As businesses expand, their administrative burdens tend to grow increasingly daunting. The hire of new employees generates mountains of paperwork, the list of applicable government regulations becomes lengthier, and the cost of managing the workforce multiplies. While devoting time and money to these HR duties, companies detract focus from their core, profit-generating activities. This realization has led many businesses to entrust their HR and payroll functions to qualified third-party firms, such as professional employer organizations (PEOs). With a team of human resources experts, PEOs handle the time-consuming administrative tasks necessary to manage a growing workforce and remain compliant with all laws and tax obligations, while allowing businesses to retain control over important decisions such as salaries and employee benefits.
Is working with a PEO a worthwhile investment? Here are some of the benefits that businesses enjoy when they decide to outsource their HR duties:
- Reduction and transfer of risk. Government regulations regarding health care, taxes, and more are constantly changing, and many businesses lack the time and resources to keep abreast of them. Failure to properly comply with these requirements may result in hefty penalties. A competent PEO will stay current on laws and regulations, ensuring the company’s compliance, and will reliably file all tax forms in a timely manner, eliminating the risk of penalties due to lateness or inaccuracy. A growing workforce also presents an increasing risk of lawsuits, with common sources of conflict including discrimination, harassment, and safety violations. By offering training and review of safety procedures as needed, PEOs reduce the risk of these conflicts occurring.
- A more efficient workforce. Although they constitute a necessary part of doing business, administrative HR tasks do not generate revenue for a company. When employees must devote time to these activities, they are not focusing on their core job duties. By allowing a PEO to assume these functions, a company will maximize its return on investment for each employee by freeing up time for those employees to focus on profit-making activities that will advance the company’s success.
- Lower costs. Having an in-house HR department is a costly operation, and as discussed above, entrusting HR duties to employees distracts their focus from profit-producing activities and carries the risk of errors. PEOs typically offer these services at a flat rate that is far less expensive than running an HR department would be.
- Cash flow becomes more predictable. When companies handle their HR tasks in-house, they are subject to unpredictable costs, such as those related to health insurance, workers’ compensation, and taxes. By outsourcing these functions to a PEO for a flat fee, businesses may formulate a more accurate estimate of cash flow by stabilizing expenses.
- Enhanced expertise. HR duties are the sole focus of PEOs; therefore, unlike hiring a new employee who must be trained, there is no learning curve for PEOs. In fact, many PEOs offer access to specialists with levels of expertise that smaller businesses would probably not be able to afford in an employee.
Creative Business Resources offers comprehensive HR outsourcing services that reduce costs and improve accuracy for your business, allowing your employees to devote their attention to core, profit-making activities. Contact CBR for more information.