Focus on Your Core Business with HR Outsourcing

As an owner of a small business, you have likely found yourself wearing many hats or taking over various positions to operate an effective and efficient company. This type of job certainly involves plenty of work, and it requires a significant amount of your time.

You have to become a master of multitasking, but you should not try to do so much that you spread yourself too thin. If you fall into the trap of believing that taking on every task alone will save you money, you can jeopardize your business. Most business owners are better off outsourcing some of your business’s most basic needs in many cases.

Outsourcing will allow your business to focus on the core competencies, which will enable you to commit to getting the most out of your business. HR outsourcing will help you focus on your core competencies --- on what you do best.

When you outsource your HR functions, you will have the freedom to work full-time to grow your business and gain a positive return on investment (ROI).

Focusing ''On vs. "In" Your Business

When you are a small business owner, it is not difficult to fall into the trap of working in your business rather than on your business. When you find yourself stuck in a daily routine of taking care of administration, you will not have enough time in the day to focus on developing your business. When you are working in your business all the time, your business will become stagnant because you are not doing the work that is needed to grow your business.

When you are working in your business, you will find yourself doing administrative tasks like the following:

• Payroll
• Benefits administration
• Scheduling and invoicing
• Constantly reviewing federal, state, and local laws and regulations to maintain compliance
• Etc.

It is very easy to just work in your business without actually working on the business. For many business owners, this happens because owners run the company in a reactive rather than proactive way. 

You should spend most of your time working on your business if you want to see it flourish. However, if you are bogged down with so many in-house responsibilities, it will become harder to focus on your business. If you have an HR representative, that HR rep should be focusing on working on your business from an HR perspective.

HR Outsourcing as a Solution

A fundamental way you can free up more time to work on your business is by outsourcing your HR tasks. 

HR outsourcing is the use of a third-party service to handle some or all of your HR responsibilities. HR outsourcing functions will include payroll processing, benefits administration, and other HR-related tasks.

If you have a current HR representative, an outsourced HR team will work with your rep to eliminate any administrative and compliance burdens so your HR rep can turn your business into an employer of choice. 

It is essential to be honest with yourself about your strengths and your weaknesses. If you do not have enough resources to execute your HR tasks properly, HR outsourcing can improve the daily experiences of the people you depend on the most.

ROI of HR Outsourcing

ROI is the standard that business owners use to determine how their limited resources will be used to maximize the business’s profits. Understanding the ROI of outsourcing will become even more critical as your outsourcing strategies begin to evolve. The ROI within your business will depend on the type of model you choose.

Do you need a Professional Employer Organization (PEO) or an Administrative Services Organization? It can be difficult to differentiate them if you have never considered HR outsourcing. Each provider will have different ways of taking on HR outsourcing. What will this mean for your business? This can mean that there will be an option that is better suited for your business than the others.

One of the most effective HR outsourcing models is a PEO. A PEO is an HR company that businesses like yours contract with to take over various administrative tasks, such as benefits administration, payroll, taxes, etc. 

The return on investment for HR outsourcing will greatly depend on the type of outsourcing model you use. A PEO will provide the most tangible value to your business. Studies by NAPEO have found that businesses that partner with a PEO will experience an average return on investment of 27.2 percent due to savings from health benefits, workers’ compensation, and not enlisting another HR representative’s services. 

Many business owners will tend to become caught up in working in the business instead of working on the company. If you spend too much time working on day-to-day responsibilities, you will be left with little time for development. A PEO will enable you to work on your business instead of just in your business. In return, you will receive a positive ROI.