5 Signs it’s Time to Outsource HR

Should I Outsource Human Resources?

5 Signs it’s Time to Outsource HR

Your organization’s human resources department is critical to the success of the company.  HR encompasses so much more than just the management of people. An HR professional also controls payroll, administers compensation and benefits, handles legal compliance, and designs and implements training and development initiatives—to name only a few of their expansive list of responsibilities.

With so much to do, and so much at stake, it’s understandable that you might feel a pull to keep HR operations in-house. At some point, however, the strain of human resources-related tasks turns out to be a bottleneck that may be hindering the growth of your company. At that juncture, your organization may be asking yourself, how do I know when it’s time to outsource HR?

Read on for the top five signs your company could benefit from outsourcing HR operations.

#1 You’re Spending Too Much Time Managing HR Issues

You can’t be multiple places at one time, and you certainly can’t complete every task, minor to major, all on your own. You need a team to get things done. One of the first rules of business is the maximization of efficiency. In order to reap the greatest results for your business, you need to spend time doing what your business is good at—providing the best product, service, or experience for your clients. The time you take to do that is invaluable: after all, time is money. That’s why the first sign it’s time to outsource HR is that you’re spending too much time managing HR issues.

Figuring out payroll, compliance issues, and searching for the perfect candidate for a technical role takes time. Listening to employee conflicts, finding solutions, and improving morale takes energy. Time and energy are finite resources, best spent on the things your business does uniquely well. Outsourcing HR gives your business the ability to re-direct that time and energy.

#2 You Want to Limit Your Liability

Hiring rules, Equal Employment Opportunity Commission requirements, collective bargaining agreements, HIPAA, and the IRS… it takes an expert to know the ins-and-outs of all of these ever-changing aspects of human resource laws and compliance. The cost of potential tax reporting violations keeps many business owners up at night.

Knowing what you don’t know is important, and so is knowing when to delegate to someone who does. Would it be easier on your business if you didn’t have to worry about missing filing deadlines, or whether it’s okay to let go of a problem employee, or how to select the best, most affordable health coverage for your team? If you find yourself answering any of those questions in the affirmative, it may be time to outsource human resources functions.

#3 You Want to Save Money as Your Organization Grows

What’s best for your organization’s bottom-line will always be a consideration at the forefront of any decision you make as a company. Cost reduction is one of the most common reasons businesses decide to outsource human resource services. Spreading the cost of a highly competent human resources team across many businesses is a key benefit to outsourcing. 

If you have an in-house human resources department staffed with HR personnel, reducing staff in that department means cutting hiring and training costs, monthly salaries, and the expenses of insurance and other benefits. If you have a small HR department, or HR tasks are spread amongst managers, you and your team’s valuable time is taken up sorting through HR tasks and solving HR predicaments. Both of these resource drains translate to the same thing: lost money for your business.

Partnering with a third party streamlines the many facets of the human resource department, freeing up your cash flow for investment back into your company.

#4 Your HR Department is Unorganized

Are the lines of accountability for HR tasks unclear in your business? Your organization may or may not have a defined “human resources department.” Regardless of what your employee’s titles are, it’s time to outsource when your HR functions are allocated among many different managers and span multiple departments. HR tasks could be getting checked off, technically speaking, but the process can still be unorganized.

This becomes particularly troublesome when a task goes uncompleted, a deadline is missed, or an employee doesn’t know who or where to turn to report a problem. When your company is growing, and HR tasks begin to feel out of control, take it as a sign that it’s time to outsource HR. Outsourcing HR creates clear lines of responsibility and frees up managers’ time to do their jobs. When you delegate HR tasks to a third-party, their role is clear, and you can be confident that the proper individuals are dealing with important, sensitive issues.

#5 You Want to Bring in Experienced HR Consultants

You know the value in bringing on team members who are the best at what they do. Have you ever wished you could have a team of HR experts working for your company? The best of the best may be out of reach, but partnering with a professional employer organization, or “PEO,” such an HR outsourcing firm, ensures that your small to medium-sized business has access to top-notch, big-firm resources.  

Did you know that businesses that partner with a professional employer organization, like an HR outsourcing firm, tend to grow 7-9 percent faster? They also experience 10-14 percent lower turnover rates. What’s most impressive, however, is that they are 50% less likely to go out of business. It’s true—a 2014 study by McBassi & Company shows that businesses that use a professional employer organization, like an HR outsourcing firm, are around 50 percent less likely to fail, or permanently shut their doors, from one year to the next when compared to similar companies in the population as a whole.

If you’re considering ways to free up your organization’s precious resources, you’re ready to reap the benefits of outsourcing HR. Take the next by requesting a free demo, or contacting Benely to learn more about simplifying your HR processes.