8 Benefits of HR Outsourcing that Your Business Needs

For small business owners, every hour spent on payroll processing, benefits administration and compliance paperwork is an hour not spent on business growth. HR outsourcing transforms this challenge into a competitive advantage by providing enterprise-level expertise without the overhead of building an in-house HR department.

The result? More time to focus on what you do best, while ensuring your workforce receives professional, compliant HR support. Here are eight compelling advantages that make HR outsourcing a game-changer for small businesses:

1. Administrative cost savings
2. The ability to offer employees access to better benefits and services
3. Stronger risk management
4. Interactive performance management tools
5. Increased efficiency
6. Faster ramp up time for new employees
7. Improved training and development
8. Personalized service from HR consultants

Which HR functions can be outsourced?

When you’re a small to medium-sized business, HR outsourcing can solve a lot of problems. HRO can address essential HR tasks and provide a wide range of other services. HR functions that can be outsourced include:

• Compliance. Many HR outsourcing companies can provide best-practice guidance regarding legal compliance to help your company avoid harsh penalties or hefty fines.
• Employee relations. Internal complaints and claims of alleged workplace harassment or discrimination can create complex situations that require HR best-practice resources and guidance.
• Payroll processing services. No company can function without a comprehensive payroll processing system that serves their employees. Outsourcing to a third-party HR department means that compensation, wages, payroll taxes and deductions are handled in a timely manner that complies with the appropriate laws and regulations.
• Employee benefits.Outsourcing HR gives you the chance to offer your team access to big-company benefits. This might include retirement plans, health insurance and non-traditional perks.
• Workers’ compensation. Workers’ compensation issues can include paid sick time, disability and policies that cover medical care in case of an emergency.

8 Benefits of HR Outsourcing

When you're running a lean and mean operation, employees can be more efficient when they have flexibility with how they use their time. HR outsourcing can help them focus on the core activities of your business, like strategic planning, rather than HR administrative burdens.

Here are some key benefits of HR outsourcing:

1. Save money on administration costs

While outsourcing your HR needs comes at a cost, it’s negligible when compared to the value HR expertise can bring. Standard HR departments have many responsibilities requiring significant staff to fulfill them. As your company grows, your HR department needs to grow alongside it.

When you outsource with a PEO, you’ll receive access to HR scalability. The HR services can expand with your workforce. Outsourcing can provide a substantial savings on overhead cost. Some of the areas where you may find savings include payroll processing, training and salaries of the HR expertise you’d otherwise have to employ.

2. Offer employees more services

Small to medium-size businesses don’t always have access to benefits or employee services. This can create issues when recruiting and retaining top talent.

When you work with a PEO, you gain access to comprehensive big-company benefits that your employees deserve. This includes traditional and non-traditional benefits. Access to benefits can extend beyond medical, to dental, vision, life, disability, retirement, transit and other voluntary benefits that help improve an employee’s compensation satisfaction. This can decrease employee stress, improve productivity and strengthen retention.

3. Stronger risk management

One of the most difficult aspects of running a business is staying up to date with dynamic employment-related laws at the local, state and federal levels. While some changes or updates may be small, you may still need to make adjustments within your organization to stay compliant.

According to new findings in the Q4 MetLife and U.S. Chamber of Commerce Small Business Index:

• About half of small business owners and decision makers say they are spending too much time and money navigating regulatory requirements and it’s impacting their growth.
• 51% say that licensing, certification and permit requirements make it harder to grow their business.
• 47% say that their business spends too much time fulfilling regulatory compliance requirements.

Outsourcing HR could strengthen your approach to risk management by providing you with guidance and services to help you avoid fines, claims or devastating penalties.

PEOs can provide HR experts who are well-versed in ongoing changes to laws and regulations at all levels to help keep your policies and procedures up to date. This not only benefits your organization, but it also helps to protect your employees.

4. Efficient performance management tools

Effective employee performance management is a critical component of HR. However, every employee is different and responds uniquely to feedback.

When you outsource HR, you can gain access to a variety of performance management tools and modern practices to conduct feedback loops and gain insight on how to retain employees by improving their overall experiences. These tools may include:

• Engagement surveys
• Exit interviews
• Onboarding questionnaires

This not only helps improve your overall organizational efficiency, but it also communicates your investment in your employees’ growth and overall happiness.

Outsourcing HR does not mean that your employees will be managed by an external team. You are still responsible for this, but you could gain tools and best-practice support to help make the process more adaptable and efficient.

5. Increased efficiency

One of the most notable benefits of outsourcing your HR is the time saved within your organization. When you have an in-house HR team, they must navigate piles of paperwork, HR compliance, risk mitigation, employee benefits, processing payroll, employee complaints and other important HR functions.

Outsourcing allows you to free up this time and increase the overall efficiency of your company. This gives you the capacity to hire a workforce that spends their time advancing your company’s strategic goals, growing your revenue stream and improving customer loyalty.

6. Faster ramp up time for new employees

Onboarding is a crucial part of the employee process—and really sets the tone. According to Gallup, 70% of employees who had exceptional onboarding experiences say they have "the best possible job." These employees are also 2.6 times as likely to be extremely satisfied with their workplace—and consequently, far more likely to stay.

HR outsourcing companies can provide consistent, proven processes for fast, clean onboarding.

And if you decide to expand to new geographic markets, certain PEOs have the HR expertise to help you onboard new employees in any state. They also could help you navigate the complex process of hiring and onboarding outside of your typical locations. All the while, they have the expertise to adhere to local, state and federal employment laws and regulations.

Any modern HR partner should also have technology that makes it easy to manage onboarding in real-time. A third-party provider's human resources information systems could equip you with mobile apps, tracking and workplace analytics to help you make well-informed personnel decisions.

7. Ongoing training and development

Employee retention is an important part of organizational efficiency and productivity. Excessive turnover leads to wasted time, money, effort and lost expertise.

When you work with an external HR team, you’ll have access to tools to help you gain a better understanding of how to create a people-centric workplace that helps build employee satisfaction, and thus improve retention rates.

You could offer your employees practical training on subjects such as:

• Best practices
• Business skills
• Software skills
• Diversity, equity and inclusion

The technology access that HR outsourcing offers enables you to provide remote instruction that encourages both personal and professional development. This can help set up your employees for success. It also shows your interest in employee development and your commitment to creating a diverse and inclusive workforce.

8. Access to expert HR consultants

Outsourcing offers unbeatable access to HR expertise. Human resources is a complex, multi-faceted and essential part of running a business. It's important to have the skills and knowledge available to meet all the requirements.

HR outsourcing can provide a cost-effective solution to this problem. Working with a PEO can provide you with a team of experienced HR professionals who understand the intricacies involved in processing payroll, benefits administration, risk management and other aspects of people management.

With the right help, a business can use HR as a tool for growth rather than just a series of chores.

The Solution for HR Outsourcing

TriNet offers HRO solutions to SMBs across various industries. Our HR experts, services and software can help your business succeed in a competitive market.

For the most comprehensive level of HR outsourcing, contact us about our PEO (professional employer organization) services. A PEO becomes the employer of record for tax and insurance purposes. We can take on a wide range of HR functions including payroll administration, payroll processing, benefits administration and compliance guidance.

Our HR outsourcing solutions enable you to focus on the goals and passions that got you into business in the first place. Find out how much you might save with a PEO by using our free ROI calculator.