5 Signs That Your Company Needs to Outsource HR

5 Signs That Your Company Needs to Outsource HR

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Small businesses often have leaders who wear many hats, including HR responsibilities that impact everything from your company culture to team member retention and compliance with payroll and labor laws to acting as a liaison between managers and their teams. 

If you’re finding yourself overtasked and spread too thin, it could be time to consider outsourcing HR, and here are what the signs look like. 

1. As the Business Owner, You’re Managing the HR Function

Although you might have managed HR problems in the beginning, as your business grows, the needs of your team start to outweigh the time you have available. 

Taking on the HR role takes time away from developing and selling the products and services you offer. It also impacts customer experience and finds you involved in low-value tasks that are not focused on generating revenue. 

If this sounds familiar, it’s time to outsource at least some of your HR functions, including:

  • Developing policies and accompanying handbooks
  • Recruiting, onboarding, offboarding, and team retention strategy
  • Background checks
  • Benefits and payroll
  • Compliance
  • Legal and risk mitigation
  • Training, performance assessment and development

2. You’ve Encountered Unexpected Liabilities

Even small business owners with the best intentions can stumble upon unexpected liabilities related to issues such as:

  • The rules of hiring
  • Equal Employment Opportunity Commission requirements
  • Collective bargaining agreements
  • Recruiting
  • Training
  • Harassment
  • Accommodations for disabilities
  • Payroll compliance

Whether this has already occurred or the risk is there, it’s essential to understand the types of liabilities business owners face related to HR functions. 

Through outsourcing, you bring in a valuable third party resource who understands every aspect of HR compliance to limit liabilities, including fines, penalties, and lawsuits.

3. You Need a Budget-Friendly HR Solution

In smaller companies, the scope of HR tasks might not fill an entire day for a dedicated HR professional. 

This often leads them to either assume additional roles or consider moving on for more engaging opportunities. Many small business owners believe hiring a full-time HR manager is more economical than outsourcing. Yet, the reality of adding someone to the payroll means shouldering taxes, workers’ compensation, insurance, benefits, and more, which can quickly surpass the cost of outsourcing. 

Outsourcing HR not only helps you manage expenses better but also provides access to seasoned HR expertise without monopolizing your time or resources.

4. Too Many People Think They’re the HR Manager

As small businesses grow, it’s common for the lines of responsibility to become blurred. 

Often, several people are involved in different areas of the business, with more than one person managing HR functions. When this happens, you’ll face overlaps, redundancy, and duplicate work, not to mention trying to avoid power struggles among your top managers. 

This can lead to frustration in the ranks, a lack of accountability and errors when incorrect information is shared. This can also increase the risks of HR-related liabilities. Outsourced HR defines the lines of accountability, creates transparency for employees, and ensures there is a single entity that knows where the buck stops.

5. You Are No Longer Scalable

Small businesses need to be scalable and responsive to change. 

If you find you can’t keep up with growth, you can miss opportunities. This can also impact your ability to meet financial obligations as you struggle to find the right balance for an affordable payroll, ordering supplies, and renting space to accommodate expansion. 

Through outsourced HR, you can access the resources you need when you need them, with an HR professional providing predictive insights to identify timing for HR deficits. As a result, you remain scalable and flexible while gaining from HR analytics, metrics and tracking to inform your decisions.

Outsourcing some or all your HR functions is the best way to streamline your HR tasks, remain scalable and comply with all HR-related regulating bodies.

About Focus HR, Inc.

Focus HR, Inc. uncomplicates the people side of business by providing small business owners with outsourced HR, project HR, and Leadership Coaching. For more information, please contact us today! If you liked this post, please subscribe to our blog. You can opt out at any time. 

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