HR Outsourcing (HRO)

HRO stands for Human Resource Outsourcing, and it does pretty much what it sounds like. HROs offer HR services on an outsourced basis. The advantage of an HRO for small businesses and startups is that it allows companies to pick and choose what benefits and HR tasks they need outsourced. In effect, it’s like choosing among a buffet of HR options so that you can custom-design a plan that works for you. Keeping simple tasks in-house while outsourcing more complex tasks to a specialized HR company is a fantastic way to support a fledgling venture.

HRO solutions don’t provide an employer partnership, so the client remains the employer of record. An HRO is a good solution for larger businesses that want to keep most HR procedures in-house but outsource additional tasks for extra help with the selection and administration of certain HR functions.

When it comes to properly running a business, employers are not only expected to keep up with shifting laws and regulations, but they’re also tasked with managing long-term business goals and helping their companies grow. However, effectively juggling these tasks is something that just isn’t feasible for every company, especially with limited to no in-house HR staff members.

While outsourcing HR may seem like a counter-intuitive way to improve your organization’s workflow, there are plenty of ways it can improve efficiency in the workplace. Effortlessly keeping up with HR trends and changing laws are one of the obvious advantages of outsourcing HR, but if you’ve been considering HRO, here are just a few of the many benefits.

1. Outsourcing HR can save money on employee costs.

For small and medium-sized businesses, it can be challenging to afford enough employees to staff a good HR department. In-house HR requires paying a salary and benefits to a whole team of employees. Most companies pay less by outsourcing HR than they do in paying those salaries, plus all the fees associated with having an employee. Outsourcing HR allows companies to keep a slimmer team focused on the company’s core business.

Companies with in-house HR must foot the bill for every individual function of that department. Everything from employee training and recruiting to the software the employees use to do their jobs costs money. Companies that provide HR outsourcing services provide all these things in one package. HR outsourcing firms can assist with HR-related tasks to keep everything moving on time and within budget, providing employers a more efficient, cost-effective approach to running a business.

2. Outsourcing HR can save money on benefits.

Because large HR outsourcing companies have many clients, they can negotiate prices with insurers that typically only very large organizations can get. Receiving better benefits for a lower price by outsourcing HR saves money and keeps employees satisfied. Health benefits are more important to employees now than ever before. Outsourcing HR can give employees better benefits for a lower price. Along with a growing number of employees comes the need for a better benefits pool. Especially for smaller businesses, healthcare benefits costs can be high. HR outsourcing can open the door to a full-service employee benefits broker that can provide access to the most competitive benefits package rates available.

3. Outsourcing HR can save time.

Managing unemployment claims, leave, and other basic everyday HR tasks can be time-consuming and stressful if you’re not familiar with the proper forms or legal protocol. HRO services will keep you up to speed on the proper procedures for all types of claims or leave administration, saving you both time and energy to focus back into running your business well.

As the number of employees increases, so do various compliance requirements, benefit plans, training needs, and people management. Instead of focusing on these tasks, outsourcing can give executives more time to focus on their goals.

An office manager is not the same thing as an HR expert, neither is an accountant nor a bookkeeper. If your company is relying on anyone other than a qualified HR expert for human resource work, then you’re missing out on important expertise, while also pulling certain employees away from what they’re qualified to do. Outsourcing HR to experts gives your accounting, bookkeeping, and office management employees time to focus on the tasks that they are good at.

For companies that have HR staff members on the team, managing the day-to-day tasks of payroll and employee services can eat up much of the employee’s or department’s time. By outsourcing some of the more time-consuming HR tasks, companies free up their HR team members to focus on long-term goals and business growth.

4. Outsourcing HR can help you stay in compliance.

Human resources is a complex and ever-changing part of the business world. For overworked HR employees, keeping up with changing regulations can be almost impossible. Additionally, no employer wants to experience errors with taxes or payroll that can result in hefty fines.

Every employee can make a mistake once in a while, but errors made in the HR department can incur large penalties. A simple mistake in payroll taxes or salary withholding can incur huge fines from the IRS. Failing to properly train employees on harassment issues can lead to costly lawsuits. Companies that operate in multiple states also have to keep up with local labor laws, or they can face fines for violating them. HR outsourcing firms have large teams with a variety of specializations. Because these HR professionals focus on one specific task, they don’t make the same mistakes that an employee juggling multiple jobs could make—ultimately saving your company money on fines and liability.

With HRO, you’ll receive a comprehensive review of your current HR policies and practices, as well as guidance on what policies and practices need to be revised, updated, and in compliance with federal, state, and local laws. It is essential for employers to maintain compliance with everything from employee classification to taxes to timekeeping. HR outsourcing will ensure that the business is abiding by regulations and statutes, as well as keep up to speed on important regulation changes and updates.

5. Outsourcing HR can help your business grow.

Many organizations are looking to recruit the best and most qualified talent as well as retain their employees they have worked so hard to train. Your top employees likely value organization, streamlined processes, and have good time management skills. They need access to a knowledgeable and responsive HR staff.

HR outsourcing firms stay on top of recruiting trends and know the best way to attract great employees. They can help businesses create a training program for new hires and plan incentives to keep employees engaged. The HRO model allows for executives to look at the bigger picture while the HR partner focuses on the employees. Organizations can also access tools to help measure growth, encourage employee success, and stay in compliance.

6. Outsourcing HR is a hassle-free way to update your employee handbook.

An employee handbook is a must and will save you time and energy when it comes to answering policy and procedure questions from your employees. HRO will help you develop and publish your employee handbook, tailored to your business identity and needs. In addition, your handbooks will be updated regularly as laws, policies, or company needs change.

7. HR Outsourcing can improve employee relations and streamline hiring orientation.

Maintaining good employee relations is an important part of any business, yet it can be very time-consuming for business owners and leaders. HRO will be available for your employee relations, as well as being able to offer efficient and professional new hire orientation.

8. HR Outsourcing can provide training and professional development.

Employee training should be done on a regular basis, both for new employees and for current employees who desire to grow personally and professionally. From supervisory training to the avoidance of harassment/discrimination to medical or personal leave to performance management, HRO services will have you covered.

Development and Management of Employee Paperwork and Handbooks

Paperwork can take a lot of time and attention to complete and process. Outsourcing these functions to trusted professionals can save you a lot of time and potential legal trouble. Even more, having an employee handbook will not only help your employees have a source for important employment information, but it will also protect business owners from potential issues that could arise from not having policies and practices in place and in writing.

Minimized Employment Risks

From proper onboarding procedures to efficient interviewing techniques to effectively managing employee relations or issues, an HRO can help small businesses prevent a variety of potential problems that can occur from attempting to handle these tasks alone. It will always be to a company’s advantage to work alongside HR experts and professionals when it comes to employment risks.

Professional Supervisor and Employee Training

Investing in supervisor and employee training will prove effective to the company’s bottom line. When employees are properly trained, productivity will improve, and a business will be positioned to run smoothly. Training from HR professionals will also positively improve your company’s reputation with external clients and customers.

Payroll, Tax Administration, and Year End W-2 Processing

Every employee wants to be paid on time and without error. So, it’s of utmost importance for small businesses to ensure proper management of payroll, as well as payroll tax administration and W-2 processing at the end of each year. Small businesses cannot afford to deal with potential errors or mistakes from the mishandling of payroll or taxes. An HRO can make sure your bases are covered.

Wage Garnishments

Though no employer desires to deal with wage garnishments, it’s a must that small businesses be prepared to handle these matters, in the event a situation arises. An HRO will make sure you are properly prepared to handle wage garnishments and compliance with regulations.

Access to Certified HR Professionals

Though a company can hire individuals to handle HR-related tasks, having access to certified HR professionals through an HRO can save time and money, while minimizing risks. Whether a small business HR employee works directly with the HRO or the HRO exclusively handles your HR needs, it will be to the employer’s advantage to enlist the assistance of an HRO.

Access to Brokering Services for Negotiation of Contracts

Contracts can often be difficult to navigate, and the legal implications associated with them can be critical to the success of your business. Allowing an HRO to advocate for you with contractual negotiations through brokering services will always be to a small business employer’s advantage.

Through various service models, LBMC Employment Partners has eliminated the need to seek multi-vendor relationships, while providing a more efficient, cost-effective approach to running a business.

1. Innovative Recruitment

Traditionally, the first point of entry for job seekers has been through a human resources department or job site. However, with the emergence and growth of social media and a more “word of mouth” approach to hiring these days, companies must be innovative with hiring tactics to stand out as an employer of choice, or a place where people want to work.

One new and effective method involves recruiting talent who aren’t necessarily applying for your open positions. With tools such as LinkedIn and university career websites, you can search for and recruit candidates whose skills match with your job vacancies before they find you. In addition, social media is becoming a very common tool for job seekers. If you’re not already, consider investing in social media as a fun and innovative way to find the best talent for your team.

2. Diversity and Equal Opportunity

Every company should abide by best human resources practices when it comes to fair employment and treating employees and prospective candidates equally. From age to sex to race to national origin to religious affiliation, your hiring and employment practices should be reviewed to ensure they are not discriminatory.

Also, remember the importance of diversity within your company, and not just diversity in terms of race or ethnicity, but also diversity in recruiting from outside the company. Your business will benefit from different perspectives and knowledge that can be gained from hiring externally. On the same note, it’s also important to acknowledge when an employee from within the company is the right candidate for potential promotions or opportunities to grow.

3. Employee Retention

If you have great employees and want to keep them, make sure you are making them feel valued. There’s no better way to do that than through compensation and benefits. Consider whether you are offering the best possible benefits to your team members or if you need to seek out more or better plans. Be mindful of the value of jobs and there worth in the labor market. When employees feel valued and are shown it through compensation and benefits, you’ll see higher productivity, stronger team morale, and an overall culture of satisfaction that maintains retention.

4. Performance Management

Both employees and employers need feedback. It’s not only important to provide proper performance expectations, but it’s also a must for employees to be able to offer input and feedback when possible. The best companies will not only want to hear the concerns and needs of their employees, but those companies will also provide the most efficient channels for the feedback to occur. A good question for employers to ask is whether they have a simple and user-friendly performance management tool. In other words, don’t make your performance review a dreaded or tedious task. Learn more tips on how to better your performance reviews.

5. Onboarding

From the very beginning, strive to make sure your newly-hired employees have the tools needed for success. From the first impression to the schedule to the team culture, there are several best practices for new employee onboarding. Make sure you have a plan, are organized, and that you show your new employees why they chose to interview for a role at your company.

6. Communication

Every great company will make it a priority to communicate well with its employees. Especially with human resources information like benefits, insurance, and payroll, good communication is a must. Whether through monthly e-newsletters, weekly emails, or face-to-face meetings, ensure that your HR communications are both valuable and visible.

All content and services on this page are offered by LBMC Employment Partners, LLC. LBMC Employment Partners, LLC, is part of the LBMC Family of Companies and is an independent entity with services and products being provided exclusively by LBMC Employment Partners, LLC.