Employers may tend to focus mainly on hard costs when evaluating business efficiencies and savings. Everyone wants less expensive benefits and insurance (and without having to scale back on coverage).
But what about the softer cost savings – the more indirect and less tangible benefits your business can gain by outsourcing HR services? Just because soft costs aren’t line items on a financial statement doesn’t mean that they aren’t equally important HR outsourcing savings to your business and to you, as a leader.
Use this infographic below to learn about the soft-cost savings of a PEO.
Keep reading for an in-depth read about these soft-cost savings and how they can impact your business.
First: What are hard cost HR outsourcing savings?
Some HR outsourcing savings are pretty straightforward. Major hard cost savings can be linked directly to utilizing an outsourced HR provider, such as a professional employer organization (PEO). For example, hard cost savings linked to outsourcing HR functions may include:
- Providing competitive benefits
- Avoiding the hefty – and perhaps unaffordable – costs of maintaining a team of multiple in-house HR specialists capable of handling a number of diverse functions
- Sidestepping payroll errors
- Confirming the competitiveness and viability of your compensation strategy
- Implementing HR technology to automate processes and streamline systems and vendors
But what about the softer cost savings – the more indirect and less tangible benefits your business can gain by outsourcing HR services? Just because soft costs aren’t line items on a financial statement doesn’t mean that they aren’t equally important HR outsourcing savings to your business and to you, as a leader.
Major soft-cost savings of HR outsourcing
1. Time
Time is one of our most precious and most limited commodities. Where we focus our time can determine how fulfilled and satisfied we are with our current reality, and how successful our business can be.
Chances are, you became an entrepreneur or got involved with your company because of something you were passionate about. When oversight of all business functions, including HR, takes your time away from working ON your business to working IN your business, that’s when you’re at risk of losing your passion.
You can also let goal setting and achievement fall to lower priority as you juggle multiple tasks.
Additionally, you can miss out on opportunities for innovation, strategic partnerships, growth and greater business success.
As a business leader, it’s best to keep yourself at the macro level versus micro level of the administrative side of your organization. Because what’s more valuable for you and your business – that you spend lots of time getting mired in HR issues or that you focus on your core competencies and the big-picture things that:
- Attract customers
- Increase market share
- Drive revenue
- Are more personally fulfilling to you
That’s not to say that HR issues aren’t important. On the contrary, they’re critical to your business. But do you have to be the one to handle them personally?
And the fact is, there just aren’t enough hours in the day for you to play the role of visionary, successful leader and HR expert – and perform both tasks well.
2. Effort
Beyond having the time, do you have the energy and desire to engage in the day-to-day work of overseeing HR? The list laid out in front of you might be longer than you realize. Including:
- Writing job postings
- Recruiting and training new employees
- Dealing with various employee issues, from disagreements to disciplinary problems
- Administering payroll and benefits
- Developing employee handbooks
- Documenting policies
- Crafting employee communications
- Tracking employee PTO
- Researching and comparing benefits plans, insurance and technology options
- Keeping up with employment laws
Most business leaders, if they’re honest, would say no.
Saving your effort and relying on the knowledge and expertise of others to handle these responsibilities can be a huge weight off your shoulders. Again, this frees you to focus on the things that you enjoy more and that drive value for your business.
3. Sound recruiting and onboarding practices
Your recruiting and onboarding practices should be well established and consistent.
However, sometimes employers can hire reactively to external events, such as a tight, competitive labor market or The Great Resignation. In these circumstances, maybe employers get a little desperate and don’t take the appropriate amount of time to find the right person for the job over the long term – someone who can grow and build a career at the company. Or, they may lack the resources to identify a large enough pool of talent and settle for whoever they find first.
Then, once they hire a candidate, employers may not always have the time and resources to ensure that the new employee:
- Establishes a strong connection and loyalty to the company from the outset
- Is set up for success in their role
All of this can impact the employee’s performance, as well as their engagement and retention.
An HR outsourcing partner can offer professional recruiting services to give your company solid, sound practices that you can stay true to no matter what’s going on around you. Your HR outsourcing partner can also facilitate effective orientation and onboarding sessions.
This can help to:
- Find the right people
- Start employees on the right foot
- Mitigate the turnover cycle
Surely this will save you many headaches and can help avoid the substantial hidden costs of turnover.
4. Management of employee relations
Even with an HR outsourcing partner on your side, you’ll never relinquish your identity as the leader or the special connection that exists between you and employees.
No matter what, you must commit to open communication, transparency and active listening with employees. You should guide and coach employees on their performance, and offer rewards and recognition to keep them motivated.
However, you can rely on the expertise and assistance of HR professionals to help you:
- Keep a pulse on what employees are thinking
- Make good, beneficial decisions for your employees and business as a whole
- Deploy strategies to boost morale and engagement
- Navigate challenging employee interactions without making mistakes that can invite legal trouble
HR outsourcing services often include:
- Deciding on and promoting a specific workplace culture
- Administering employee surveys about the work environment, including crafting custom questions, analyzing results, and recommending next steps based on outcomes
- Counseling on best practices in employee relations
- Benchmarking your organizations against peers
- Facilitating training and development
- Providing performance management expertise
- Implementing technology platforms to facilitate connection
- Assisting with sticky situations, such as discipline and terminations
All of these things foster higher morale among your employees and stability throughout your organization. A positive work environment and engaged, satisfied employees who stay for the long term – with minimal stress on your part – are invaluable, right?
5. HR-related compliance
If you have offices in more than location, you know how complicated adherence to the patchwork of employment laws can be.
Not only do different state and municipal governments pass their own laws independently of each other, but employment laws at the federal, state and local level are continually evolving. It’s challenging for any leader to focus on their core business while maintaining knowledge of applicable laws and their latest updates while avoiding the common errors that can result in:
- Lengthy investigations that consume time and resources
- Litigation
- Costly fines
- Incursion of other penalties
Furthermore, lately there’s a heightened awareness among leaders about the true risks and liabilities associated with employees. What’s contributing to this?
For example:
- The recent prominence of certain sociopolitical issues have led to a greater focus on:
- Potential expansion of controversial benefits in the workplace
- COVID has impacted how workplaces:
- Handle sick leave
- Manage workplace safety
- Accommodate long-term medical conditions and employees who serve as caregivers
- Allow remote and hybrid work
- Approach flexibility and work-life balance
Having easy access to an HR resource that can assist you in these complex HR issues and help prevent problems proactively can give you peace of mind – and can also result in a hard cost saving of avoiding or minimizing legal fees.
6. Wellbeing
Added together, all these soft-cost savings can have a huge impact on your mental health and peace of mind.
The decision of whether to hire an HR outsourcing service really boils down to the quality of life you wish to have as a business leader.
- Achieve greater simplicity and efficiency in how your business operates – without having to micromanage
- Relieve stress associated with being pulled in 20 different directions by delegating HR responsibilities to those who specialize in those functions
- Avoid the constant state of worry about the negative things that could happen
- Gain more free time to pursue passions and be with loved one
Your wellbeing as a leader can truly flow downwards, improving the wellbeing of your leadership team and to all employees.
Summing it all up
Think about how precious your time is and how you best bring value to your business as a leader. Is it better for you to add HR to your ever-growing list of responsibilities, or should you focus on your own core competencies? How much faster could your business grow if you focused on your own strengths and passions?
To learn more about how the HR outsourcing savings that can benefit your business, download our free magazine: The Insperity guide to HR outsourcing.