Employers have long been familiar with the benefits of outsourcing. From payroll and legal services to IT support and janitorial services, businesses recognize the value of focusing on growth and development, while vendors pick up the slack of non-strategic, non-revenue generating activities.
In recent years, small and mid-sized employers have expanded their outsourcing-horizons to outsource many of their Human Resources functions. HR Outsourcing firms take over the complex and oft-mismanaged tasks relating to employment and HR compliance. Business owners recognize that management is best utilized developing and training their staff, instead of sifting through paperwork, surfing the web for compliance policies, and processing insurance claims.
HR Outsourcing firms manage the entire ‘life-cycle’ of an employee, from hire to termination. Administrative support includes:
- Hiring Practices
- New Hire Policies and Handbook
- Employee Training
- Employee Benefits Policies & Administration
- ACA Compliance
- Employment & HR Compliance
- Payroll & Tax Administration
- Safety & Risk Management
- Workers’ Compensation Insurance
- Progressive Discipline & Termination Practices
Outsourcing human resources provides a triple-benefit to employers:
1. Reduce Overhead and Operating Costs
Experienced HRO firms have worked hard over many years – and sometimes decades – to forge solid, long-term relationships with many large vendors, insurance companies and service providers. By representing thousands of employees, the HRO firm successfully negotiates deep discounts in service fees and premiums. These rates are then passed through to their clients. The economies-of-scale generated by the HRO offers small employers access to rates and programs typically only available to Fortune 500 corporations.
The reduction in rates and costs can be experienced in many areas. Some examples include:
- Workers’ compensation premiums
- Group health insurance rates
- Employment Practices Liability Insurance
- Voluntary employee benefits (life, disability, vision, etc.)
- 401 (k) and Cafeteria pre-tax plan administration fees
- Payroll processing and tax filing services
- On-site safety consulting
- Management training courses
2. Employment Liability Protections
Year after year, the federal government and state legislatures pass new laws or change existing legislation that directly impact the way employers do business. For small and mid-sized employers with little internal legal support or human resources expertise, this is like building a house in quicksand. The employment ground keeps shifting, and only experienced legal experts who are ‘plugged into’ the new laws can safely understand their impact on employers.
HR Outsourcing firms employ teams of seasoned human resources professionals and in-house legal counsel. Day in and day out, these employment experts stay abreast of the changes, and pass this information directly to their clients. Whether there are recently issued guidelines regarding new laws such as the Affordable Care Act/Obamacare or social media policies, or changes to existing laws such as minimum wage, the ADA, or Title VII, clients who outsource their human resources to professionals can confidently move forward knowing their business is in compliance.
3. Employee Development and Productivity
At the end of the day, it is the people within any organization that will make or break its success. Study after study shows that employers who invest in their employees have less turn-over, produce more productive and motivated staff, and are ultimately more profitable.
“Investing in employees” can take many different forms. Most fundamentally, it is offering a solid benefits package including major medical, dental, vision and other voluntary benefits. However, it doesn’t stop there. Employers who create a positive work-environment and who recognize their employees’ hard work will ultimately produce a more dedicated and hard-working workforce. Examples include incorporating incentive and recognition programs, offering a flexible work-week, regular company events, and conducting regular employee reviews and continuing education opportunities.
HRO firms are in the position to provide these programs and insurance products to their clients. They will also walk them through the creation and implementation process, and assist in tweaking the programs as they develop.
In conclusion, human resource outsourcing firms offer a three-way winning combination for their clients. The financial team will be thrilled with the reduction in employment overhead and insurance costs, management will comfortably do their job knowing someone is watching their back, and the employees will give 100% for the business, knowing they are a truly valued human resource.