What Are the Benefits of Outsourcing HR?

They’re your most important asset, and some companies have a department to help answer questions, process payments and field complaints from your workforce. We all know it as human resources (HR for short), but HR today isn’t easy, nor is it even present in a lot of organizations, which is a problem in itself. Human resources are complex and require the right touch, and many companies just don’t have the budget and resources to do it right. But instead of throwing your hands up and running an understaffed, underfunded department, — or, worse yet, trying to run an HR department in your spare time — it’s true that you can spend less money and time, as well as gain more HR capabilities with outsourcing.

It’s called outsourced HR, and it’s more than just a paycheck processor. By outsourcing your HR, you get the best in hiring, onboarding and benefit management, as well as the right compliance with local, state and federal rules regarding employment — all at a reduced cost to you.

Reduce Your HR Costs

In fact, one of the main benefits of outsourcing HR is to reduce your quickly expanding HR budget. Whether you’re augmenting an existing HR department or you need someone to help your business establish a legitimate HR presence, outsourcing HR saves you money so that you can be more strategic with your expenses.

These savings can come from numerous places, but the main benefit is a reduction in salaries. A typical HR manager makes upwards of $75,000 a year, and that’s before benefits, time off and other costs. If you have a mid-sized company with a growing HR department, you could be spending a sizable chunk of your budget on your HR staff itself. 

A reduction in hiring and training costs is another one of the numerous benefits of outsourcing HR. According to research firms, it can cost more than $20,000 to hire and train any given employee, and all that’s before they’ve had a chance to have an impact. If you hire the wrong person, that’s money down the drain, and you’ll have to spend again for the next applicant in line. But with outsourced HR, you’ll be able to make better hiring decisions, and it’ll cost less to onboard and train them once you’ve made a decision to hire. 

Outsourced HR is also great when it comes to compliance, as rules and policies are integrated more accurately and efficiently than with a fledgling, local HR department that may be struggling to keep their heads above water. 

Another one of the main benefits of outsourcing HR is that your organization will spend less time on HR functions and responsibilities. When you consider that many business owners spend less than 30 percent of their time on core business functions — the rest is squandered on administrative and other time-consuming tasks that don’t bring in any money — it’s easy to get excited about all the time you’ll save. Simply put, you’ll have more time to spend on your strategic goals, saving more money so that you can invest it back in your department or company.

Don’t Try to Wing It

For many small business owners, HR is something that takes you away from more important priorities. And if you’re trying to manage HR yourself, or you have an accountant or financial rep pulling double duty, you could be making grievous mistakes or even running afoul of the law. That’s worrying when you consider that up to 80 percent of small business owners try to manage HR themselves, and many of them are making it up as they go along.

Unfortunately, HR isn’t that simple. Managing employees in a modern-day workplace are fraught with idiosyncrasies, regulations, and laws that carry very real penalties and fees if you get it wrong. Even still, trying to play catch-up while you’re also running a business is no way to do right by your employees, and it’s common to make mistakes with payroll, misplace paperwork, and neglect to institute policies on behalf of your employees, even as you’re increasing your time spent on HR-related matters.

With outsourced HR, you’ll gain all that time back, which enables you to make better, more strategic decisions for yourself, your employees, and your business. 

Improve Your Hiring

Even if you’ve never had problems hiring in the past, the benefits of outsourcing HR include a more seamless hiring experience, as well as the identification of better applicants and the ability to woo them with more comprehensive benefits packages and more competitive salaries. That means you won’t have to worry about losing that hot prospect to a competitor and their more generous benefits. 

But even before you bring in anyone new, outsourcing your HR processes allows you to attract, vet, and hire the best talent, starting with a job description all the way to the interview process and onboarding. Some companies will even do most of the heavy lifting for you, whittling down the large pool of applicants into a more manageable group of promising applicants. 

After they’re hired, an outsourced HR company won’t leave you high and dry. Instead, they’ll help your new hire assimilate into your company’s culture with the least amount of friction. That means they’ll be able to impact your company’s bottom line sooner rather than later, and you’ll also experience less turnover with a selection process that puts the spotlight on the most viable, long-term candidates. 

Strengthen Your Compliance

One of the major capabilities of any HR department is to ensure compliance. But compliance today is a minefield of rules, regulations, and requirements, and unless you have people that you pay to stay on top of it all, you may be unwittingly breaking the law. That’s why one of the main benefits of outsourcing HR is to stay current with local, state, and national employment laws without you having to spend all of your time staying informed. 

Even beyond the typical employment laws, many industries have various industry regulations to abide by, and running afoul of any can represent a significant charge or fine. Furthermore, there’s  also harassment, disciplinary, and termination protocols to follow, which could end up exposing your current HR shortcomings if you fail to address them properly, not to mention open you up to lawsuits, fines, and other damaging effects. With outsourced HR, you’ll avoid all of this with a competent team that knows exactly what they’re doing each step of the way. 

For more about the benefits of outsourcing HR, including what outsourced HR can do for your hiring, onboarding, and retention capabilities, contact the experts at My HR Partner. With the experience and capabilities to handle just about any HR need, My HR Partner is your HR partner in business. Contact us today to see how we can help you.