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 Outsourcing HR
Why Outsourcing HR Should Top Every Small Business To-Do List
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By: Arlette Measures
A Quick Guide to HR Outsourcing

A recent SHRM survey asked executives this question: “What do you think will be the biggest investment challenge facing organizations over the next ten years?” For 47 percent of respondents, the answer was, “Obtaining human capital and optimizing human capital investments.”

Small businesses cannot afford to make many mistakes when it comes to hiring, firing and generally managing their workforce. The average cost per employee for a small business with fewer than twenty employees is about $7600. Compare that with companies that have more than 500 employees; their expenses add up to only $5300 per employee. Clearly, small businesses owners have strong motivation to have competent HR professionals working in the best interests of their organization. Respondents to the above mentioned survey gave the following reasons, in order of importance, for choosing to outsource HR functions:

1. To save money.
2. To be free to focus on strategy.
3. To improve compliance.
4. To increase accuracy.
5. To fill a gap in in-house experience.
6. To take advantage of technological advances.
7. To offer services we otherwise could not.
8. To focus on core business tasks.

Key Benefits of Outsourcing HR
What benefits can you expect to see if you decide to outsource your HR? Here are eight important ones to consider:

1. Save Money - HR tasks can be complex and time consuming. Outsourcing HR duties will eliminate the expense of hiring and training your own HR employees to perform duties such as benefits administration and payroll. Experienced HR experts will be able to handle these duties efficiently, resulting in substantial
savings in labor costs. HR providers can also save you the expense of hiring temporary employees for short-term projects as well as the cost of paying
benefits to in-house HR staff.

2. Save Time - Outsourcing your HR functions will relieve you of dozens of administrative tasks involved with employee-related responsibilities, allowing you
time to focus on developing strategies that create growth and enhance your competitive edge.

3. Enhance Productivity - Outsourced HR service providers have systems in place to effectively monitor and analyze employee performance and implement
changes that will increase productivity among employees.

“Outsourcing firms can take up various tasks, from payroll to benefits to recruiting, to free up a client to focus on its strengths. The new health care reform legislation, for example, will have a big impact on employers, some of whom may be overwhelmed by its complexities.” - Don Weinstein, senior vice president for product management at ADP.

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