July 22nd, 2021

3 Benefits of Outsourcing HR

More small to mid-sized businesses are looking for ways to save time and money and redirect their focus from managing day-to-day tasks to driving business growth. Outsourcing certain functions like human resources is an increasingly smart way to go.

Outsourcing can stand in for an HR team if you don’t have one, but it doesn’t have to replace your existing team. Whether you or a small team of your employees is handling it. Instead, outsourcing supports both: it can fill in as or support your existing HR staff by offering administrative bandwidth and specialized knowledge when it’s needed. There are signs you’re ready to outsource your human resources, from lack of time to increasing costs, to compliance issues.

Back-office administrative tasks like payroll, workers’ compensation, and compliance are well suited for outsourcing. Allow your in-house team to pay attention to the people-focused and strategic work of HR, such as developing your company culture or managing employee performance, for example. Ultimately, outsourcing HR gives you and your staff more time to spend on the high-value work that benefits your employees and business as a whole.

1. Save Costs

If you’re concerned that outsourcing is just an added expense that will hurt—not help—your bottom line, here’s why you can spend less time worrying about that when it comes to HR.

The costs associated with having employees aren’t just about paying their wages. Outsourcing helps your business save on some of the most expensive HR costs—from healthcare and benefits to workers’ compensation and employee perks. You’re also probably paying for different types of insurance like Temporary Disability Insurance (TDI), taxes, and the administrative costs of handling payroll.

About 70% of your labor costs are made up of all of these expenses combined. And the size of your business can have a huge impact on what you’re paying, especially if you’re a smaller operation.

Labor costs are significantly reduced with an HR partner. That’s because they have buying power that’s the equivalent of many businesses and many employees. They can extend their buying power to you so you can “buy in bulk” and save on healthcare, benefits, and other labor expenses, thus getting more value for your dollar.

Whether your business only has a few employees or upwards of 100, you can offer benefits that are on par with top companies at a reduced price. And you can get better rates on mandatory insurances, especially if your HR partner handles claims management.

2. Stay Compliant

If you’re a business owner, you know what it’s like to feel the pressure to maintain compliance. There are new rules and regulations to follow as you grow. But you can relieve some of that pressure with an experienced HR partner.

Outsourcing helps your business stay fully compliant with federal, state, and local labor laws and reduces your liability. 

Laws and regulations are a reality of having a business. They guide everything from the way you hire and fire people to how you administer payroll and benefits to how you file taxes. There is a multitude of regulations—think FICA, FMLA, ADA, OSHA, HIPAA, and more— that can be extraordinarily challenging to keep track of. And to make things even more difficult, many of these laws and regulations are constantly changing.

An HR partner means you don’t have to be “pretty sure” anymore that you’re staying compliant. You can share legal responsibilities with your HR partner, which means instead of having to rely solely on your judgment or your staff’s, you can get help and guidance from your partner’s legal and compliance experts. An HR partner has your back so you can navigate the many varied and complicated regulations in today’s business landscape and avoid the potentially catastrophic costs of employee-related lawsuits and other liabilities.

3. Relieve the Administrative Burden

If you’re drowning in HR paperwork, you likely don’t have enough time for the critical parts of your job. There are likely several HR activities that are wasting your time. Having an HR partner can lighten the load and free you up to work on strategy.

HR administration has a cost—and it’s not just a financial one. There’s a major time burden involved as well. Outsourcing disengages you and your staff from all the administrative tasks, processes, and paperwork so you can focus on the most important aspects of your job as well as the aspects only you can do.

A huge amount of time goes to all the day-to-day back-office tasks like securing employee benefits, paying employees on time, and managing HR operations. While these tasks—known as transactional HR work—are important for keeping the business running and your employees well cared for, they leave little time for the other side of HR, which is the strategic work.

With an HR partner that can take over your administrative burden, you can focus on strategic HR. Strategic activities are the intentional, meaningful work of planning for the future, building strong teams, and developing and investing in your company culture. The result of spending quality time on strategic HR is more engaged employees and managers and better employee morale. In essence, focusing less on admin you can focus on the kind of qualities that attract and retain the best talent.

Reap the Rewards of Outsourcing Your HR

Outsourcing HR to a trusted partner means you can hand off many of your most complicated and time-consuming HR tasks to the experts. And an HR partner doesn’t just handle your paperwork: they can also offer guidance and advice on strategic HR when you want it. Instead of worrying about who on your team can or should take on these tasks, you can be assured that an HR partner has the capacity, skills, and tools necessary to take them on for you.

Growing your business doesn’t just happen at the sales level. How you manage, nurture, and build your team and keep your workplace running smoothly also matters. Being intentional and strategic in your business means being able to offload and consolidate many of your most complicated and time-consuming HR tasks to a partner. When you do this, you save costs, keep your business compliant, and free up time for the best you and your staff have to give so you can take your business in the right direction.

Ready to outsource your HR to a trusted, local HR partner? Schedule time with one of our experts today: https://www.obsidianhr.com/contact/. Or if you’re still not sure, read our guide on whether to outsource your HR or keep it in-house.

Download Our eGuide: Managing HR — In-House or Outsourced?

Download this guide to learn whether in-house support or sharing the workload with an HR partner is the right fit for you.

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