OneSource Business Solutions Blog

How Outsourced HR Can Help Grow Your Business


As a small business, you know how important it is to grow your company. Companies that partner with best-in-class HR outsourcing solutions such as a professional employer organization (PEO) grow 7 to 9% faster than average and are 50% less likely to fail.  

This signals a competitive advantage that can be obtained easily.  

So, how do PEOs help companies grow? 

Increased Cash Flow 

Cash flow is one of the biggest challenges for newer businesses. You might have plenty of income, but you also have plenty of expenses. Partnering with a PEO helps with your cash flow in three distinct ways: 

  1. It allows you to avoid hiring an extra full-time HR employee. Instead, you can give your team the support and expertise they need at a fraction of the cost. 
  2. Many PEOs let you access their master workers' compensation plan. When you get a workers' comp policy, you have to pay a large upfront deposit. As the PEO pays the deposit themselves, you can "pay as you go" on a more convenient and stable monthly schedule. 
  3. PEOs give you access to their master benefits plan, which gives you much greater economies of scale. This significantly reduces what you spend on healthcare and retirement benefits (and lets you offer better benefits). 

Focus on Core Competencies 

When your internal HR team or non-HR personnel are trapped doing hours on hours of routine paperwork, they cannot deal with the issues that help your company grow. You need your people to focus as much as possible on revenue-generating tasks such as creating products and providing excellent customer service. 

You can outsource any or all of the following: 

  1. Benefits administration. Employees often have complicated questions about their benefits that take time to answer. This can interrupt HR people at the worst time. Even worse, employees might ask the wrong people and get an incorrect answer. 
  2. Payroll tax compliance. Payroll tax errors cause can cause expensive compliance issues. Only a PEO using the co-employment model can file your payroll taxes for you. Payroll mistakes, in general, can lead to large lawsuits and drive employees away. 
  3. Direct deposit of paychecks. 
  4. Providing employee handbooks and other information to new employees 

By outsourcing these mundane and time-consuming tasks, your employees can focus on your core business and doing their jobs. 

Attract and Retain Top Talent 

Many small- and medium-sized businesses have issues attracting and retaining the talent they need to grow. It is hard for a small company to offer a fair salary, competitive benefits, and great workplace culture.  

HR outsourcing can help by providing access to competitive benefits at an affordable price. It also frees up you and your HR people to work towards creating that great work environment and bringing in the right employees. This helps develop a company culture that makes people want to come to your company. This helps you attract high-quality candidates who otherwise would not even look at your business. 

Growth Compliance 

Very small businesses are exempt from a lot of regulations. This means that as you grow, compliance requirements change. For example, when you hit your 50th employee, you become covered by the Family and Medical Leave Act. This obliges you to provide unpaid leave for certain life events. Knowing the requirements and what qualifies suddenly becomes important. 

In many cases, companies of this size have a single HR specialist and maybe an assistant. An outsourcing partner on the other hand, has full-time compliance experts who follow the latest changes in regulations. They can help you keep up with changes as you grow or changes as a result of updates to legislation. 

If you aren't totally compliant, this can result in expensive fines and can cause a growth ceiling. Some businesses may even hold off on hiring and slow their own growth out of fear of dealing with new regulations. 

Outsourcing HR can help you grow your business. It can reduce your cash flow problems, help your employees focus on core competencies, allow you to offer better benefits, and help you keep up with compliance. The go-to solution for small and medium-sized businesses is to partner with a professional employer organization (PEO), which can provide you with a comprehensive, scalable solution that grows with your company. 


Which HR Functions Should Your Business Outsource?