The decision to outsource all or part of an organization’s HR work can be difficult to make. Many business owners and executives are understandably leery of whether the investment in an HR vendor or professional employer organization (PEO) will really pay dividends. That said, HR outsourcing can be an incredibly powerful tool for boosting business growth and meeting business objectives. Here are a dozen ways partnering with a PEO benefits businesses of all sizes.
1: To save business owners time.
Nearly two-thirds of small business owners work more than 40 hours a week (and one-third work more than 50); worse, the amount of time they spend on administrative work and dealing with regulations impede their work. Allowing the employer to focus on their core business is a driver for companies to outsource. (Bank of America)
2: To save money.
HR outsourcing reduces overall expenses. In fact, 56% of businesses outsource HR in order to save money and reduce operating costs. These companies spend 27% less on HR services per employee than typical companies. They also reduce HR labor costs by 29%, operate with 24% fewer HR staff per 1,000 employees, and spend 50% less on outsourcing in general. (NelsonHall)
3: To save more money.
The cost of dealing with regulations can top $12,000 per year for small to midsize businesses and can lead to an additional $83,000+ in first year costs for startups. (NSBA)
4: To save even more money.
Healthcare insurance premiums have increased 213% since 1999. During the same period, workers’ contributions to premiums grew even faster (242%). These increases vastly outpace both workers’ earnings (which increased just 60%) and overall inflation (which increased just 44%). (Wells Fargo)
5: To help increase employee retention rates and decrease turnover.
Over half (51%) of U.S. employees say they are actively looking for a new job or watching for openings. (Gallup)
6: To develop better performance management systems.
Only 20% of employees agree that their employers manage them in a way that motivates them to do outstanding work. (Gallup)
7: To develop more effective employer branding.
83% of employees/job seekers are likely to research company reviews and ratings when deciding on where to apply for a job. (Glassdoor)
8: To help improve job and leadership development pathways.
Only 18% of employees feel that employers give them the ability to develop themselves and chart new pathways for their careers, and 54% say there are no programs in place to build the skills of the future. (Deloitte)
9: To more effectively leverage and manage workforces that include alternative work arrangements.
In the United States, more than 40% of workers are now employed in “alternative work arrangements” that include contingent, contract, freelance, part-time, or gig work. (Deloitte)
10: To bolster employee recognition programs.
69% of employees say they would work harder if they felt their efforts were better recognized; 78% said being recognized motivates them in their job. (Hubspot)
11: To help bridge the gap between HR technology needs and experiences.
HR analytics is the top priority when it comes to HR technology deployments, but only 14% of organizations are “very satisfied” with their current HR analytics technology. (PwC)
12: To allow in-house HR staff to focus on strategic needs.
By streamlining HR functions and offering access to vendor technology and resources, internal HR organizations can focus on meeting organizational goals instead of transactional HR tasks.
CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.