From the 1970s to 1990s, utilizing outside resources to manage HR and other services became increasingly popular for big companies. As the years have progressed and external HR companies (Private Employer Organizations) have continued to improve their effectiveness and efficiency, this industry has grown rapidly. In fact, “nearly 85% of firms now outsource at least some of their HR functions” (inc.com).
Small Businesses Get in on the Action
Benefits of time and cost savings, reduced liability and improved benefit offerings are the main reasons that many small businesses are now also utilizing PEOs. These small business owners are able to focus on core competencies, growth and continuous improvement instead of losing valuable time dealing with administrative duties.
Outsourcing HR Mitigates Risk & Increases Competitiveness
Businesses – both small and large – are able to attain more competitive benefits through PEOs who can leverage their buying power to drive down costs and offer multiple options to employees. By offering better benefits, organizations can attract a higher tier of talent to fill open positions.
In addition, PEOs reduce the liabilities many organizations can face in dealing with compliance issues – both state and federal – as well as legal issues around vacation time, workers comp, etc.
Don’t Forget the Human Element
Even with all of the benefits that come with utilizing a PEO to outsource the administrative side of HR, it’s important that business leaders do not forget to nurture the human side of this function. It’s imperative that growing businesses train and empower employees so that they can grow professionally, personally and within the organization.
By combining the benefits of utilizing a PEO service while also creating a strong company culture and employee development plan, businesses of all sizes can create exceptional internal value that will translate into continued growth and increased financial returns.
Read more on this topic: http://www.inc.com/fiscal-times/human-resources-big-savings-for-small-business.html