Running a business isn’t easy.
From figuring out how to get your idea off the ground, to remaining competitive in your market and continuing to push your company to the next level, you may be feeling a strain on your resources.
Many businesses that are just starting out or are only a few years old strive to handle nearly every business-management responsibility in house with a small, but dedicated team; however, this can prove to be a detriment to your company.
While handling everything in house might seem like a good idea so that you can keep an eye on things and feel like everything is more accessible, that might not always be the case. As your company grows, so do the demands for HR expertise and flawless payroll management.
There are also many advantages to outsourcing your HR and payroll such as access to highly trained staff, saving time that can be reallocated to other essential tasks, the ability to minimize your risks, and cutting administrative expenses.
So, is it time for you to outsource HR and payroll for your business?
If you’re reading this, you’ve likely already tried a lot of different options to streamline payroll, formalize your processes by bringing on an in-house human resources professional, and follow the best HR practices. But you may still be unsatisfied with how things are progressing. If that’s the case, use this guide to help steer you towards the decision that’s best for your company.
To begin, let’s take a look at signs that you may be ready to outsource…
You’re worried about liability
One of the most telling signs that it’s time to outsource HR is that you’re concerned about your company’s liability. Keeping track of employment laws, responding to required changes within your business, and managing all of the aspects of HR in a correct and timely manner is essential for any business with employees. If you fail to do so, you may find yourself in hot water facing fines and violations that jeopardize your business’ well-being.
However, with an outsourced HR team whose main focus is to be knowledgeable about employment laws (from accommodating disabilities to handling harassment claims) and ensure they are implemented correctly, your worries about liability can be significantly reduced. While there’s always a risk, third-party guidance can be a major asset to your company and for the most part, protect you from serious errors or issues.
You’re having a difficult time with recruiting
Attracting top talent is essential to growing your team in a meaningful way, but it can be easier said than done.
Whether you can’t seem to keep up with your hiring needs because of your limited in-house resources, or you are experiencing a high rate of employee turnover, it’s likely a sign that you need to outsource your HR to an experienced team.
Experienced HR professionals have the knowledge, tools, resources, and time to make your business’ recruiting more fruitful. They can help you compete with other employers, refine your hiring process, advise you on maintaining good employee morale even in times of strain (such as the COVID-19 pandemic), and build an employee retention plan to help reduce employee turnover.
Payroll is behind or rife with errors
As your team expands, payroll becomes much more demanding and can grow out of hand for a small in-house team. This can be a major issue for your business if payroll gets behind or errors are being made. Employees work to get paid, and when their paychecks are delayed or incorrect, they aren’t going to be happy. And if you’re handling it by yourself with limited prior experience, it can be an even bigger source of conflict. Even if the mistake is completely unintentional, underpaying your employees is a violation of the law.
Your budget is tight
Having a full-time HR and payroll team can be a drain on your budget. After all, you have to pay their salary and any benefits, which adds up quickly. According to SmallBizGenius, 59% of businesses use outsourcing to reduce their expenses. Outsourcing could help you free up some financial resources for hiring for other positions, marketing, and growing your business.
Your team is spread too thin
In some cases, especially for smaller or newer businesses, HR and payroll tasks may be allocated to department managers. While this might seem like one way to save money on these administrative roles, it can also create a scenario where managers are already spread too thin. Not only that, but having too many hands in the pot, so to speak, can result in errors, inconsistent practices, and bigger issues down the line when it comes time to pay taxes.
Outsourcing HR & Payroll: How to Make the Transition
Find a reliable HR outsourcing solution, don’t rush into it just because you’re under stress. Do your research on your options and make sure to vet any companies you’re considering working with— sensitive business information should be handled with care by a team you can trust.
If you’re not completely comfortable with outsourcing all of your HR and payroll personnel, you can take a hybrid approach. That way, you can still have an HR representative on-site, but without having to support an entire team’s salary and benefits. Plus, you can take advantage of the technology and efficiency that’s available when you outsource to an established HR company.
There is one other option, utilizing HR and payroll software solutions to streamline workflows, automate certain processes, and reduce errors. With software, you may also be able to get everything done with fewer staff members, saving you money in the process.
Whether you’re fully or partially outsourcing, or even introducing a software to make your team’s job easier, a gradual transition will provide your company time to adjust and shift gears according to the new processes.
Refocus & move your business forward
Hopefully this article has provided more clarity into whether it’s time to outsource your HR and payroll and how you should go about if that’s the route you decide to take. Only you know what’s right for your business, so take your time making this decision and consider consulting with other leaders within the company, your mentor, or even your legal advisor. That said, outsourcing payroll is a great opportunity to refocus your energy and resources and take the next step in pushing your business forward.