Is HR Outsourcing Right for Your Business?

Running a business is no piece of cake. Not only do you have to focus on your core competencies, you also need to look after your people—your human resources. Most business owners aren’t HR experts. Yet as a business grows, so does the burden of handling all of the employment “stuff”—payroll, employee benefits, legal compliance, workers’ compensation, training, etc.

Not only that, many are anxiously waiting to see what federal policy changes the Trump administration will set forth and how it will alter the landscape of being an employer in Hawaii.

At some point, it may make the most sense for your business to outsource these time-consuming HR tasks to a third-party provider. Though HR administration will never generate revenue for an organization, HR outsourcing can deliver tangible business benefits such as increased productivity and profitability, reduced risk and liability, and lower labor costs.

Four signs HR outsourcing is right for your business

1. Your business is growing

Products are flying off the shelves, new customer orders are coming in every day, and you finally feel like you’ve found your business sweet spot. But instead of strategizing ways to keep this momentum going, you’re shuffling through employee time cards and processing payroll. Not the most ideal use of your time. By outsourcing the back-office functions of HR, you can get back to what you do best—building your company’s bottom line.

2. You’re having trouble keeping up with employment laws

FMLA, COBRA, ADA, OSHA, EEO, HIPAA, ERISA, FLSA—employment law is an alphabet soup. Even with an HR professional on staff, it’s difficult to stay on top of new state and federal laws, changing reporting requirements, and revisions to important employment forms. Government fines for non-compliance are hefty and a single wrongful termination lawsuit has the potential to sink a small business.

3. You need to contain costs

Keeping a full-time HR team on staff is not cheap. You have to budget for recruiting and training costs, salaries, benefits, employment taxes, and worse yet, turnover costs if you lose a member of that team. However, businesses can leverage a high level of expertise and knowledge by outsourcing their non-revenue generating HR functions, without ever having to bring on additional in-house employees.

4. You’re struggling to attract talent

In Hawaii’s war for talent, a comprehensive benefits package can be the difference between finding the right employee or not. Under an outsourcing model known as a professional employer organization (PEO) relationship, you can offer your employees a wide range of benefits and support services that are typically only available to large corporations. This is because PEOs have large group buying power which allows their clients to gain access to those benefits, regardless of their size.

Realizing the benefits of HR outsourcing, however, depends entirely on selecting the right provider and the appropriate service plan. And since no two providers operating in Hawaii offer the same service or quality of service, it pays to know what outsourcing options are available and how to best evaluate potential vendors. To learn more, download our free, in-depth guide about HR Outsourcing in Hawaii.

This article is for informational purposes only and does not constitute legal advice. Readers should first consult their attorney, accountant or adviser before acting upon any information in this article.