Businesses need employees to carry out operations. But having employees comes with tremendous responsibilities including hiring, benefits, payroll, engagement, training, and development. When these human resources functions are managed smoothly, business leaders can focus on growth. But how do you know if your business should keep HR in-house or outsource?
We’ll examine the costs of outsourcing HR compared to hiring internal HR staff. You’ll also learn how outsourced HR improves compliance and minimizes your organization’s exposure to litigation with certified HR professionals that are always up to date on the latest laws and requirements. Discover how your business can focus on your core competencies and strategies while your dedicated team of outsourced HR certified professionals takes care of the rest.
HR outsourcing is not an all-or-nothing decision
Believe it or not, knowing when it’s time to outsource HR functions is not about the size of your workforce. It’s more about the ability to bring on specialized talent and experts at a lower cost than if your business was to hire employees for multiple in-house HR roles.
Hiring and retaining a great HR team is expensive when you take into account salary and benefits costs—and that doesn’t even include the specialized training needed to keep up with changing regulations or develop new strategies to win the war for talent. Can your business afford to hire an in-house expert for more than 20 essential HR roles?
Probably not. That’s why more than half of businesses are already using outsourcing to manage critical HR activities.
According to HR Dive’s 2021 Identity of HR Survey, 54% of respondents said their HR departments used a benefits outsourcing firm or consultant on a regular basis and 53% used a payroll processing service. The complexity of regulations and requirements that accompany compensation and benefits have also led nearly half of employers to outsource Family and Medical Leave Act management.
The cost of outsourcing versus hiring an internal HR team
An in-house HR team plays an important role in establishing and maintaining company vision, values, and culture. Depending on your organization’s budget, you might have just one HR manager or maybe even a small team of HR specialists that focus on key roles like payroll or benefits. Here are the average annual salaries of some of these positions according to payscale.com:
HR Manager: $69,373
HR Director: $96,976
Payroll Manager: $70,184
Benefits Manager: $78,031
These salary costs alone are a lot more than what it would cost many businesses to outsource HR services. Businesses that outsource their HR functions usually save more than 50% off the cost of hiring a full-time in-house HR staff. That frees up cash to invest in customer-facing roles, sales, and product development.
Outsourced HR can strengthen compliance and reduce exposure to litigation
According to one study, nearly three-quarters of informal or ad-hoc HR managers are worried about accuracy and compliance. That’s why it’s important for businesses to ensure they have either experienced in-house HR staff or a team of outsourced HR certified professionals ready to comply with complex responsibilities and regulations set forth by federal, state, and local laws. It’s important to remember that the only thing more expensive than paying for in-house or outsourced HR services is not having HR at all.
For example, did your business just hire its fiftieth or 100th employee? Are you ready to comply with the responsibilities that go along with it such as FMLA and EEO-1 reporting? If not, the business is at risk for noncompliance penalties. The Department of Labor wants to ensure that working people in the US receive the wages and protections they’ve earned and in 2021, the DOL followed through on more than 24,700 compliance actions.
To avoid the costly penalties that accompany these errors, many businesses are outsourcing basic compliance HR functions to save time and money and ensure accuracy. Outsourcing provides your organization with access to specialized knowledge and expertise and a team whose sole focus is to keep your workforce compliant with employment laws, minimizing your risk.
Outsourced HR can provide the experience and expertise needed to ensure strict compliance with workforce laws, proper workplace policies and thorough recordkeeping. This helps organizations defend against litigation from both government entities and employees. According to employment law firm Seyford Shaw, workplace class action lawsuit settlements reached a new high of $3.62 billion in 2021. That’s more than double the $1.58 billion from 2020 and $1.34 billion in 2019.
Outsourcing helps internal teams focus on the core mission
Outsourced HR services, also known as HR as a Service (HRaaS), enables businesses to adapt to evolving workforce needs while freeing up time and money to invest in the core functions critical to business objectives. Rather than spending countless hours on researching and completing essential projects like developing employee handbooks, salary benchmarks, job descriptions, or other deliverables, a company can outsource these tasks to a team of certified experts and maintain internal focus on business growth. Companies can also outsource any of the following to help alleviate in-house burden: corrective action reviews, onboarding activities, group benefit reviews, performance management, remote training and development, and much more.
Are outsourced HR services right for your business?
Growth doesn’t happen by accident. It happens when busi nesses focus on their core strengths and make the best use of their time, capital, and people.
Asure offers flexible HR outsourcing plans to meet a variety of business needs including basic compliance, strategic planning, and fully outsourced HR. Asure team members are certified by either the Society for Human Resource Management (SHRM) or the HR Certification Institute giving you access to an incredible breadth of knowledge at just a fraction of the cost of hiring an entire in-house team.
Asure’s HCM experts can help you explore which service level is best for your organization, provide pricing, and give you more details on how our HR Consulting Services can help you save time and money, stay compliant, and build a great team.
Schedule a no-cost consultation to learn more about how outsourcing HR helps you stay focused on reaching business goals.