7 Reasons to Outsource Employee Management

Running a business is complex, a situation only complicated by globalization. Since World War II international competition has been steadily increasing in nearly every sector. Digitization has simultaneously simplified and further complicated the situation. Even small and medium-sized business can have employees on multiple continents, interconnected by conference calls and serving customers in several languages.

Outsourcing employee management

This presents its own challenges; following employment regulations in only one of the fifty states can often be exhausting. The peace of mind provided by consulting a trained individual in the complexity of employee resource management far outweighs the costs. Here’s a list of subjects that can be handled by a professional to outsource the stress.

The company that will benefit most from the outsourcing of human resources is the small to medium sized business experiencing rapid growth. Outsourcing can enable the stressed entrepreneur to focus more directly on the expansion of the organization, rather than dealing with the minutia of the day-to-day office details.

Employee Benefits Packages and Management

Perhaps the most time consuming and aggravating of an employer’s hiring concerns is overseeing benefits packages; this is particularly true for growing businesses simply seeking to retain good help as they expand. As many employers know, this is also the most essential aspect of retaining employees, which can make or break any business.

Affordable Care Act Concerns

Many employers are scrambling to understand their new responsibilities to their employees with the implementation of the Affordable Care Act, also known as Obamacare, and it’s particularly disjointed rollout. This concern can easily be handled by a professional PEO as they are well-versed in all the health care changes including Obamacare and Medicaid expansions.

Employee Retirement

The creation and operation of employee pensions, 401(k) plans, 403(b) plans, IRAs and all the other acronyms that the modern employee yearns for are a constant hassle to a small business owner. These are operations that can be outsourced quickly to a PEO with little to no hassle for the entrepreneur.

Employee Immigration Status Concerns

Here in Arizona, one of the main crossing points between the United States and Mexico, employee immigration status is a great concern, not only because much of the population is of Hispanic descent, but also because it’s a highly regulated law. Although the rules may not be as stringent in Arizona, it’s a constant worry of many employers who are trying to honestly hire employees. Employers should seek to run their business according to the letter of the law, lest they run into legal troubles. For those employers who worry about staying on the right side of the law, a PEO is a great idea.

Workers’ Compensation Issues

Manufacturing companies are at the greatest risk and pay the highest premiums when it comes to workers’ compensation issues. Within this sphere are myriad loopholes and incentives that can be used by those in the know. Many PEOs will be able to find cheaper premiums for the companies they serve. Also, a PEO may institute new health plans that reduce the burden to workers compensation. This can include better health insurance, which can help retain high-quality employees. By lowering workers’ compensation costs a PEO can help to improve an employer’s bottom line.

Employee Safety Training and Injury Concern

By handing over workman’s comp concerns to PEO companies will often help to create a safer work environment by instituting better safety training. This will not only make a safer environment but therefore reduce the costs of operation by limiting accidents.

Maintaining Employee Satisfaction and Retaining Good Talent

There are many benefits to retaining employees including increased efficiency and lower costs. In fact, according to the Center for American Progress the cost of employee turnover costs one-fifth of that employee’s salary in total expenses, regardless of employee pay level.

Ultimately, any employer can benefit from the compartmentalization of human resource management whether it’s in the form of the creation of an HR department or the outsourcing of human resources to keep a company running efficiently. Regardless of method, every company should have a compartmentalized human resources organization if it can, if for no other reason than to increase American companies’ competition nationally and internationally.

Photo credit: Simon Blackley


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