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Outsourcing HR Can Save Money, Free Resources
No matter
what your business, chances are that your role as an employer consumes a big
part of your effort. The expense involved in recruiting, hiring, and training
new employees makes it all the more important to do a good job of retaining
and motivating your experienced workers. And a comprehensive human resources
program can play a vital role in that endeavor.
Administration of benefits and compensation packages is filled with
time-consuming detail, and doing it right may require costly technology. Making
sure every employee is paid the right amount on time can mean intensive
ongoing data entry, especially in companies with variable work schedules and
pay scales.
In addition, human resources administration requires expert knowledge of
legal and regulatory requirements and staff trained to respond to employee
questions.
Many small and midsize businesses find the HR function a burdensome
distraction from their providing the products or services that lie at the
core of their business. For them, the answer is outsourcing all or part of
the job.
Gaining Technology
Mistakes in benefits or paychecks can damage employee morale. Finding and
eliminating the cause of these errors — often a slip-up in data entry or an
inadequate computer program — can take a lot of time. Outsourcing firms that
specialize in HR can help reduce these errors, because they provide access to
the most current technology for standardizing compensation and benefits
programs.
Telephone voice-response programs and online services provided by many HR
outsourcers allow employees to check their records and elect their benefit
options without assistance, leading to a drop in staffing costs.
Since HR is their expertise, outsourcers can provide employers with assurance
that their benefits programs comply with changing legislative and regulatory
requirements.
Getting Started
Though full-service HR outsourcing is available in several forms, companies
frequently decide to begin with one or two services to try out the
arrangement.
With its intensive data-entry requirements, payroll is a popular place to
start. A payroll outsourcer issues checks or handles direct deposit
arrangements, deals with taxes, and administers sick time and vacation
programs.
Benefits administration is another area loaded with detail, and many
employers are happy to unload the burden. A benefits outsourcing arrangement
usually covers employee enrollment and data management, along with
administration of call centers and other informational support.
Programs covered include health and life insurance plans, retirement and
deferred compensation programs, disability coverage, employee assistance
plans, discount and reward programs, and other benefit packages.
Expanding the Effort
HR outsourcers can also handle recruiting, background checks, hiring,
performance appraisals, wage reviews, firing, exit interviews, and
unemployment claims management.
General HR risk management can also be farmed out to experts in the field. In
these arrangements, the outside firm helps to develop company employment
policies, publish and distribute policy handbooks, and resolve disputes.
The risk management contract may also take in safety policies and training,
emergency evacuation planning and training, maintenance of records to comply
with Occupational Safety and Health Administration requirements, and
administration of workers’ compensation programs.
Compliance programs may also be included, making certain that the company
observes laws covering immigration, equal employment opportunity, and family
and medical leave.
Going Full-Tilt
A comprehensive approach to HR outsourcing is offered through employee
leasing and PEO arrangements, named for the professional employer
organizations that administer them.
Though the two approaches are similar in many ways, they also differ
significantly, according to the National Association of Professional Employer
Organizations (NAPEO), the trade association for the PEO industry.
PEOs assume responsibility for payroll and benefit plans for all or most of a
client’s work force as part of a long-term "co-employment"
arrangement, NAPEO says. Employee leasing, in contrast, is often viewed as a
temporary arrangement for specific projects, according to NAPEO.
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