For most small business owners there comes a time when you start spending more time on non-revenue generating activities than you care to admit. From payroll administration, human resource management, benefits and compensation to accounting and finance, these time consuming but necessary tasks don’t directly affect your customers or produce a dollar in sales. Choosing to outsource all or a part of HR tasks is how many owners direct their focus on revenue generating activities again.
According to The Society of Human Resources Management (SHRM), the most popular reasons given for outsourcing HR functions include:
- Accessing skill sets and knowledge not readily available in-house
- Obtaining professional support that they themselves do not possess
- Cost savings over hiring an in-house professional HR staff member
- Freeing up any in-house HR staff’s time for other revenue generating activities
Whatever the reason, the fact of the matter is that you have better things to do with your time than handle HR. And though it may be hard to let go or you fear losing control, it makes financial “cents” to outsource your HR if your business falls under any of the following.
Your company size makes it too difficult for you to manage HR, but it also doesn’t necessitate hiring an in-house HR professional. Most businesses with less than 50 employees rarely have an HR expert on staff. It’s more common to have an employee, like an office manager or finance manager, doing double duty. As a rule of thumb, most businesses with more than 50 employees will often find it more efficient
to have an in-house HR representative due to the increased volume of employees’ needs. Some companies find middle ground by combining an on-site representative to handle employee issues with outsourcing specific processes like payroll, benefits administration and recruiting.
Your company has specific needs that in-house staff cannot meet whether due to lack of resources or knowledge. A typical small
business needs payroll processing, benefits administration, performance coaching, training and development, recruiting and hiring, and day-to-day employee talent development. Decide which of these you can handle on-site, and which ones you may need additional support to manage. Identify the areas that you are lacking and develop a plan to fulfill these roles in-house or through outsourcing.
You’ve done the research and math, determining you can save money by outsourcing all or some of your human resource management. Before hiring an HR firm, establish up front the way in which the service is billed. Fees vary depending on the level of service that is required. Some outsource HR providers charge a monthly fee, while others bill by the hour. Choose the provider that fits your needs and your budget. Standard hourly fees are similar to business consultants and may cost $100-$200 per hour, while retainer fees may cost $500 to $5000 per month depending on services provided. Most of the time, the cost of outsourcing HR is still far less than hiring your own HR manager who works 40 hours and is provided benefits.
You’ve given some serious thought about how many hours you spend tied up with administrative procedures that do not directly contribute to revenue. Outsourcing HR allows you to focus on driving sales and revenue without burdening the bottom line. Hiring an HR firm is a growing trend because it just makes cent$ for so many growing small businesses in today’s marketplace.