|
Hire a Human Resources Helper
Published March 20, 2008
 |
| Photo by: iStockphoto |
HR is for big businesses, right? Wrong. Even the smallest businesses can benefit from professional help when it comes to hiring, firing and managing employees. To get the help you need at a price you can afford, consider outsourcing your HR department to a PEO.
By: MATT ALDERTON
Small business owners are used to doing things themselves. In fact, they're not just CEO; oftentimes, they're also CFO, CMO and COO. In other words, they're C-everything-O.
It's not surprising, then, that when they're asked who handles their HR, most small business owners answer either, "Me," or "Nobody," according to Rob Wilson, president of Employco, a Westmont, Ill.-based company that specializes in human resources for small businesses.
"A lot of times, when you talk about human resources," Wilson says, "small businesses say, 'I don't really have HR needs; that's big company stuff.'"
The truth is, however, that if you have employees—whether two or 200—you also have HR needs. You've got to hire employees, pay them, provide for them, evaluate them and, sometimes, let them go when things aren't working out. What's more, you've got to do it all by the book in order to protect yourself and your team.
It's a tall order for already-busy small business owners. Unless you've got room on your to-do list for yet another action item, then, you might consider a different solution: outsourcing.
People Problems
While it's sometimes a bad word in business, "outsourcing" doesn't have to be a no-no. In fact, for small companies that don't have the resources of large corporations, outsourcing is often a very smart solution—especially when it comes to critical business functions like human resources.
"Typically, you're either doing HR yourself or you have an office manager who's wearing that hat, along with maybe 20 other hats," Wilson says. "When you outsource your HR, however, you're hiring HR professionals who are at the top of their field."
Indeed, dedicated HR professionals—like those that work within a professional employer organization, or PEO—wear just one hat, and it's designed to help you deal more effectively and more efficiently with your company's greatest resource: its people.
"PEOs can bring much-needed relief to small business owners who want to spend more time building their entrepreneurial dream and less time coping with HR issues," says Betty L. Collins, vice president of corporate human resources for Administaff, a Houston-based PEO that serves as a full-service human resources department for more than 6,000 companies nationwide. "With a PEO at their side, these businesses are in a better position to compete with much larger companies."
In the same way that companies outsource marketing to agencies and accounting to CPAs, they can outsource HR to a PEO, which serves as their HR department in charge of everything from recruiting and benefits administration to payroll processing and workers' compensation. For companies that can't afford to hire a full-time human resources officer, outsourcing in this way enables them to attract, manage and retain the talent they need in order to prosper.
The Case for HR Outsourcing
While outsourcing your company's HR functions enables you to take another item off your personal plate, it's about much more than passing the buck, according to Wilson. Instead, it's about positioning your company for strategic growth within an increasingly competitive marketplace.
Consider, for instance, a few of the most popular benefits to HR outsourcing:
-
Productivity: Because PEOs help companies establish a system for regular performance reviews and promotions, employees are more motivated and therefore more productive.
-
Recruitment: PEOs often have relationships with benefits providers that enable them to offer popular benefits, including retirement plans and health care, to client companies at discounted rates. And because attractive benefits appeal to workers, small companies can therefore recruit on a level playing field with big ones.
-
Retention: PEOs help employers develop better, more intimate relationships with employees, which fosters both retention and loyalty among one's workers.
-
Cost: While a Chief Human Resources Officer might make upwards of $100,000 per year, most PEOs charge between 2 percent and 4 percent of your company's total payroll, making it an affordable alternative to hiring a full-time HR person.
Another major benefit to HR outsourcing, according to Collins, is risk management, as PEOs help employers navigate and comply with confusing federal, state and local employment regulations.
"According to the U.S. Small Business Administration, the number of federal regulations regarding employment policies and practices grew by about 60 percent between 1980 and 2000," Collins says. "The owner of a small business now spends up to a quarter of his or her time on employment-related paperwork."
PEO as Partner
The best PEOs function as partners within one's business. Essentially, they're a co-employer. For that reason, choosing the right company—the right partner—is essential.
In order to evaluate a PEO, consider the following factors:
-
Services: Not all PEOs are created equal. Some offer only one service, such as payroll processing, while others offer an entire suite of personnel products and solutions.
-
Reputation: Collins suggests checking with the National Association of Professional Employer Organizations (NAPEO) in order to find out if there have been any complaints filed against a given PEO; credible companies will be complaint-free NAPEO members who are licensed in your state.
-
Business Model: Some companies will work with you online or over the phone while others offer in-person relationships; decide which is most attractive to you and shop around accordingly.
Finally, Collins suggest, look for a PEO that has a corporate culture that's complementary to your own. The goal of outsourcing human resources is to help you attract and retain better employees; if you clash with your PEO, you'll have opposite results.
"Having a PEO that knows and advocates for your business is extremely important," she concludes. "A PEO that understands a particular company's industry and the climate in the workforce can in return help better prepare the company for future growth and change."
|
|
|
