When Should I Consider Outsourcing My HR?

Posted on: October 3rd, 2022 by

When your business is small, there’s no need for an HR department. You can handle HR functions yourself. As the business grows, you might keep all the HR responsibilities yourself or delegate some of them to other employees. Still, everything is getting done in-house.

At a certain point, though, you need to make a decision about whether to keep performing all your HR tasks in-house or if you’re going to outsource HR functions to another company, such as a professional employer organization (PEO).

Here are the top 5 signs it’s time to outsource your HR functions to a human resources consultant.

Sign 1: HR Is Taking Too Much of Your Time

When the company is small, it’s easy to handle HR on top of all the things you have to do to keep your business going. However, as the number of employees increases, so does the HR work. At a certain point, HR is taking too much time and keeping you from doing the work you need to do to make your company successful. Then it’s time to either hire a dedicated HR person or outsource HR.

This can also be true if you’ve delegated some HR functions to other people in the company. If HR responsibilities are dragging down any manager or department, it’s time to reallocate HR work to either a dedicated employee or another company.

Sign 2: HR Responsibilities Are Unclear

Delegating HR tasks among managers can be an effective strategy at first. You get some of these time-consuming tasks off your plate, and managers have more responsibility over their direct reports. However, this can stop working if people don’t know who they can or should go to with HR-related questions or concerns.

This can keep your employees from getting the HR services they need from your company. Once this becomes an issue, it’s time to outsource your HR or get a dedicated HR person to make the responsibilities clear.

Sign 3: You Worry You Might Be in Legal Trouble

human resources complianceOne of the critical functions of HR is to avoid legal problems related to hiring or managing employees. There are numerous government requirements you have to meet in terms of EEOC, sexual harassment, required benefits, training policies, and more. As your company grows, these requirements become more stringent. If you are afraid that you or other people tasked with monitoring these HR compliance requirements aren’t up to the task, it’s time to outsource or get a dedicated HR person.

It’s important to make this call before you become the subject of a lawsuit or get handed a fine.

Sign 4: Mistakes Are Being Made

When people aren’t HR experts, they are bound to make mistakes in handling complicated and detail-oriented tasks like doing payroll and managing benefits. Ideally, you would catch these mistakes before they affect your employees. If too many mistakes are happening, and/or they’re impacting your employees, it’s time to outsource or hire a dedicated HR person.

Sign 5: Outsourcing Makes Better Business Sense

The previous four signs tell you when you need someone else to handle your HR duties, but how do you know when to outsource and when to hire in-house?

This should be a straight business decision. Hire an in-house person when it makes financial sense. Otherwise, you should outsource. Most of the time for a company facing this decision for the first time, outsourcing is the smart approach. It’s a cost-effective way to handle HR functions while getting access to the necessary expertise.

Partial or Full Outsourcing?

One of the ways that outsourcing can be highly cost-effective is that it lets you outsource only part of the HR functions. Hand off the most difficult tasks to a PEO and keep some with yourself or your managers. This works as the best of both worlds: you get critical expertise and efficiency where it counts, but can save costs by doing some of the work yourself. Certain functions lend themselves to outsourcing. Bundling payroll and benefits, for example, ensures that these two critical pieces work smoothly together.

Other times, it makes sense to hand over everything at once. This might make sense because you can get package pricing that makes it less expensive to turn it all over. Or perhaps no one in your organization can efficiently and effectively handle any HR tasks so handing it all over is the only way to ensure it gets done properly.

Let PassioHR Lighten Your Load

At PassioHR, we offer a full range of HR services so that we can help you overcome any and all challenges that are dragging your company down. Whether you’re struggling with payroll, benefits, compliance, employee conflict, or any other issues, we can handle them for you at a reasonable cost. Letting us handle the HR challenges you haven’t mastered will put your business in a better position to succeed.

With our Elevated Engagement Plus® Approach, we will take the time to understand your business needs. Meanwhile, maintaining our outside perspective helps us key into what matters most so we can recommend the best way to handle your HR challenges.

Want to learn more about how PassioHR can help you put HR worries behind you? Please use our online form to request a proposal.

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