Outsourcing HR might be a good move for your company and it can provide a better result when it comes to business decisions. There are many benefits of outsourcing, and we present them in this article. You will find out how to outsource HR and what steps to take to organize the HR department in the right way.
What is HR outsourcing?
HR outsourcing represents an arrangement through which the company hires a third-party company to take care of the HR tasks. This is an arrangement that can save money and time, and it is often used in organizations.
You can outsource many HR tasks and this could mean a significant advantage in the business operations. There are options for outsourcing employee benefits administration, payroll processing, talent acquisition, and many more.
You have two main options when it comes to outsourcing. These are HR outsourcing (HRO) and personal employer organization (PEO).
When it comes to PEO, you should know it is a co-employment model. It means that your employees will appear on the books for tax and legal purposes. These books are part of the PEO provider’s structure. It is usual that a PEO manages all of your HR functions, but you can still decide and have control over your employees. You can promote them or fire them, and this could mean that you have control over the HR tasks.
When we consider HRO, you have more responsibilities for your employees because you have legal and tax responsibility for their actions. This is a co-employer model and your employees will remain in your business’ books.
When should you use HR outsourcing?
Every business can use HR outsourcing, and this can help business owners have more organized HR solutions. You should opt for HR outsourcing if you are in some of the following situations:
- You have lack of money to hire new employees or cover and pay benefits for the in-house HR employees
- Too much time spent on the HR tasks within the company
- Liability exposure or predicted lawsuit
- HR functions that are spread to other business departments
You can benefit from HR outsourcing if your business is not large enough to have in-house HR staff. In this manner, the company outsider could provide the HR functions that will cover the necessary tasks.
What functions does HR outsourcing provide to a company?
There are many HR functions that HR outsourcing provides. Some of the most popular are listed below.
Employee benefits administration
If you offer your employees a strong employee benefits package, you will keep your current employees happy and you will have a significant advantage in attracting new employees. Good health insurance, retirement plan, and other benefits can mean a difference in your employee satisfaction.
Payroll processing
This is the commonly used HR function that companies address to business outsiders. Managing payrolls, taxes and legal papers can be very challenging, and this is why companies outsource these tasks.
Employment law compliance
If you are a business owner, you have to comply with many rules and regulations. Besides taxes and payrolls, you need to take care of workers’ compensation regulations and equal employment opportunity (EEO) laws. To make this possible, it is best to hire an HR outsourcing company and keep up with the necessary regulations.
Other HR functions that are commonly outsourced are talent acquisition, background screening and reference checks, performance management, risk management, and more.
The main role of HR outsourcing is to make employee management easier and more convenient. If you, as a business owner, can get the HR system more manageable, you are on the right path to success. To make this possible, you should apply HR solutions that are effective and productive all the time.