When a business considers outsourcing some or all its HR functions to a third-party partner, an important question arises. A business must ask themselves, "Will outsourcing help or hurt the relationship between the employer and its current and future employees?"
This question looks into what might happen if the business decides to let an outsourced company handle its human resource tasks. It's not just about the current employees but also how future employees might view the company.
Consider it this way: What are the positives of outsourcing HR services? Are operations running smoother or saving your business money? What negatives come with outsourcing HR? Is there reduced employee trust or communication issues?
Compare the positives to the possible negatives to gain a clear understanding of how partnering with a PEO impacts your business.
Although, we have some pretty good evidence that employees like it. The National Association of PEOs conducted an in-depth analysis of companies that use PEOs versus comparable businesses that don’t. They found employee turnover was 10 to 14 percentage points lower for companies that work with PEOs. What is the reason employee turnover is significantly lower?
Partnering with a PEO makes employee lives much easier. Especially when the outsourcing comes bundled with technology upgrades and self-service portals. Self-service portals let employees handle questions and issues quickly themselves.
Often times PEOs offer technology and expertise that is otherwise difficult to find or implement. Employees are frequently pleased by the level of self-service they can engage in through self-service platforms. HR providers enable the automation of regular tasks, complementing the self-service platforms.
When employees face problems or have HR questions, these are quickly, professionally, and effectively addressed – all the while helping more workers. Top HR organizations, like leading PEO companies, can handle 67% more employees than regular HR organizations, according to The Hackett Group.
In fact, many employees may be surprised at how high-touch HR outsourcing services can be. A good HR outsourcing (HRO) provider can offer immediate answers even to highly unique and complex questions. This includes handling complaints and performing other tasks that can help improve employee satisfaction.
The Hackett Group has found that world-class HR organizations enjoy 34% lower operating costs per employee than typical HR groups. Considering the 2022 median HR expenditure per employee at about $2,000, partnering with a PEO could potentially result in reduced costs. This corresponds with findings from the National Association of PEOs (NAPEO) in a study comparing PEO clients to non-PEO clients. The study revealed that PEO users may spend up to 35% less than non-PEO users on HR.
Simply stated, when HR is executed at a world-class level, neither business leaders nor employees have to think about or deal with HR issues as often, or at all. They can get answers and solve problems faster, and often just avoid the questions and problems in the first place.
In turn, this relieves both groups of time-consuming burdens related to business-critical but non-revenue-generating tasks. Business owners can then spend more time on growth and revenue initiatives. While employees can focus on their role in achieving organizational objectives. The PEO handles the HR.
When a business partners with a PEO, the business becomes more attractive to talented people. Prospective employees like it because they get better benefits, smooth HR assistance, and professional support. All of these can make the workplace more attractive.
Furthermore they can help in keeping talented employees and improving the employment relationship. PEOs can provide cost effective benefits packages for small businesses and provide ways to grow a supportive workplace culture. Keeping employees happy reduces the turnover rate and creates a stable workforce that's committed to the company's success.
The previous point is particularly important. It often results in employees not noticing the outsourcing of HR, mostly because their HR-related experience seamlessly continues to function. Outsourcing with a trusted and expert partner will often become a smooth and invisible process. It effortlessly manages all tasks so naturally that neither employees nor business owners even need to think about it.
And let’s face it, employees shouldn’t spend time thinking about the aspects of their employment that HR handles. Reduce HR-related problems, you reduce the amount employees have to think about HR at all. And when they do, it’s often to breathe a sigh of relief because the provider makes dealing with their HR questions and issues so easy that it’s often a load off their minds.
Ready to optimize your HR operations and boost business productivity? Consider partnering with CoAdvantage, a nationwide Professional Employer Organization (PEO). With our comprehensive and cost-effective HR solutions, including but not limited to: HR administration, HR technology, workers' compensation management, and tailored health insurance packages. From payroll to compliance and risk management, we've got you covered.
Let us handle the complexities of HR management so you can focus in growing your business. Fill out the form below to discover how CoAdvantage can support your company's success!