The Benefits of HR Outsourcing

August 25, 2016

There is no perfect recipe for achieving business success. Yet certain characteristics generally play a big role, such as perseverance, a laser-like focus, the ability to develop and execute a strategic plan, and the aptitude to manage one’s workforce. The challenge is that there are many aspects to any business, and it is difficult to keep on top of everything in an ever-changing and complex marketplace.

The most successful companies have learned that outsourcing certain business functions not only free up valuable time, but can also improve and streamline important processes for greater efficiency.

When it comes to HR needs, many small and medium-sized business owners across the country have discovered that Professional Employer Organizations (PEOs) are a practical and efficient solution. A PEO serves as an off-site, human resources department that manages daily administrative needs such as payroll processing and related tax filings, employee benefits management and workers’ compensation coverage and claims resolution.  In addition, by taking advantage of volume buying power, PEOs can offer benefits packages that relatively small companies may not otherwise be able to access.  Such comprehensive benefits packages may include health, dental and vision coverage, a prescription drug program, and short and long-term disability insurance that they may not otherwise access.

Full-service PEOs typically also provide employer liability management, some government compliance assistance, training and development, and help with recruiting and selection as part of their total service offering. Business owners usually find that entering into a co-employment relationship with a PEO can better help them focus on more profitable and productive tasks – like finding new customers and retaining existing ones – while the PEO handles the time-consuming HR-related activities.

Below are several reasons businesses might consider outsourcing:

Reduce and Control Operating Costs. The single most valuable reason for outsourcing is to reduce and control operating costs. Companies that try to control all resources themselves incur higher research, development, marketing and strategizing costs, while an outsourced agency lowers that cost by the sheer size of its consistent output.

Improve Company Focus. Leaving operational details to outside resources frees businesses to focus on broader business aspects, including strategizing and meeting customer needs. By not focusing on areas outside its experience, the company can place more emphasis on its core internal functions.  And more importantly, the company can narrow its focus to the needs of its clients or customers.

  • Share Risks.  It’s about a collaborative relationship. By the very nature of the function, outsource providers share many of the risks. When responsibility for a task is shared, so is the risk. A co-employment relationship with a PEO helps to significantly lower the risk that one company assumes.

A company considering a PEO should carefully reflect on its internal resources, current needs, future growth plans and financial situation.  Although a PEO may not be the answer for every small and medium-sized business, it is a smart decision for many and may be worth considering. The National Association of Professional Employer Organizations (NAPEO) offers guidelines to companies considering a relationship with a PEO.

Staying ahead of the competition and running a successful business takes an enormous amount of hard work and time.  PEOs help unburden employers by handling cumbersome employment-related paperwork, keeping up with the constant flux of workplace laws and regulations, and overseeing benefits management.  They can serve as a critical support team that enable business owners to focus on what is most important and grow their companies.

John Zilg is a district manager in the Florham Park, NJ office of Insperity, a trusted advisor to America’s best businesses for more than 30 years. Insperity provides an array of human resources and business solutions designed to help improve business performance. Insperity® Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace. Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce Optimization® solution. Additional company offerings include Human Capital Management, Payroll Services, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over two million employees.  With 2015 revenues of $2.6 billion, Insperity operates in 60 offices throughout the United States. For more information, call 800-465-3800 or visit http://www.insperity.com.


Written by: John Zilg
District Manager, Insperity
http://www.insperity.com

John Zilg is a district manager in the Florham Park, NJ office of Insperity, a trusted advisor to America’s best businesses for more than 30 years. Insperity provides an array of human resources and business solutions designed to help improve business performance. Insperity® Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace. Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce Optimization® solution. Additional company offerings include Human Capital Management, Payroll Services, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over two million employees. With 2015 revenues of $2.6 billion, Insperity operates in 60 offices throughout the United States. For more information, call 800-465-3800 or visit http://www.insperity.com.

3 Responses to The Benefits of HR Outsourcing

  1. I like how you talked about using business IT solutions to improve company focus by leaving operational details to outside resources. My aunt is looking to outsource her IT to another company because she can’t afford to hire her own anymore. Thank you for the information about how doing so will help her place more emphasis on the core internal functions of the business.

  2. It’s interesting to know that when it comes to a company outsourcing their human resource department, there are actual benefits that come with it. Like how it will be able to improve and streamline important processes for greater efficiency. To me that is something that will really help companies to succeed, and it will in turn create a better experience for me as a customer.

  3. Hello John! . Quiet useful information especially when thinking of outsourcing and how important it is to develop a good plan. Using the virtual staff and setting up an off-site office can definitely give a new direction and reduce the work load of a HR department. By outsourcing the company is not only allows itself to focus on the core elements but also sharing the risks involved equally.

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