Outsourcing HR: What does it mean, and how does it help my business?
Stephanie Hand, Chief Human Resources Officer/Shareholder
February 6, 2024
As a business grows, so do its demands and responsibilities. Among these, managing human resources can become a complex, time-consuming task that requires specialized knowledge and skills. Between recruiting, onboarding, benefits administration, compliance, and employee relations, HR responsibilities can quickly become overwhelming for small business owners. However, there is a solution that can alleviate the burden and save money in the long run: outsourcing HR functions.
What is Outsourced HR?
Outsourced HR is delegating some or all of an organization's human resource functions to a third-party service provider. Instead of hiring an in-house professional or team, companies can rely on external experts to handle their needs. This allows business owners and their employees to focus on core activities and strategic initiatives while leaving the human resources tasks in capable hands.
What Duties Can Be Outsourced?
Small businesses can outsource several HR functions to external service providers. These include:
1. Benefits Enrollment & Troubleshooting
Outsourcing the benefits coordination to a trusted third party can save time and resources while ensuring your employees have access to high-quality and affordable benefits. Outsourced HR providers, in coordination with benefit advisors, can help you navigate the complexities of insurance strategies and coverage options, handle benefits enrollment, stay compliant with regulations, and provide employee support.
2. Employee Onboarding & Exit Assistance
Onboarding new employees can be laborious for small business owners. Outsourcing these tasks ensures the process is consistent, smooth, and efficient, with the provider handling everything from paperwork and orientation to benefits enrollment.
A third-party provider can also ensure a professional and compliant offboarding process, handling benefits termination, COBRA options, and exit interviews. This guarantees that employees receive the necessary support upon their departure.
3. Employee Handbook Development
Having a well-crafted employee handbook is beneficial for both employers and employees. It helps maintain consistency, provides a reference point for dispute resolution, and provides everyone within the organization with a set list of rules and expectations. Outsourcing the development of an employee handbook ensures that it is comprehensive, current, and in line with legal requirements.
4. Employee Strategy
People are often a company’s greatest asset. Skilled HR professionals act as partners with management to develop strategies for workforce planning, talent acquisition and development, and employee retention efforts so you have the right people in the right positions for the long haul. Additionally, HR plays a crucial role in nurturing a positive workplace culture that champions the professional development of employees and an inclusive environment and open communication. A fresh, outside perspective can help you solve issues through the creation and execution of policies and programs, cultivate a supportive work environment, and foster both personal and professional growth among employees.
5. HR Compliance Administration
Staying compliant with changing employment laws and regulations can be a challenge for small business owners. Outsourcing HR compliance administration ensures you stay up-to-date with legal requirements, reducing the risk of costly fines and penalties in areas such as:
Anti-discrimination and Equal Employment Opportunity (EEO) Compliance: Implementing and monitoring policies to prevent discrimination in the workplace.
Workplace Safety and Health Compliance: Adhering to occupational safety standards and health regulations.
Record-Keeping Compliance: Maintaining accurate and up-to-date employee records as per legal requirements.
What Are the Benefits of Outsourcing HR?
Outsourcing HR functions offers several benefits. Let's take a closer look at how it can save money and provide value:
1. Cost Savings
One of the most significant advantages of outsourcing HR is cost savings. Hiring and maintaining an in-house HR team can be expensive, especially for small businesses with limited resources. Outsourcing eliminates the need for additional staff, payroll expenses, and the costs associated with training and development.
Small businesses gain access to a team of HR experts who specialize in various areas, including compliance matters, benefits, and employee relations. By using an outsourced provider, you ensure that a full range of HR skills, from essential day-to-day compliance to high-level strategy, is always at your fingertips. These experts stay up to date with industry trends and regulations, ensuring that small businesses remain compliant and avoid costly mistakes.
3. Increased Efficiency & Streamlined Processes
By outsourcing HR functions, small businesses can streamline their HR processes and improve overall efficiency. External service providers, with their expertise and resources, are well-equipped to efficiently handle tasks such as benefits administration and employee onboarding.
4. Ability to Focus on Core Business Functions
Business owners should focus on what they do best: running and growing their company. By entrusting time-consuming HR tasks to external experts, they can dedicate more time and resources to their core business activities, such as product development, professional services, marketing, sales, and customer service. This focused approach can lead to increased productivity and earnings.
5. Enhanced Training & Development
Outsourced HR providers often offer training and development programs to help companies improve their employees' skills and competencies. These can include leadership development and management training. Small businesses can enhance their workforce's capabilities and drive innovation by investing in employee development.
How Lutz’s Outsourced HR Services Can Help
Outsourcing HR functions can save small businesses money while providing access to expertise and increasing efficiency. Partner with a reliable provider like Lutz for hands-on guidance and support in streamlining HR processes. If you have questions or would like to learn more about our Outsourced HR services, please contact us.
Positivity, Strategic, Ideation, Woo, Activator
Chief Human Resources Officer/Shareholder
Steph Hand is the Chief Human Resources Officer/Shareholder at Lutz. She began her career in 2000. Steph is responsible for overseeing the firm's people strategy and HR team. In addition, she leads Lutz's Outsourced HR offering, which provides HR solutions to small and mid-sized companies.
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