The human resources (HR) department is a crucial part of any business, but when HR professionals don’t have the time, resources or expertise to adequately handle all aspects of the HR function, your entire business can suffer. Many organizations need additional assistance.
Outsourcing HR services has become a major trend in today’s business economy. Increasing complexity in employment laws and regulations, as well as growing business needs has made outsourcing an essential tool for many middle market organizations. In the past, the idea of outsourcing was seen as a negative business practice – “shipping jobs overseas”. Today it is viewed as a way to lower costs, add required expertise and allow organizations to redirect needed resources to focus on core business practices. An increasing number of companies are beginning to outsource many of their administrative functions – so why not outsource HR!
The Society for Human Resources Management (SHRM) conducted a survey of companies utilizing HR outsourcing services to determine the 10 leading reasons organizations turn to external HR experts. Those reasons included:
- Saving money and reducing operating expenses
- Controlling legal risk and improving compliance
- Gaining greater HR expertise
- Streamlining HR functions
- Offering services the organization could not otherwise provide
- Allowing the company to focus on its core business
- Reducing the number of HR staff and related expenses
- Improving service delivery
- Allowing HR staff to put more emphasis on strategy
- Making up for the lack of in-house expertise
An organization’s HR function is responsible for a variety of important tasks associated with managing your people. HR oversees employee payroll, benefits administration, and compensation. HR also manages legal compliance with applicable laws and regulations, maintains files and records, and oversees training and performance management. For many businesses, the functions and duties of HR are too fluid and complex to maintain in-house.
Whether you’re managing a large company with hundreds of employees and a large HR team, or own a small business with just a few employees looking for additional HR expertise that you currently don’t have, HR outsourcing is an option that can assist you in successfully running your business. While you have the best insight and direction on how to run your business and meet your organizational objectives, you may not know how to properly administer a benefits plan, how to apply wage regulations from the Department of Labor, or the proper process for completing regulatory employee documents and reports. The good news is that you don’t have to.
However, it can be difficult to determine what type of HR outsourcing model would fit your organizational needs the best. A professional employer organization (PEO) model is a co-employment arrangement where the PEO partners with your company to provide human resources, employee benefits, regulatory compliance, and payroll outsourcing services – they contractually share certain employer responsibilities. Administrative Services Outsourcing (ASO) is another model that seeks to eliminate or automate the transactional components of HR processes, with the client retaining all employment-related risks and liabilities. A Human Resource Outsourcing (HRO) model, also referred to as Business Process Outsourcing (BPO), is set up so the business remains the employer of record but this model focuses on managing the entire HR business process.
RSM’s team of expert human resources consultants can help you determine what type of outsourcing meets the needs of your organization. To find out more about this or other ways that RSM can assist you with your business needs, contact RSM’s management consulting professionals at 800.274.3978 or email us.