HR Outsourcing 101
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HR Outsourcing 101

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Here’s a brief guide on what exactly human resources outsourcing is, as well as the benefits and the pitfalls.

Here’s a brief guide on what exactly human resources outsourcing is, as well as the benefits and the pitfalls.

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HR Outsourcing 101 HR Outsourcing 101 Presentation Transcript

  • HR Outsourcing 101 Here’s a brief guide on what exactly human resources outsourcing is, as well as the benefits and the pitfalls.
  • Table of Contents .01 – What is HR Outsourcing? .02 – HRO vs. PEO .05 – Outsourcing Benefits .07 – Outsourcing Drawbacks .08 – Fast Stats: HR Outsourcing HR Outsourcing 101
  • What is HR Outsourcing? HR Outsourcing Is: when a company designates certain human resources tasks to an outside service provider. A Human Resources Firm Can: recruit and screen potential employees, navigate government regulations and employment laws and more, all under an employer's direction. Access to Expertise: has ranked consistently high as the number one motive for outsourcing human resources. Page .01 HR Outsourcing 101 © 2013 Business.com Media, Inc. All Right Reserved.
  • HRO vs. PEO Page .02 HR Outsourcing 101 © 2013 Business.com Media, Inc. All Right Reserved.
  • Page .03 HR Outsourcing 101 © 2013 Business.com Media, Inc. All Right Reserved. HRO: Human Resources Outsourcers HRO Firms Can: can address all or only a few human resources tasks. Companies can choose which responsibilities to outsource and which to manage in-house. Most HRO Companies Offer: services individually so that clients can pick and choose which HR responsibilities they want to outsource. HROs can manage: a business’s needs including payroll, benefits administration, training, risk management and recruitment.
  • PEOs Are: agencies that provides a service under which an employer can outsource all employee management tasks. • A hired PEO becomes a co-employer with a client company. The PEO serves as the administrative employer, while the client business acts as the on-site employer. • A PEO assumes all associated liabilities and legal responsibilities for its clients. • Since the PEO is the employer-of-record, it is responsible for federal and state taxes, as well as workers’ compensation. PEOs are able to provide a broad array of HR services at a lower cost, saving their small business clients at least 21% on HR administration1. Page .04 HR Outsourcing 101 © 2013 Business.com Media, Inc. All Right Reserved. PEO: Professional Employer Organization 1. Professional Employer Organizations: Fueling Small Business Growth, NAPEO, Sept. 2013
  • Benefits and Drawbacks Page .05 HR Outsourcing 101 © 2013 Business.com Media, Inc. All Right Reserved.
  • HR Outsourcing as a Tool Small and medium-sized businesses often view HR outsourcing as a tool that relieves them of HR responsibilities and enables them to focus on what they do best. Lowered Costs Lower overhead and other labor costs by allowing your HR firm to handle the paperwork and mandatory training. Reduced Liability Reduce company liability that comes with hiring (and firing). Improved Office Performance Improve office performance by setting more descriptive job qualifications and expectations with insight from an HR team. Increased Company Efficiency Increase company efficiency by allowing employees to focus on the business instead of payroll and paperwork. Studies show that the average small business owner spends 20-40% of his or her time on human resources tasks. Page .06 HR Outsourcing 101 © 2013 Business.com Media, Inc. All Right Reserved. Benefits of Outsourcing HR
  • From unexpected costs to poor-quality hires, there a few things to consider when determining if HR outsourcing is a good fit for your business, such as: » Secondary costs » Candidate quality » Company culture » Training time Keep in mind that through trial and error and comprehensive research into which HR firm has worked with companies similar to yours and clear communication, your business can avoid many of these drawbacks. Secondary Costs Secondary costs, such as trainings or orientations, are sometimes hidden. Candidate Quality Candidate quality may not be up to your company standards, without clear and continuous communication. Company Culture Company culture could be affected if the HR firm doesn’t have a clear understanding of your office dynamics. Training Time Training time can be more extensive through the outsourced company than it would be in-house. Page .07 HR Outsourcing 101 © 2013 Business.com Media, Inc. All Right Reserved. Drawbacks of Outsourcing HR
  • The most common resources for outsourcing include reduced operating costs, reduced legal compliance risks, and more streamlined HR functions. The biggest drawback, according to an SHRM study2 is a lack of face-to-face contact. 75% of those who outsource HR say that HR is able to focus more on core business functions and 66% say outsourcing allows HR to spend more time on strategy development and execution. Page .08 HR Outsourcing 101 © 2013 Business.com Media, Inc. All Right Reserved. Fast Stats: HR Outsourcing 1. “Human Resource Outsourcing Survey Report,” SHRM, July 2004