Outsourcing Human Resources

June 9, 2015

When you first started your small business and every dollar was precious, it is likely you handled Human Resources tasks on your own, or delegated the tasks involved out to your team, entrusting them to pull double-duty. However, as your company has grown, you have noticed your Human Resources tasks growing exponentially, and now realize you need some additional help. Below are some things to consider if you think now is the time to begin outsourcing your Human Resources.

The first thing to take into account is the size of your company and how you intend for it to grow. You should be aware that some professional Human Resources organizations will not take you on if you have fewer than 10 employees. Typically, companies tend to turn to outsourcing when they are between 16 and 80 employees in size.

The next item to weigh is the cost of outsourcing your Human Resources functions. While rates vary, you can expect to pay between $500 and $1500 per employee per year, or somewhere between two and eleven percent of your total wages.

Next, consider carefully how much control you want over your Human Resources functions, as well as what services you truly want handled outside of the business, as this information will help you select a company that is right for you. The following complex Human Resources functions which require specialized training and knowledge are the most frequently outsourced: payroll, legal compliance, benefits administration, and background checks and drug screening. Of all of these, legal compliance is perhaps the most attractive to outsource. Failure to comply with local, state, and federal laws can result in hefty fines for a business, and many professional organizations will guarantee to absorb that cost if they are in error. Finally, one additional benefit to outsourcing your Human Resources that you may not have considered is the access to enhanced workforce analytics that will be provided by the company you hire.