HR Companies for Small Business: The Pros & Cons of Outsourcing HR
Administration is a part of every business. However, not every business owner likes to focus on the administrative side of their operation. For more hands-on, lead-by-example owners who prefer to work directly in their field, administration can be a drag or a duty they’d prefer to delegate. For those who would rather focus on the goods and services they provide, you can consider the option to outsource your HR needs.
One Business, Multiple Services
As outsourcing various administration duties has become more popular, HR companies serving small businesses have grown in number. The number of services and business models these companies offer can vary. For example, business process outsourcing companies will specialize in one specific administrative task, like payroll. Single-source companies, on the other hand, provide all the services required throughout the employment lifecycle, from recruitment to departure processing. Which service you go with depends on your business’s needs and your budget. Among the HR duties that small companies tend to outsource are the following:
- Payroll processing
- Employee benefits
- HR compliance
- Employee performance management
HR Outsourcing Pros
The fact that HR outsourcing is a growing industry shows the benefits of outsourcing to an HR company for small businesses are recognized by many. Outsourcing HR services frees you and your staff to focus on productivity and customer service rather than having to spend a lot of time on bookkeeping and administration. Regulatory compliance is another big benefit. A professional HR service will ensure your business is operating in compliance with all local, state, and federal HR regulations for your industry, preventing you from facing costly penalties and avoiding legal trouble.
A quality HR service knows how to find quality employees for a growing business, which means you’ll see improved recruitment as you grow. Outsourcing offers the opportunity to reduce costs since the monthly fees from an HR service, which often range between $500 to $2,500 a month, may be less expensive than having to hire and pay in-house administrative staff. Contracting with an HR service ensures you’ll have access to expert administrative guidance. For a small business, especially one just starting out, this can be invaluable in avoiding administrative mistakes.
HR Outsourcing Cons
There are some potential concerns with HR outsourcing that should be addressed. The first, and a concern with just about anything in business, is the potential expense. While the right HR service for your business can help you save on administrative expenses, a service that’s a poor fit for you can be more expensive. It is important to make sure you get the services you need while avoiding paying for unnecessary services.
Another concern is maintaining control of your company. A good HR service will make sure you always feel like you have the last word on any decisions about how your company operates. When selecting an HR service, you should feel comfortable with their method of advising and not like they’re making decisions without your input or approval.
Finally, accessibility is an important quality for an HR service. Services that are difficult to contact when they’re needed can leave you in a lurch, especially if HR emergencies arise and there’s nobody from your HR service available. Make sure your HR service keeps compatible business hours and is reliably available in the event of an emergency.