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Is HR Outsourcing Necessary for Your Small Business?

May 21, 2018

HR positions are among the fastest growing in America with an expected hike of 9% between 2016 and 2026.

This is due to the value a quality HR team can bring to a workplace. HR professionals are in charge of many administrative functions within companies. They oversee recruiting efforts, conduct interviews and are instrumental in the hiring process.

If you own or help manage a small business, one of the main questions you may have is how to incorporate a quality HR presence into your company in a cost-effective fashion.

A solution to this that many companies have explored is HR outsourcing services. By outsourcing HR, small businesses are able to delegate some or all essential HR functions to external parties.

The focus of this article is to discuss some of the advantages of HR outsourcing as well as some of its pitfalls to determine if it's right for you.

1) Consider The Size of Your Company

How many employees you have should inform your thought process when considering outsourcing HR. For example, most companies with under 75 employees don't have a formal HR team.

For those companies, HR functions are usually managed by a finance supervisor or similar employee who has some HR experience. In those situations, it's important that the employee informally wearing an HR hat is qualified to ensure compliance.

Not being in lockstep with federal and state regulations in regard to HR duties can present a liability. If you're having somebody mildly qualified manage HR functions and are concerned with their ability to keep you in compliance, outsourcing may be an excellent option.

If you're managing a company with over 75 employees, consider having a dedicated internal HR team. Employing an internal team can be costly. The level of personalized attention they'll be able to give your large workforce though can have a positive effect on company culture.

2) What Are the Cost Benefits?

Outsourcing HR services can be a question of numbers.

When wrapping your head around the cost of outsourced HR, it's important to first define the scope of the work you need outsourced.

For example, are you just trying to outsource payroll related tasks? Hiring? Or are you looking for an end to end HR solution?

Having a clear idea of the scope of your need will help you present external HR vendors with your expectations. This will enable them to give you a clear understanding of cost.

3) Potential Impact on Company Culture

HR is an important resource for your employees. Many workplace issues they have will be floated through HR and to that end, it's important to consider your employee's preferences.

For example, would your employees respond well to needing to engage an external vendor to have issues in regards to their payroll discussed? Or would they prefer to have in-person conversions with people they're familiar with?

Putting yourself in your employee's shoes will help inform you as to what kind of impact outsourced HR may have on your culture and what the ripple effects may be.

Companies with happy employees on average outperform competition by 20%. So it's important to consider outsourcing's possible full-scale effects versus clear monetary gains.

Still, if you're trying to provide non-outsourced HR services to your company but the quality of those services is sub-par, outsourcing can be the better option. Your team will have access to more highly qualified HR professionals that way.

4) Consider Ease of Use

With human resources outsourcing, it's important to understand the tools external providers offer. These tools should make accessing them as easy as possible.

Fortunately, software as a service web applications have greased the wheels on this end. Whether you've outsourced application tracking, employee training or payroll, many external HR services now offer sleek, browser-based applications for users to use.

These applications can undergo regular updates that improve their usability on a daily basis. This is important because the more intuitive your outsourced human resources services are, the less negative impact outsourcing will have on your company culture.

5) Understand the Importance of Having an Expert in Your Corner

Whether you choose to train existing staff members on HR principles or go external, it's important that you end up with a team that are compliance and company benefits experts.

Today's regulatory environments on both state and federal levels provide challenges to businesses on a daily basis. Whether it's in regard to hiring practices or health care, you need an expert to be able to protect you from legal trouble, decrease employee turnover, and help foster a healthy workforce.

Bottom line, when exploring what HR solution is best for you, be sure you're not cutting corners. The people you have handing your HR related tasks need to be well-trained and capable. Otherwise, you could experience costly problems down the road.

Wrapping Up HR Outsourcing Services

As businesses grow, so to do their need to have quality HR solutions. To handle this, some choose to hire a dedicated team. Others choose to go with HR outsourcing services or train existing employees to be able to handle HR duties as a stretch obligation.

Whichever solution you go with, it's important that both you and your employees are confident that your HR duties are being handled proficiently!

Are you a small business that wants an extremely cost-effective way to manage your HR internally without needing to hire a costly, dedicated team? HR Branches has a solution for you.  

HR Branches is the cost-effective option that provides you with a middle ground. We give you the freedom to self-administer your HR functions without the guessing (and unreliable google searches). No expensive outsourcing necessary... your HR expert is right at your fingertips, online.

Don't take our word for it though, download our free HR starter kit today to sample the incredible value we can bring to your operation!

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