Suzanne Lucas

HR Outsourcing, Part I: How Do You Know If HR Outsourcing Is Right for Your Business?

HR outsourcing may not be something you’ve ever thought about for your small business. Chances are, though, if you don’t have an HR expert on staff, you should consider it.

Managing employee standards, overtime and everything else that comes with bringing on employees — all while staying on the right side of the law — takes expertise. Right now, 20 percent of small businesses aren’t confident in human resources. But that doesn’t have to be the case for your business.

Why Getting HR Right Matters

Employment law kicks in the moment you hire your first employee. It’s critical that you know how to pay that person properly — are they owed overtime pay if they put in more than 40 hours in a week, or are they exempt? The more employees you have, the more laws you’re subject to, and all of these can vary from state to state or even from city to city.

From there, how do you handle employee relations problems, recruiting, leaves of absence and finding the best health insurance for your small business?
If you find yourself consistently pushing back HR duties to take care of other parts of your business, then you might want to get some help from an expert.

But a full-time (or even part-time) HR manager may not be the best use of your limited budget. That’s where HR outsourcing comes into play.

What HR Outsourcing Could Look Like for Your Business

Outsourcing human resources could fall into a number of arrangements and solve a number of problems. Here are a couple of ideas to get you started.

  • Streamlining benefits administration. In order to attract great employees, you need great health care and other benefits. An HR outsourcing firm can help you vet plans, run your open enrollment and then act as your point of contact throughout the year.
  • Recruiting. Depending on your business needs, your recruiting efforts might need to be a little more sophisticated than posting a job ad on Craigslist. A recruiter or headhunter can help you with the process. This person works per position filled, and pay depends on your individual arrangement with them.
  • Handling major HR duties. You can also hire an individual consultant to act as a human resources business partner, employee relations specialists or any other function you may need. A person in this role would handle your work, just like a regular employee; the major difference is that they would be an independent contractor and might have other clients in addition to your business. Still, when you need help, they’d be the one to come to your aid.
  • Answering general HR questions. If your needs are less hands-on, you might want to consider hiring a general HR consulting firm. In this situation, you may not get personalized care. For example, it might be a call center that answers employees’ questions about eligibility for protection under the Americans With Disabilities Act — and just that. The advantage of this type of HR outsourcing is that the firm you work with will have the expertise and resources to provide you with accurate, up-to-date answers across the entire HR field. This can be especially helpful if you operate across state lines, as many employment laws are state-specific.

The beauty of small business HR outsourcing is that you can pay for what you need, and it can grow along with your business. Generally, by the time you reach 50 employees, you need a dedicated full-time employee to handle HR matters — but even then, you can still go through an HR outsourcer if that relationship works well for your organization. A successful business constantly searches for better, more efficient solutions to problems. Sometimes it pays to think outside the box — or outside the company.

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