Posted on / Updated on / in Outsourced HR /

Deciding to hire a human resources professional or deciding to outsource human resource management can be a challenging decision to make. Does the business need a full scale HR department, or should the organization use external resources, such as a a 3rd party HR outsourcing firm? Hiring a human resources department may not always be the best step for every organization. In fact, for some businesses, it may not be financially or organizationally feasible. That’s where outsourcing your HR comes in.

Today, let’s focus on three benefits of outsourcing HR: reduced costs, increased productivity, and reduced risks. Keep reading to see why HR outsourcing might be the best solution for your business.

Reduced Costs

It comes as no surprise that one reason business owners and leaders decide to outsource human resources is cost. Small or decentralized businesses may not choose to invest in salaries and staff needed to run an in-house HR department. Trained and certified human resources professionals can be an expensive investment, and ensuring you hire the right in house HR professional is critical to a business. So the decision to hire one or more HR professionals, or choose a Firm to help can be a tough one to make.

A benefit business owners and leaders should enjoy with HR outsourcing, should be the ability to offer certified HR professionals who can provide a little support or a lot of support – just when the business needs it. Your HR Outsourcing firm should be competent in preparing a strategic HR plan, and be able to execute that plan to cover the entire employment lifecycle – starting with recruiting, then onboarding, training, policies & procedures, legal compliance, performance coaching, the evaluation process, employee benefit management, communications, compensation planning, termination decisions and off boarding. And yes, they should also provide systems and structure to simplify paperwork and improve the HR workflows – covering all the basic human resources tasks you need and more, all within the budget and time you elect.

For a monthly fee, HR Outsourcing firms provide organizations with highly trained HR consultants for a fraction of the cost of in-house resources. HR Outsourcing firms save companies money in several different ways, too.

An HR department generally consists of more than one person that all need to be paid and have benefits provided for them. That’s easily a few hundred thousand dollars a year, depending on the size. Plus, as your business grows and the more employees you have, the bigger your human resources department needs to be. Outsourcing can save you money (and office space) as you grow. It’s not just a few salaries you have to worry about, either, with an in-house department. You also have to provide your employees with the resources needed to perform the job and any training or continuing education necessary.

Having a fully-staffed HR team may not always the best allocation of resources, especially for small- and medium-sized companies. There’s a lot that goes into the upkeep of an in-house HR department and those funds might better be served elsewhere, like investing in core activities. It can also save you time that managers waste on administrative tasks. Instead, you could focus more on business functions like sales and growth goals.

Outsourcing HR can also save your company money in benefits—and not just those of the HR employees—hiring and training new employees, and penalties associated with non-compliance with laws and regulations. An HR Outsourcing firm already has all the right resources in place to hire and train your employees and to keep up with employment laws. They can also negotiate better rates for a larger pool of clients, even if your business is fairly small.

Check out our resource on Top 5 Reasons Outsourcing HR Improves Your Bottom Line. Click here to download for free.

Improved Productivity

Using an HR Outsourcing firm can increase the productivity, and therefore the profitability, of your company in many ways. HR consultants will work side-by-side with you in every way to make your company the best it can be for your employees. They will help create an organization that allows the business to grow and be more productive and prosperous through effective people management.

Outsourcing the HR function gives management the time and opportunity to focus on the core business while the consultant concentrates on Human Resources. That means you spend less time on paperwork and other administrative duties. You and your employees and refocus on important operations of your business instead. HRO firms, as we mentioned briefly before, already have the right resources in place to take care of all your needs. This means newer technology and streamlined operations, both leading to increased efficiency.

Outsourcing HR can also reduce employee turnover, as HRO firms are dedicated to helping you hire only the best employees, while also providing your employees with the best experiences and benefits. Employees will be happier and more productive at a job where they are well taken care of. HRO firms can help provide employees with comprehensive benefits, on-time and accurate payroll, professional assistance with employment-related problems, better communication within your organization, informative orientations and training, safer workspaces, and more. All of this is better for your current employees and makes your business more desirable to future employees.

HR Outsourcing firms will also streamline the hiring process, meaning less time for you and more productivity for your company. The onboarding process designed by HRO firms also helps new employees assimilate to your company faster and more successfully.

Reduced risks

Human resources can be a tricky business and having an expert behind you can be the difference between no fines and $500,000 fines. Human resource management companies help businesses reduce risks when it comes to laws and regulations and day-to-day operations.

Labor and employment laws are always changing and being modified. It can be hard for employers to stay up to date on which regulations affect their organization and how they can best operate within them. HRO firm consultants are experts in their field. They are always keeping an eye on the laws in your state and it’s their job to make sure your business is compliant at all times and avoid expensive fines or lawsuits.

Trusting an in-house employee, who isn’t sufficiently trained and works on these matters on a part-time basis, can cost you greatly in the long run. Outsourcing HR can ensure that your business is compliant in every way, that your opportunity for liability is minimized, and that any claims for worker’s compensation or unemployment are managed competently.

Inexperience often leads to mistakes, and not just with legal compliance. For someone without extensive training, it is too easy to mismanage staff, neglect the proper paperwork, make payroll mistakes, and more. In the event of a mistake by an inexperienced, in-house HR representative, even more time, and potentially money, will be unnecessarily spent fixing it.

Your HR consultants also won’t get bogged down if there is a major issue or change within your organization. Essential duties will still be performed on time; nothing will get delayed or lost by the wayside. Halting daily functions in the event of a large turnover, for example, can leave your entire workforce suffering. Outsourcing HR in this instance and many others is the best way to ensure that all human resources services are still performed accurately and timely.

Outsourcing human resources can be the best thing for any business, no matter your reasoning, but it’s particularly beneficial to small- and medium-sized businesses who do not have the resources to maintain an in-hour HR department adequately. So much money can be saved in the long run by using an HR outsourcing firm instead of hiring your own team. Not to mention, the money you’ll save by keeping up to date on your legal compliance. You will notice the difference in productivity, too, when you’re providing the best experiences to your employees.

Integrity HR works to save you money and time, improve your company’s productivity and profitability, reduce your risks, and give you the opportunity to do what you do best – make your company great! Our experts can function as an entire HR Department, or can just manage the key elements your business needs to succeed. Explore the benefits of outsourcing your HR. Schedule a conversation with one of our HR professionals today.

Budgets are tight. What are you doing to help your bottom line?
Top 5 Reasons HR Outsourcing Improves Your Bottom Line

Our team talked to business leaders who have taken the step to outsource HR and provided real world insights and learnings in this free resource. Learn more about how HR Outsourcing can impact your bottom line, and see if it is a good fit for your business.

New call-to-action

about the author: Integrity HR

Integrity HR's human resources blog is filled with expert advice (and sassy commentary) on those everyday employment issues that give business owners and managers HR headaches. From tips on how to retain key employees to how to write your dress code policy, our blog has all the HR resources you need.

Please let us know your thoughts...