Have you ever wondered how to outsource human resources for your small business? If you are a small business owner or run operations for a small business, you already have a lot on your plate. But whether you have a few key employees or a quickly growing team, chances are you didn’t expect the amount of time and attention human resources management takes. 

From payroll and benefits to hiring, firing, performance reviews, employee relations and more, you not only have the responsibility of getting it all done and keeping your employees satisfied and productive, but you also have the responsibility of staying in compliance with local, state, and federal employment laws. 

The truth is, if you don’t have a strong handle on your human resources management, you are not only dealing with a lot of extra work but you are also putting your business at risk legally.

The good news is, you don’t have to do it all yourself, and neither you nor your current staff has to become a human resources expert. HR management is a multifaceted role and it can be challenging and costly to hire someone internally with all of the knowledge, skills, and experience needed to get the job done well. 

By outsourcing HR, you can keep your employees safe and happy, comply with employment regulations, and follow best practices to support the growth of your small business.

HR Outsourcing Options 

Whether you are looking to fully outsource your human resources management or simply want help with some aspects of HR, it’s important to know what needs to be covered and what options are available to you.

Administrative human resources functions include things like payroll, benefits, insurance, taxes, employee handbooks, hiring, and firing. Employee engagement functions include performance reviews, training and development, onboarding, and disciplinary actions. Compliance functions include managing safety, legal and regulatory issues. 

If you choose to outsource any aspect of your HR, it is important to understand that each of these functions intersects and overlaps with one another, which is why even HR consultants who specialize in the services they offer should have a generalist background or partner with providers with broad offerings.

Perhaps you simply want to outsource application tracking or payroll to a software-as-a-service (SaaS) that does most of the work for you and automates repetitive tasks. You could also tap into a third-party vendor that offers low-cost benefits administration or a helpdesk that provides basic answers to your HR questions.  

You might want to consider going the route of joining forces with a Professional Employer Organization (PEO), an option that allows you to totally outsource HR by entering into a co-employment arrangement. The PEO becomes the employer of record and takes on the responsibility of managing human resources functions, payroll, benefits, and more. 

But many small business owners are also looking for more personalized hands-on support. If so, you will want to work with a human resources consultant or firm, such as HR Answers, that provides services customized to meet the unique needs of your organization. 

The Pros and Cons of HR Outsourcing for Small Business

The biggest advantage of outsourcing HR is that it reduces the fixed costs of managing your employees. Working with an HR firm can save you time and money because they are more efficient and knowledgable about best practices. Plus, through outsourcing various HR functions your small business can offer a wider range of benefits, perks, and professional development opportunities.

Overall, outsourcing can allow you to better take care of your employees while also focusing on growth and what you do best.

The biggest drawbacks arise when small business owners choose outsourcing as a band-aid for bigger internal problems. Some make the mistake of using outsourcing to put a buffer between management and employees in a way that causes mistrust and resentment. And if your goal is to be as hands-off as possible to minimize employee engagement, you are likely to be disappointed.

Keep in mind, an inexperienced consultant or poorly run outsourcing company may provide inadequate services, causing more harm than good. So it is important to do your due diligence when selecting a vendor.

Are You Ready to Outsource HR?

When deciding whether it’s time to outsource HR or some function of HR, you should ask yourself questions such as:

  • Have I properly assessed my company’s needs and identified the outsourcing solutions that will most likely meet those needs?
  • Have I done enough research to know what kinds of questions to ask a potential vendor?
  • Do I have the bandwidth to provide what the outsourcing partner will need to do their job?
  • What type of outsourcing solutions will best meet our current needs?
  • What is our budget for outsourcing?

As a small business, it often makes sense to outsource many HR functions. A combination of consulting services and software platforms can help you manage the majority of the HR-related duties you face. Your focus as a small business leader should be on generating revenue, growing your business, and creating a great place to work, not making sure your employees get their paycheck on time. 

Are you considering outsourcing HR for your small business? Whether you are exploring options or have a specific need, contact us for a free consultation today.