensures that the employees feel safe.
Employee Support and Counseling
Outsourcing HR can also benefit your team’s mental health. HR companies provide access to mental health programs and counseling to keep your employees happy and healthy. Prioritizing the overall wellbeing of your team will help your employees feel cared for and contribute to a positive company culture.
What Kind of Company Should Outsource HR?
Any business, no matter the size, can benefit from outsourcing some or all of their HR functions. However, deciding to what extent you outsource HR functions is crucial. Each business is unique, so each approach to HR should be unique as well.
Small or Growing Businesses
Businesses in this stage are meeting with investors, developing their product, and growing their team. This is where your focus should be. Even though it seems like you can handle HR tasks yourself, it is in your company’s best interest to outsource most HR functions. This will allow you to focus on what needs your attention.
Recruiting is most likely a top priority at this stage. It may be tempting to bring all of your HR functions in-house, but there are still benefits to outsourcing some aspects of HR. Initiatives that aim to improve company culture can be handled by in-house HR teams because they are unique to your business. However, outsourcing services like compliance, training, and employee benefits will allow your HR team to focus on employee-driven initiatives.
At this stage, it can be considered a competitive advantage to bring all HR functions in-house. Similar to mid-size businesses, there are benefits to outsourcing more administrative HR tasks. Allow the in-house team to find talent, support employees, and spearhead initiatives. The outsourced HR company can handle the impersonal functions.
Outsourcing HR in any capacity will increase efficiency, improve company culture, save you money, and ensure your policies are in perfect shape. You and your team will be able to concentrate full-time on growing your business; it’s what you do best.