Why small businesses should have an outside Human Resources firm

small businesses should have an outside Human Resources firm

Have you ever considered outsourcing HR? If your business is new, perhaps you don’t. Many startups and small businesses do not have human resource management (HRM) at the top of the priority list. It can seem simple to oversee a few employees, but in reality, manage employees in a company means it’s a lot to manage.

Best HR practices keep your employees safe and happy, state and federal regulations ensure compliance with local and support the growth of your business. Luckily, the good news is that you don’t have to be the expert to do this. There are many options for outsourcing human resource management for all of your HR functions.

When you first start your company, your priority is to hire people who are integral to build the product and grow the company’s income. From marketers and engineers to salespeople, consultants, and so on, every new company needs to fill the seats with suitable persons who help the company and move the bottom line and grow the business.

At some point though, a business grows big enough that it needs people to take care of the back-office operations of the company. You need some responsible members for coordinating interviews in the company, sending offer letters to new members, managing benefits administration, and much more. The problem with that job is that it’s incredibly multifaceted, and it can be hard to find all those skills in one person. These entire workloads have been managed by some responsible companies in the market which provide outsourcing HR services to companies. Excelerator consulting is one of them.

How do small companies handle HR?

We can segment HR functions into three categories, and all of which can be outsourced: 

  • Administration, including payroll, insurance, taxes, hiring, and termination.
  • Employment law compliance, including regulatory and legal issues. 
  • Employee performance, including reviews about employees, recognition, training, and benefits.

This can be a significant challenge for a startup or small business. Interestingly, a research study revealed that nearly a third of small businesses don’t use outside support for these HR needs which causes them to put an extra burden on employees and they didn’t perform well due to extra workload.  

HR covers a lot of ground, so it’s not always apparent which functions can be outsourced effectively. A good first step for a new startup is defining what role you want HR to play in your company. In general, Human Resource Consulting provides the most value on strategic initiatives that have to do with building strong work teams, like recruiting, hiring, and developing company culture. They are often responsible for other key tasks like payroll and administering benefits, these are functions that can be automated and easily left to an outsourced HR and payroll provider.

The Benefits of Using an HR Outsourcing Company

Outsourcing HR functions offers multiple benefits to your organization and your employees. Here are a few examples:

Benefits of HR Outsourcing

  • Refocuses energy on revenue-generating tasks
  • Controls costs
  • Saves time and minimizes paperwork
  • Provides reliable and professional compliance in areas like labor, employment  and immigration law, and payroll
  • Reduces workload turnover and helps to attract experienced employees
  • Professional claims management for workers’ compensation and unemployment
  • Access to better benefits packages at more affordable rates
  • Provides professional human resource management, including training, employee handbooks, and enforcement of company policies and procedures
  • Reduces accounting costs
  • Minimizes employer liabilities
Saurabh Singla
Saurabh Singla is a former Mechanical Engineer turned digital marketer. He has been in the digital marketing industry for over 6 years and has worked with clients across different sectors including FanFare, BitMachina, Bayslope amongst others. Saurabh is also an Author and has written over 30 websites for his clients including INC42, Yourstory etc. After founding CaphIQ in 2020, he is helping businesses and Personalities for their Personal Branding and online visibility.

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