Employers are no strangers to the benefits of outsourcing. From legal, accounting and payroll services, to IT support and customer service centers, businesses of all sizes recognize the value of focusing on business development and revenue-generating activities. Why waste critical human resources on non-strategic, non-revenue generating tasks when a third-party vendor can pick up the slack?
As employment regulations and labor laws mushroomed over the past decade, employers began expanding their outsourcing-horizons to include one of the most time-consuming, complex and dangerous activities in their business operations: Human Resources administration. Rather than surfing the web to find the latest labor law, sifting through stacks of employment paperwork, or processing insurance claims, businesses are best served when management can focus on core HR functions, such as training, motivating and developing their staff.
With limited internal time and resources, tens-of-thousands of employers nationwide are turning to firms that specialize in Human Resources Outsourcing.
Human Resourcing Outsourcing firms manage the entire ‘life-cycle’ of their clients’ employees, from hire to termination. HRO firms employ and team of employment experts, providing guidance and support in a wide range of disciplines including:
- Regulatory compliance
- Hiring Practices
- Employee relations
- ACA compliance
- Compliant policies and procedures
- Employee Training
- Employee benefit packages and administration
- Payroll & Tax Administration
- Workers’ compensation insurance
- Safety & Risk Management
- Recruiting
By outsourcing many of these human resources functions, employers enjoy multiple employment benefits.
- Reduce HR Overhead and Operating Costs
HRO companies support thousands of clients and employees. Through this large and stable employee base they are in the position to forge solid, long-term relationships with a range of insurance companies and service providers. These include workers’ compensation carriers, insurance brokers, 401(k) administrators, background and credit check agencies and employee perks providers. In each case, the HRO firm negotiates significant discounts in premiums and fees which are then passed through to their clients. Whereas high-volume purchasing power is usually reserved for Fortune-500 size employers, even the smallest start-up can now enjoy the economies-of-scale offered through the HRO.
Beyond rates and premiums, veteran HRO firms also offer their clients proven employment systems and turn-key HR processes. From hiring practices to termination policies, small employers without established HR systems can now significantly reduce the time and cost of researching, creating and implementing compliant employment policies.
- Regulatory Compliance
Obamacare, wrongful termination, disability protections, wage and hour issues, religious and sexual discrimination, minimum wage, sick and pregnancy leave – the list of employment challenges goes on and on. For small and mid-sized employers with limited in-house HR expertise or legal support, running a business is a virtual minefield. One wrong employment decision can result in lawsuits, fines and punitive damages. As the employment landscape keeps shifting, only experienced employment experts can safely understand the impact of these laws and provide timely support and direction to their clients.
HR Outsourcing firms employ seasoned HR professionals and in-house legal counsel who are “plugged into” the new laws and have the time and know-how to track and stay abreast of the changes. This information is then passed directly to their clients. Ultimately, clients who outsource their human resource functions to an HRO firm can confidently make employment decisions knowing their business is in compliance.
- Attract and Retain Top Performers
At the end of the day, it is the employees themselves who will determine the success or failure of any business venture. By attracting the best talent, and developing and motivating these employees to reach their potential, employers will be well-positioned to maintain a profitable business. Numerous studies show that employers who invest in their employees and provide a rich benefits offering, such as major medical, dental, vision and other voluntary benefits, experience low turn-over and produce a more productive and motivated staff.
However, “investing in employees” goes beyond insurance products. Employers need to understand the value of creating a positive work-environment, and to recognize and reward the employees who excel at their work. HRO firms do not only provide their clients a robust and rich benefits offering; they incorporate incentive and recognition programs, help clients establish flex-time or tele-commuting policies, organize company events, assist in conducting employee reviews, create work/life balance incentives, and provide training and continuing education opportunities.
Through all these programs, HRO firms help their clients create a positive workplace buzz, attract top-talent, and ultimately help motivate their employees to excel.
Summary
Human resources outsourcing firms provide multiple benefits for small and mid-sized employers. The CFO will applaud the decision to join an HRO as they watch their insurance premiums and HR administration soft-costs drop. Management will feel confident in their daily employment decisions knowing there is an HRO team watching their back. Employees will give the business 110% as they see their employer investing in their well-being and best interests. And the Executive Team will remember what it was that drove them to open their business in the first place.