The Strategic Advantage of HR Outsourcing for Small Businesses
Written by Complete Payroll
Outsourcing HR reduce costs and administrative burden on small businesses. Partnering with industry experts to handle compliance issues and ensure your business runs smoothly allows business owners and managers to focus on business growth rather than paperwork.
Why HR Management is Challenging for Small Businesses
Let’s face it. With limited resources and a lack of specialized HR expertise, it’s easy to run afoul of complex laws and regulations. Even “basic” HR functions are complex, and the requirements change regularly. For instance, in 2024, there are new regulations and proposals regarding:
- Federal, state, and local increases in minimum wages
- Pay Transparency
- Exempt minimum salaries
- Employee vs independent contractor classification
- Paid sick leave
- Workplace violence reporting
- And more
Failing to comply can result in fines and lawsuits. Using an efficient, experienced HR outsourcing partner can significantly reduce your organization's risk.
What is HR Outsourcing?
Outsourcing HR simply means employing a third-party provider to handle some or all of your organization's HR & Payroll functions. Complete Payroll provides industry-leading HR tools and resources for small and midsized businesses to simplify your HR, providing peace of mind.
Benefits of Outsourcing HR for Small Businesses
Rather than hiring specialized HR staff, outsourcing HR for small businesses allows companies to pay only for the specific services they need. Not only does it save money on HR staff, but it also eliminates expenses related to employee overhead and HR technology, hardware, and software.
Small and medium-sized businesses that outsource HR can see as much as a 27.3% ROI in cost savings.
Access to Expertise
Outsourcing provides instant access to the knowledge and capabilities of highly qualified HR professionals. External specialists devote their careers to staying current with legal standards, training requirements, workplace trends, and best practices.
Small businesses can leverage this expertise on demand without the burden of hiring, training, and maintaining a dedicated HR team.
HR management for small businesses reduces legal risk by ensuring strict compliance with employment laws and timely, accurate payroll and tax filings. Your outsourced HR partners will continually monitor policies and practices to ensure alignment with the latest regulations.
How HR Outsourcing Supports Business Growth
Minimizing HR obligations frees up resources you can redirect toward growth initiatives. Knowing that your HR is in good hands, you can better focus your efforts on high-value business activities like sales, marketing, and revenue development. This maximizes productivity and boosts performance across all operational areas. It also leads to faster, more responsive decision-making unencumbered by HR distractions.
Choosing the Right HR Outsourcing Partner
According to Deloitte’s Global Outsourcing Survey, about 85% of businesses are now outsourcing some or all of their HR functions. Finding the right partner, however, is key to success. Here are some of the key areas to consider.
Breadth of Services
Look for a partner that offers a breadth of small business HR solutions, including HR administrative tasks outsourcing that includes:
- Payroll processing to manage pay, taxes, and compliance
- Benefits administration
- Time and attendance automation
- HR software to manage the employee lifecycle
- Employee scheduling
- Applicant tracking and employee onboarding
- Expense management
- Employee self-service tools
While you may choose to use some or all of these services, look for an HR outsourcing partner that can do it all. This allows you to expand your HR outsourcing over time as you scale your business.
When considering HR administrative tasks outsourcing, you will want to discuss the various levels of service and the experience of the people who will support you. Look for teams with specialists in different HR areas to provide expert guidance.
Your HR You also need an HR partner that is a good cultural fit with your organization. They will play an important role in how your employees feel about your workplace, so ensuring they fit well with how you want to work is important. The best small business HR solutions will adapt to your culture rather than disrupt your workplace.
Ask for references and talk with clients to get firsthand insights about their experience. This allows you to probe into performance beyond the marketing pitch to discover the real story. If possible, look for clients that are similar in size and face the same challenges you do.