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Whether you're a small organization without a dedicated human resource professional or you have an HR staff of one or more, chances are you’ve thought at one point or another about outsourcing some (or all) of your HR functions.
It would be great to free yourself and your staff to focus on business growth and other efforts to scale your company, but just how much would HR outsourcing cost?
The answer, of course, depends on the scope of services you’ll want your HR partner to perform. Before you can determine the costs—and potential savings—of HR outsourcing, you first need to assess which services would meet your needs.
Do you just need someone to handle payroll and compliance reporting? Or are you looking to overhaul your onboarding process, manage benefits, provide guidance on corporate restructuring or help transform your culture?
There are many types of HR service providers available who offer different levels of service. To find the one that is right for you, it helps to have a general understanding of the following common services offered.
It’s not unusual to hire an HR service provider to handle many of the administrative tasks associated with HR, including payroll processing, direct deposits, benefits administration, tracking of employee records, tax forms, reporting and more.
Many businesses, however, like to maintain a hands-on approach to their data and a Human Resource Information System (HRIS) is the best way for multiple users to access and maintain accurate records.
Such software can track everything from tax forms, signed agreements, Forms I-9, OSHA logs and more. It also integrates payroll processing and usually includes time-off management, scheduling, storage for company policies and a myriad of other features.
One of the challenges businesses have traditionally faced is that an HRIS is often cost-prohibitive to purchase and implement in-house, requiring configuration and ongoing maintenance.
As HRIS has grown in popularity, however, many tech companies have launched out-of-box, often web-based, systems for purchase or subscription. These systems have the advantage of being initially more cost-effective, but they are rarely supported beyond the technical aspects. So, support is available to fix the system if it won’t let you fill out an OSHA incident report, but it can’t tell you how or why to complete specific fields.
As a result, many employers choose to partner with a third-party HR service provider that offers access to robust software in addition to personal support with other HR functions.
Most companies need more than a technology solution to improve their HR functions and stay on top of the latest trends, regulations and recruiting initiatives, and many service providers offer starting packages that include HR consulting.
The extent of consultative support can vary widely, but you should expect any HR partner to first provide a thorough assessment of your current HR program and any potential risks before they implement any new systems.
General HR services usually include help with regulatory compliance and an audit of personnel files, employee handbooks, job descriptions and Forms I-9 to determine any potential areas of concern.
Depending on your needs, some services are scalable to also include assistance with establishing protocols for employee discipline, help developing policies and procedures, or conducting wage and salary benchmarking.
Some companies may choose to outsource all HR functions rather than hiring an internal department, and there are times when a company needs additional support for a specific project. In these cases, you will want to look for a provider who offers enhanced HR services which may include:
So, does HR outsourcing save you more than it costs? Many businesses think it does. Consider the labor savings, reduced risks of compliance violations, avoidance of fines and legal fees, plus the increased profitability from improved employee engagement, productivity and efficiency.
All these factors can provide significant savings over time and free your team to focus on strategic initiatives for even greater growth and prosperity.
The key is to choose the right partner who meets your specific needs.
HR outsourcing needs to be scaled to your organization's needs to be most effective. As your business changes, make sure your HR approach changes with it and you have the right partner to help you achieve your goals.
Contact our team and see how your business can reach new heights by partnering with McClone for HR services and check out the infographic below for a helpful comparison between In-House and Outsourced HR.