Outsourcing Human Resource can help you in many ways. This is becoming a common choice for companies worldwide owing to its benefits. Most companies hire a Professional Employer Organization (PEO) who handles several activities like recruiting, onboarding, compliance, HR functions, etc. It is debatable if it suits all kinds of businesses, but it evidently comes with its features, especially in terms of saving time and money, and that made it a growing trend. Let’s dive deeper and learn how human resource outsourcing can help you with recruiting and in meeting your HR needs.
Monetary benefits of Outsourcing
There are several ways in which you save money, some of which are discussed below.
- Reduced salary expenditure: A PEO charges one-tenth of the capital you would need to run an HR department in house. This is a significant area of benefit.
- Reduced benefits expenditure: A PEO negotiates better rates for benefits as he or she deals with a more significant number of employees here. The PEO will ensure that the right people are hired to reduce expenditure and will use its resources to cut hiring costs.
- Avoids penalties: A PEO also helps in avoiding penalties by staying up to date with the regulations and employment laws.
- Less time spent on HR functions: The time saved can be used to pursue other business goals like growth, strategy, or revenue. Statistics show that employees who work 50 hours a week spent only 30% on actual business functions. This way, a PEO is highly beneficial in increasing productivity.
Mistakes are often caused by inexperienced leads
As discussed earlier, HR outsourcing helps with time management and frees up time to focus on other activities. Usually, small business owners handle the HR functions themselves. But in a survey, it was found that 30% of them weren’t entirely sure of what they are doing.
Managing employees is not an easy task and requires proper experience, and specialized knowledge is needed so as to avoid it from running afoul. Mistakes with payroll, improper paperwork are common issues that arise when the small business owner is doing it all by him/herself. This makes it vulnerable to risks and costs more money, and the overall functioning of the company is hampered, and all these extra work costs extra time.
Outsourcing will help you in planning your time more efficiently, and the time can be well spent in growing the business. You can work on developing your business instead of stressing yourself with the HR functions. All of this will eventually bring more revenue.
1. Improved hiring
About 22% of small businesses cannot attract talents as they are far behind in offering lucrative packages. Bring in a PEO not only helps with good packages but also with overall hiring. Job seekers are content when they work for a satisfactory package. The PEO also ensures that the employees are getting sufficient training.
The hiring process is smoothened as the PEO makes an effort to make it more and more efficient. They also target the best candidate and arm them with appropriate training. A PEO can help with onboarding once the hiring is done. Surveys show that in a company that has a consistent and well-established onboarding process, the employees take lesser time to get acquainted with the day to day tasks. The PEO also monitors the functioning and performance of employees and also gives them insights on the job objectives.
2. Compliance is taken care of
Compliance is among the significant tasks of an HR department. Compliance is complex and multi-faceted. Ever-changing employment laws and wage laws make it more troublesome. Failing to comply with the laws can end up hurting the company financially. All these hassles are taken care of by the PEO.
Another benefit of outsourcing is that it ensures all your employee practices are within the scope of the law. Employee issues such as termination, harassment, and discipline should be as per specific laws, and not being able to do so will make your company vulnerable to fine and lawsuits. A PEO handles such issues making the policies legal, transparent as well as fair.
3. Added benefits
Most small businesses are struggling to offer lucrative packages to their employees. A PEO does so quickly as he or she has a large employee base, and that helps in securing better retirement, health packages, employee assistance, and more.
Usually, better packages are associated with large companies who have funds to invest. Joining a PEO does the same for a smaller company that cannot churn out that much funds.
Added benefits of Outsourcing goes beyond only providing more options. PEOs are experienced managers and can meet all the issues that an employee may face in his or her tenure. Example: you might require your employees to submit paperwork and documents, but a PEO will opt for an online portal to do so. These little things add a lot of convenience in the long run. Hence, you and the managers will have to lesser time on time taking procedures.
We have looked at all the advantages of outsourcing HR functions to a PEO. This shall give you an idea of how vital this growing trend is to your company.
There are several advantages in terms of hiring, management, compliance, and overall functioning of a company when a PEO joins. These benefits cannot be overlooked, which is why an increasing number of organizations are opting for the same and have made outsourcing HR functions a growing trend.
If you are a confident business owner and are up for handling all HR functions by yourself, then you can do so. But keep the benefits in mind for when you face unavoidable adversity down the line, then you can always turn to outsource HR. A lot of companies are doing well without it; this doesn’t necessarily mean it is not beneficial. It is always advisable to the first-hand experience the situation and understand the intensity of it and then opt for a PEO.
Get in touch with Collar Search’s Human Resource experts, today!