$11 billion dollars get lost every year from employee turnover.
How do you reduce employee turnover? By having an efficient human resources operation.
Human resources management is an important function of any small business. However, it’s also a complex one that requires the investment of many resources including time and money.
For many small businesses, outsourcing HR functions makes a lot of sense. Small businesses can benefit from joining a professional employer organization (PEO).
PEOs aren’t just used for payroll processing. In fact, they can handle all of your HR functions. While you might be thinking you could do this work yourself, there are quite a few reasons you shouldn’t.
Keep reading to learn more about the ways outsourcing your HR functions can benefit your business.
1. Outsourcing HR Functions Saves You Money
As a business owner, protecting your bottom line is one of your biggest priorities. While it might seem like outsourcing your HR functions is just another cost, it’s quite the opposite.
One of the biggest reasons businesses choose to outsource is because it actually saves them money.
While we’ll go into more detail on how outsourcing HR functions improves your company’s compliance, you’ll save money by avoiding penalty fees from noncompliance with regulations and employment laws when you have an expert on board.
It’s expensive to have an efficient in-house HR staff. HR managers often earn over $75,000 per year, plus the cost of benefits.
While it dependents on the size of your business, you can easily spend hundreds of thousands of dollars each year on employing your own HR staff. It costs much less to outsource these jobs.
Working with a PEO can also save you money on benefits by negotiating better rates. This means that small businesses can access rates usually only offered to large companies with big staffs.
One of the biggest reasons that small companies lose out on top talent is because they often can’t offer salaries and benefits that compete with big companies. Investing in a PEO means you can offer a better benefits package including insurance as well as training opportunities.
2. Freed Up Time
When it comes to running a business, time is money. If your employees are spending less time on HR functions, they have more time to spend on business initiatives.
These include focusing on sales and growth and of course, increasing business revenue.
Business owners are often bogged down by administrative tasks that take time away from the essential functions of the business. Gone will be the days of spending hours on tedious paperwork or working through issues with payroll or benefits. Instead, you can work on setting business goals, developing strategic sales plans, marketing your product or service and selling it, and increase your bottom line.
Some of your company’s best minds are probably stuck behind a pile of HR paperwork.
3. Better Compliance
Ensuring compliance with government laws and regulations is one of the most essential functions of an HR department. It’s also a complicated job.
Laws regarding employment and wages are constantly changing. Your company must be in compliance with not just federal law, but also state, county, and local rules and regulations.
If your company is subject to union or industry regulations, things are even more complicated. If you don’t comply with these rules, you’ll be subject to major financial consequences.
As a business owner, you probably aren’t an expert in employment law, and you shouldn’t have to be. Working with a PEO will give you peace of mind and save you from legal consequences.
They will ensure your policies are within the scope of the law and that any actions you take regarding employees including issues like harassment claims, discipline, and termination, are fair and legal ones.
4. More Efficient Hiring and Training
Hiring and training of new employees is expensive. The average cost of hiring a new employee is $4,129 and it takes an average of 42 days to fill an open position.
That’s a lot of money spent on advertising. Using a PEO means saving money on hiring because they have the resources to cut these costs. PEOs also make sure you hire the right people the first time.
This saves you money on the cost of turnover. You’ll spend less hiring staff and you’ll hire better staff.
PEOs streamline the hiring process and give you a better opportunity to attract top talent from the posting of the job description to the interview process. You can have the early stages of recruiting and hiring handled for you so that you only need to be involved when the pool has been narrowed down to the top candidates.
Your PEO will help with the employee onboarding process. When a company has an efficient onboarding process, employees are likely to adapt to the culture of the company more quickly and more efficiently.
Once employees are settled in, PEOS can monitor their performance and offer objective insights into HR decisions.
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Using a PEO for outsourcing HR functions will give you a return on investment that is worth more than the cost of the service.
You can use the time and money you save to focus on doing what you do best as a business owner. You’ll also find peace of mind in knowing that your HR department is not making costly mistakes with regard to compliance.
Contact us today to learn more about what we can do for you and how we can streamline your HR operations.