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Explore the 9 Most Outsourced HR Functions and How They Can Boost Your Business

Commonly Outsourced HR Functions

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  • By outsourcing HR, small and mid-sized businesses can prioritize strategic initiatives and optimize daily processes.
  • Some commonly outsourced HR functions include payroll, benefits administration, and risk management and compliance.
  • At EmPower HR we handle your day-to-day HR tasks so you can focus on growing your business. Contact us to get started!

HR outsourcing can be complex and, although we wish for a playbook, unfortunately there isn’t one. What’s the best approach for your business needs?

This article explores the most outsourced HR functions, from payroll to performance management, to help you decide.

Let’s dive in!

Types of HR Outsourcing

There are three approaches to outsourcing HR functions:

  • Full Outsourcing: An external service provider handles all your HR tasks.
  • Co-Sourcing: You outsource some HR functions, while keeping others in-house.
  • HR Technology Support: External providers assist your internal HR team with technology and resources.

Basically, the best path to deciding on an HR outsourcing service relies on your organization’s current development stage and your strategic goals for the next one to two years.

Outsourcing Payroll Can Free up Valuable Time and Help Your Avoid Costly Errors

9 Commonly Outsourced HR Functions

Payroll and benefits administration, compliance, and employee relations, are on top of the list of the most outsourced HR functions.

Let’s take a closer look:

Payroll Administration

Payroll is the most commonly outsourced HR function for a reason. It involves complex calculations, tax withholdings, and ensuring accurate and timely payments to employees. Payroll providers offer a range of services, including:

  • Calculating salaries and wages
  • Withholding and paying taxes
  • Producing checks or direct deposits
  • Issuing tax return forms

Outsourcing payroll can help you avoid costly errors and free up valuable time to focus on other business priorities. Additionally, you gain the expertise of a team that stays up-to-date on complex tax regulations, reducing your risk of penalties.

Employee Benefits

Employee benefits are a crucial part of any compensation package, including health insurance, retirement savings plans like 401(k)s, and other insurance options.

HR outsourcing enables you to have specialists managing these benefits for you, including:

  • Answering employee questions about benefits options
  • Enrolling employees in plans and processing changes in coverage
  • Tracking eligibility to ensure employees qualify for the benefits they choose

By outsourcing benefits administration, you can potentially:

  • Obtain better rates from providers than you could negotiate on your own
  • Offer a more attractive benefits package to attract and retain top talent
  • Reduce your workload and free up your HR team’s time to focus on other strategic initiatives

That way, your employees receive a wider range of benefits options, and you benefit from a more efficient HR team and potentially lower costs. It’s a win-win for everyone!

Employee Relations

Every business owner dreams of a workplace where everyone works seamlessly together. However, with diverse personalities, backgrounds, and working styles, conflict is inevitable. Managers play a crucial role in navigating these situations, but it’s not always easy.

This is where an HR expert can be invaluable. Skilled HR professionals can help build trust, defuse conflicts quickly, and foster a positive and productive work environment for everyone.

Risk Management and Compliance

HR departments navigate a complex web of laws and regulations. Keeping up-to-date can be a full-time job, and failing to comply can lead to hefty fines and lawsuits. In fact, compliance is estimated to consume over half of HR’s time.

Outsourcing HR compliance tasks can help you stay on top of legal requirements and mitigate risk. Here’s how:

  • Compliance Expertise: HR specialists can ensure you comply with current employment laws and regulations.
  • Claims Management: They can manage claims efficiently, giving you access to legal expertise when needed.
  • Unemployment and Workers’ Compensation: Outsourcing specialists can handle the administration of unemployment claims and workers’ compensation, freeing up your internal HR team’s time.

Drug Screening

While some organizations might manage their own drug screening protocols, partnering with a third-party provider often provides a safer and more reliable option.

Third-party providers ensure compliance with drug testing regulations, minimizing your legal risk. Also, they eliminate potential conflicts of interest that could arise.

Coaching and Development

Outsourcing professional development can be a valuable tool, but there are pros and cons to consider.

Coaching might be more effective when integrated with daily routines, since it’s able to address immediate needs. However, involving external experts in coaching might bring a fresher perspective and vast expertise, which could also be beneficial.

The best approach depends on your specific needs and goals. In fact, a hybrid of both options can be ideal!

Policy Development and Enforcement

Clear and well-defined HR policies are essential for any business. They establish structure, consistency, and ensure everyone understands their rights and responsibilities. However, developing and enforcing policies can be challenging, especially for organizations with remote employees or a global presence.

An HR outsourcing partner can help you create consistent policies across your organization, ensuring compliance and providing an effective communication plan.

HR Strategy

HR strategy plays a crucial role in your overall business success. By defining your approach to company culture, performance management, training, and talent acquisition, you create a competitive advantage.

A well-defined HR strategy can help you attract and retain top talent, while building a positive and productive work environment.

However, developing and implementing a strong HR strategy can be a complex and time-consuming process, especially for SMBs. An HR outsourcing company can bring a wealth of experience to your organization and help you develop a customized HR strategy that aligns with your specific needs.

Succession Planning

Imagine a scenario: You’ve built a successful business. But what happens if you decide to retire, relocate, or pursue other opportunities? Employee turnover is inevitable, whether due to retirement, career advancement, or other reasons.

This is where succession planning comes in. Having a plan that aligns with your strategy and growth plans is fundamental for the success of your SMB today and for the future.

HR outsourcing can help you assess your current workforce and identify employees with high potential for leadership roles. Also, they can develop training or mentorship programs where experienced leaders guide and support high-potential employees.

Outsourced HR Specialists Can Keep You Compliant with Employment Laws and Regulations

Unlock Faster Growth with HR Outsourcing

The decision to outsource some or all HR functions depends on various aspects of your business. But there’s one key question every leader should consider: What approach will propel your company’s mission and strategic goals faster and more effectively?

At EmPower HR, we provide HR outsourcing services for over 400 companies in the U.S. From payroll processing to ensuring compliance, we can alleviate the burden of HR tasks so you can focus on growing your company. Let us be your HR partner! Contact us today to learn more about our customized HR solutions.

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