Why Outsource Human Resources?
OUTsourcing. Why is it all the rage? Do you gain a lot? Lose control?
Save money? Obtain tax benefits? Reduce legal risk?
So many questions and all of them very important to understand!
Before you can decide whether to outsource a service or product it always benefits you to understand the subject from a historical perspective.
Outsourcing is nothing new… we have all heard the * buzz * word for the last 20+ years.
Outsourcing is the final evolution of an efficient 21st century lean and profitable business model.
Outsourcing allows a company to increase their flexibility and creativity with a laser focused strategy on their core business. The keys to good outsourcing:
- What am I good at? Focus on your product or service, be the expert in your field… does this mean you’re an expert at everything? What do I know… that I don’t know?
- Identify the services you need that you don’t necessarily want to micromanage on a day to day basis. Outsourcing can be a smorgasbord or ala carte by needs.
- Figure out the requirements of how outsourcing fills a critical role in your current company today. How will it help with your future growth in size and revenue?
- Create a program in which outsourcing minimizes risk to your core functions, and helps the business owner and management sleep better at night.
- Ability to access senior Fortune 500 level experience and wisdom that smaller companies usually never get access to, at a fraction of the cost.
- Benefit from an outside third party perspective that can be more objective in your current and growth business strategies.
- Identify how outsourcing increases productivity & efficiency – while $aving money!
Perhaps you’ve heard of other companies that successfully outsource their Human Resource Departments. It seems great for them, but you’re wondering what possible good reason you’d have to do the same for your company.
Things seem well taken care of in that area.
How can outsourcing really be that much better for the company?
Reduced overhead costs: For starters, outsourcing may just save you money; lots of money. We all want the best that money can buy, but that doesn’t mean we can all afford it!
Can you afford an experienced enough HR professional full time with salary, benefits and perks who not only can handle the day to day, but also the daily changing and ever more complicated federal, state, local employment laws and compliance-related HR issues, such as:
- Obamacare and the Healthcare mandate
- State and local minimum wage changes
- Green cards and I9’s
- Guest Worker visas
- Worker’s Compensation injuries and claims
- Sexual Harassment
- Medical Marijuana
- Federal law requiring leave
- Parental leave
- Tax implication strategies by employee classes
- State and Federal Grant money for training
- Penalties for improper training
- Social media and mobile device policies
Expertise: Each one of these areas is a time bomb waiting to blow up in your business. Any owner or manager who has been in this game long enough has at least one – if not many – horror stories of the zig when they should have zagged that cost them a lawsuit or worse. It’s hard to be on top of it all, when you can only afford an entry level HR Assistant in your budget, but have the daily need of executive level expertise and training. Entry level salaries get you entry level skills and knowledge.
Compliance/ Efficiencies: Ensure your entire business is compliant in ALL areas and up-to-date where you need to be to avoid costly litigation. Outsourcing may just be a lifesaver for your company.
Really, can you honestly say you’re sure you’re compliant and up-to-date in every single area you’re required to be by law?
Do you even know the laws and rules you should be following? That’s a chance no business in today’s world wants to chance. It’s actually easy to make sure, protect yourself and do it for less than you think.
Do you know the best way to shop for health insurance? Get the best rate? Reduce worker’s compensation utilization? Find government money to sponsor your trainings for free? There are so many ways businesses waste money and time, simply because no one showed them a better way.
Employee Satisfaction: Did you know that employees that are happy, fairly compensated and feel appreciated work harder and stay with their employer longer? Are your current policies and procedures making your workforce miserable and inadvertently killing your business? Is your turnover rate higher than you would like? Do you find that you are spending more then you want to on retraining for the same positions? HR when done right can help minimize and correct these common inefficiencies that cost your business every day.
This is just a sampling of how outsourcing gives you more… for less!
Common Excuses from Companies unsure if Outsourcing HR is an option for them
There are some common excuses why many company executives don’t think they need to outsource their Human Resources functions, yet they may be gravely misguided. See if any of these sound familiar to you:
1. I am a small company and I do that myself. I am too small to need “all that stuff.”
But are you sure you’re compliant in ALL areas? Have you even read, understood or know the areas in which you need to be compliant? The most costly mistake is the one you don’t know your even making. Don’t find out you messed up when the subpoena comes in the mail, it is often too late then.
2. I have a person for that and she has hired some pretty decent staff members.
Remember, staffing is only the tip of the iceberg that includes Human Resources. HR is benefits, handbooks and policies, discipline, growth strategies, market competitiveness, training, compliance, injury claims, and so much more. Well run HR departments help a company to grow faster and more efficiently while minimizing risk!
What about that second location you just staffed? Did that put you over the limit for FMLA? Are your locations crossing two states? Often we see issues arise during growth when a company might know pretty well their area, but do not understand the area they expanded into or the expansion may be affected by the rules. Ignorance is never a legal defense!
3. I cannot afford to hire a company to do that for me.
How do you know you cannot afford it? It’s far less expensive than you think! In fact the better question to ask is: Can you afford NOT to? One lawsuit against your company can be enough to put you out of business. Don’t take our word for it, search the internet… there are hundreds if not thousands of stories of small to medium sized businesses that get in trouble every day. One slip up that finds your business noncompliant in a single area can open you up to fines, penalties and lengthy and expensive litigation. Even if you “win” your case, the expenses to win can be often more than you can afford. In fact, it’s often one of the reasons many small to medium sized businesses… go out of business. An ounce of prevention is worth a pound of cure!
4. It’s too much of a hassle to find a great company who really knows what they are doing and hire them.
McCloskey Partners serves small to medium-sized companies in a variety of industries and is able to cater services and fees to your company’s specific needs. To find out more about McCloskey Partners, LLC connect with us.
5. I don’t know how to get started and how to incorporate an outsourced HR Consulting Firm into my present set-up or I don’t like change, so I am reluctant to change what we are already doing.
Adding an outsourced HR Department to your existing company structure is seamless and requires little time and energy on your part. This is what we do, and while it might be your first time… don’t worry it’s definitely not ours. Adding compliance, handbooks, policies and procedures and streamlining your HR not only creates peace of mind… but creates efficiency and greater productivity, happier employees and less turnover.
Well run HR is the cornerstone of growing any successful company, and making sure it’s stable and protected to be here in the future.