Running a small business is inherently challenging. Daily, you are faced with issues that can impact the growth, profitability, and success of your business; and seemingly small decisions can have tremendous implications.
While large corporations have sufficient internal resources, the smaller business owner must rely on the knowledge and experience of their often-limited staff. The shrewd business manager recognizes these limitations and seeks to augment their internal resources by carefully selecting and engaging the services of specialists.
As the adage goes, “Do what you do best, and outsource the rest”. This philosophy is firmly embraced by companies in every industry. Common business functions such as legal, accounting, IT, and human resources are perfect examples where small businesses can leverage the expertise of outside specialists to improve operational efficiency and recapture their time – allowing them to focus on what matters most – their products, services and customers.
When it comes to human resources especially, since there are so many components, it can still be quite time consuming trying to coordinate multiple service providers to meet the wide array of business needs.
Fortunately, there is an HR outsourcing model that can help businesses consolidate most human resources functions. Professional Employer Organizations (PEOs) provide a comprehensive set of human resources services, including payroll administration, benefits, HR, risk management and compliance assistance.
By partnering with a PEO, small businesses gain access to a fully staffed human resources department that can handle not only all of their HR administration but also help solve many of the top employment related concerns expressed by small business owners across the country:
Hiring and Retaining Employees: For smaller businesses, there may not be many resources devoted to hiring, training, and retaining employees. Still, the employees of a business play a large role in its success, and the recruiting process, as well as keeping employee retention high, is very important. A PEO can help through a number of services, such as assisting in writing job descriptions, recruitment and selection, employee interview assistance, customized employee handbooks, employee surveys, online training services, and more.
Healthcare: In today’s competitive environment, having an attractive benefits package is vital to help in attracting and retaining talent. However, benefits are expensive and managing the rising cost is critical to the financial success of a business. Small businesses may find it daunting to decipher the best options, trying to balance affordability and employee satisfaction. A PEO can help by aggregating its clients’ employees together when purchasing employee benefits, giving smaller companies the leverage of a big business with access to more robust and competitive benefits offerings. This not only helps to lower costs now, but can also stabilize rates in future years.
Offering Retirement Plans: The lack of access to qualified retirement plans is a pressing employee issue for small businesses. According to the Small Business Administration, a whopping 72% of employees at small firms (about 41 million workers) reported that their workplace does NOT offer a retirement plan. But most view this as a very desirable benefit.
Employers struggle with the costs of establishing and administering a plan, the burden of ongoing administration, and ensuring compliance. A PEO can help here too, since according to the industry’s association, NAPEO, 98% of PEOs offer some type of retirement plan to their clients’ employees, making these plans accessible and affordable.
Compliance: The legal landscape is constantly changing with laws being added and amended on a regular basis. It is necessary to frequently review human resources policies, practices, and procedures to ensure compliance. Here is where the potential liability exposure can be significant. Most small business owners don’t know what they don’t know. So, the landmines of noncompliance pose a real threat to their businesses. PEOs help in this area by offering expertise, providing compliance assistance and in many cases, even transferring the liability from the employer, onto the PEO.
Companies large and small are beginning to realize the impact that HR can have on their bottom line. According to an economic study published by McBassi & Company, businesses that work with PEOs are proven to grow faster and survive longer. Their research shows that companies that utilize the services of a PEO:
- Boost their growth rate by 7 to 9 percent,
- Reduce employee turnover by 10 to 14 percent, and
- Cut the risk of going out of business in half!
These are some pretty compelling stats by anyone’s measure. So, if you’re looking for that extra “something” in your business strategy to help propel you to the next level, then you may want to explore outsourcing. Remember, when it comes to HR, the ABC’s of outsourcing begin with PEO… it truly is an effective way to get more, by doing less.
If you would like to learn more about how a PEO can help your business grow, reach out for a free consultation.