There are a number of reasons why your company may choose to outsource many of your human resources functions to a licensed Professional Employer Organization (PEO). In today’s market more and more companies are leaning towards outsourcing because simply put, it makes more sense. Outsourcing HR functions to a PEO allows companies to focus more on their core strengths while saving them time and money. As shown below, all types of businesses can benefit from a PEO arrangement.
Blue-collar businesses tend to have a higher risk rate due to their hazardous nature (i.e., construction/remodeling companies, electrical contractors, auto maintenance shops, industrial service companies or any other manual labor based industry) and, therefore, tend to experience higher premiums for workers’ compensation coverage because the probability of accidents. Naturally, the riskier the business/hazard, the more your workers’ compensation coverage is going to cost you. Obtaining third party assistance in the administration of risk management and loss control HR functions, allows blue-collar businesses to take immediate advantage of world-class specialists at their fingertips making sure safety is number one and regulations are followed, thereby avoiding costly penalties or lawsuits. By outsourcing your risk management and loss control human resources to a PEO that maintains a master workers’ compensation insurance policy, your company may also be able to secure discounted rates for insurance coverage.
On the other side of the spectrum, white-collar businesses tend to outsource human resources functions because for a low fee, you receive more services, expertise, and dedication for less than what you would pay a minimum wage employee to take care of payroll, deposits, taxes, and reporting. All businesses focus on the same objectives, making money. Outsourcing human resources to a PEO frees up time to allow you to focus on your core competencies, staying compliant, recruiting great talent while staying on top of the latest trends and technology.
Business with 10–100 employees
Smaller businesses usually don’t have the resources/expertise to accomplish specialty tasks, such as payroll processing, employment tax reporting, employee benefits administration, etc. Rather, the management team of a company with a workforce ranging from 10–100 employees is often focused on core, business-growing and company-sustaining roles. Owners of small businesses go into business to do what they love to do, not to focus on mundane paperwork and managing personnel. In addition you may not be the best at managing these tasks, which is why most companies hire a professional human resource person. But, a human resources professional can be expensive; hence, the reason why many smaller businesses ans startups choose to outsource their HR needs to a pay where they can receive an entire team of HR professionals.
No matter the type or size of your business, outsourcing your human resources to a PEO can provide great benefits to your company. Consider all your options before making a decision. You may be surprised the cost savings outsourcing can provide while maintaining the integrity of your company and employees.