At its core, HR outsourcing involves partnering with an external company to handle one or more human resources tasks for your business. These can range from specific services, such as managing payroll and negotiating better benefits packages, to comprehensive solutions like recruitment, employee development, and support to help you stay compliant with workplace laws and regulations. By outsourcing HR functions, your business can operate more efficiently and focus more time on growth and strategic initiatives.
Despite the growing popularity of HR outsourcing, it remains a commonly misunderstood business practice. Many business owners are unaware that HR outsourcing is not limited by company size, function, or industry. In fact, a wide variety of companies, from startups to large enterprises, outsource at least one of their key human resources functions to a third-party provider. And industry research shows that businesses utilizing the benefits of HR outsourcing grow 7-9 percent faster than those that don’t.
As your business continues to grow and expand, you may be considering the option of HR outsourcing. In this article, we’ll explore some of the fundamental benefits HR outsourcing can offer your company.
4 examples of how outsourced HR can help grow your business
In addition to a variety of other advantages, outsourcing HR can help you:
- Lower costs
- Better support your employees
- Manage your time more efficiently
- Gain access to HR expertise
Let’s dig a little deeper into each of these benefits:
1. Lower Your Costs
A study by the National Association of Professional Employer Organizations (NAPEO) shows the average cost savings from outsourcing your HR to a professional employer organization (PEO) is $1,775 per year per employee, while the average PEO cost per employee is $1,395, yielding an annual ROI of 27.2 percent.
We put this benefit front-and-center because it’s the one that matters most – especially to small-to-medium-sized businesses. Companies (and their employees) deserve quality human resources support, but many smaller businesses can’t justify the expense of hiring an entire HR department.
2. Help Your People
Ensuring employee satisfaction and productivity hinges on addressing their essential needs. While managing day-to-day HR tasks such as payroll, PTO, benefits administration, professional development, and more can be valuable to your workforce, it can also be extremely time-consuming for you as a business owner. Outsourced HR solutions can streamline these processes, freeing up your time to focus on core business operations while at the same time ensuring your employees receive the support they need to thrive.
HR outsourcing – especially with a full-service partner – gives you access to comprehensive HR expertise and support. This support can, among other things, help you reduce turnover, improve retention, and recruit top talent to your team. PEOs like G&A Partners can also help you provide better, more affordable benefits for your employees by leveraging their buying power and expertise in negotiation and risk management.
3. Reclaim Valuable Time for Strategic Initiatives
As a business leader, managing essential HR functions like payroll, benefits administration, compliance, and more can divert your focus from core business activities. By outsourcing your HR, you can offload these time-consuming tasks, freeing you up to concentrate on strategic growth initiatives and employee development – areas where your unique expertise can unlock the full potential of your team.
4. Leverage Deep HR Expertise: Focus on What You Do Best
You started your business to share your industry expertise and deliver innovative products or services to your target market, not to navigate the complexities of compliance regulations, healthcare, HR, taxes, and other administrative tasks.
When you outsource your HR to dedicated, knowledgeable experts, it allows you to stay focused on your core business objectives – developing groundbreaking products or delivering exceptional services, and fostering a thriving company culture.
How does outsourcing improve business performance?
As referenced in the section above, the benefits of outsourcing HR services are numerous, including streamlining operations and boosting efficiency. In addition, leveraging outsourced HR can significantly enhance employee retention – which directly impacts your bottom line by reducing the costly effects of employee turnover.
And how much can employee turnover cost your business? According to a report by The Society for Human Resources Management (SHRM), “Reducing Employee Turnover with Creative Workplace Solutions” – the cost of replacing an individual employee can range from one-half to two times their annual salary. This includes factors such as lost productivity during the vacancy period, recruiting and onboarding costs, and the impact on morale of remaining employees.
By outsourcing HR functions, businesses can gain access to expertise in areas like talent acquisition, performance management, and employee engagement. These practices can help to create a more positive work environment and increased employee satisfaction and retention. This, in turn, can lead to significant cost savings for business.
To learn more about the benefits of outsourcing HR services with a trusted provider, contact G&A Partners today.
How does outsourcing impact a business?
HR outsourcing can enhance business performance by reducing the administrative burden on internal staff, allowing them to focus on their core job functions and strategic initiatives. This leads to more efficient operations and can improve overall customer satisfaction, as teams are better equipped to meet their objectives without being bogged down by HR tasks.
From employee well-being to company culture and overall operational efficiency, HR outsourcing can have a positive impact. For example, choosing to outsource just one HR function – payroll – can do more than streamline operations, it can also enhance employee satisfaction.
How? One of the key benefits of outsourcing payroll is the assurance that employees are paid accurately and on time, which can significantly enhance trust and job satisfaction. When employees are confident that their compensation is handled reliably, it fosters a sense of security, leading to higher productivity and loyalty.
Outsourcing HR functions to a partner like G&A also ensures that employees have access to Fortune 500-level benefits at affordable prices. This can include health insurance, dental, vision, retirement plans, and a variety of ancillary benefits. These benefits not only allow you to compete with larger organizations for top talent, they also contribute to the overall well-being of employees, making them feel valued and supported.
A healthy company culture is crucial for retaining staff and fostering a positive work environment. High turnover can negatively impact this culture, as remaining employees are often burdened with additional responsibilities while new hires are sought and trained. This can lead to burnout and diminished morale.
HR outsourcing can help mitigate turnover by providing employees with better support and resources, such as policies that offer paid time off, holidays, and inclusive workplace practices. These measures ensure that employees feel their needs are recognized and respected, leading to a more stable and engaged workforce.
For more insights on how to maintain a robust company culture, you can check out G&A Partners' company culture resources, which include a checklist for assessing cultural health.
How outsourcing is being used to increase the effectiveness of HR
Outsourcing HR has proven to be transformational for many small and medium-sized enterprises (SMEs). This comes with a bit of a caveat however—it’s important to choose the right provider for your business.
A great example of this is highlighted in one of our client case studies, where a mid-sized engineering firm came to G&A Partners after receiving subpar service from their previous provider. In this situation, we provided the firm with modern HR solutions, including advanced time and attendance software and comprehensive service management, which:
- Resolved prior inefficiencies
- Allowed the client’s HR specialist to be reassigned to focus on more impactful tasks, like employee recruitment and relations
- Relieved the firm of the burdens of 401(k) administration, while also saving them $175,000 and giving the owner peace of mind about his own fiduciary risk
This streamlined approach led to fewer errors and higher productivity. Outsourcing enabled our client to benefit from best-in-class client service, cost savings, and efficient HR processes, highlighting why SMEs are increasingly relying on outsourced HR to meet their business needs effectively and cost-efficiently. The firm was searching for the best outsourced HR services for a small business, and G&A Partners delivered.
Why G&A?
For almost 30 years, G&A Partners has helped business owners take care of their employees and get back to growing their companies. When you partner with G&A, you gain access to the HR technology, support, services, and expertise to take your business to the next level.
