Consider that a small business owner can potentially save $500 per employee
annually on HR.  I have seen PEO’s do just that for small business
owners.  How?  Easy…economies of scale.

It depends on frequency of payroll, quantity of checks being cut, how many locations your company requires checks to be delivered and what other services are being provided.  For instance, if you have a payroll provider that offers Sect 125, or a 401k, or pay-as-you-go workers compensation insurance, then you can expect to pay more.

The payroll part of the equation is the easy part…it is the additional services and convenience that providers make their margin.

The fact of the matter is that there are typically so much savings in the area of Worker’s Compensation, Health, Dental, Vision, Life, Disability, 401k, Payroll administration and to many to name soft costs; that the saving are actually greater than the cost of the program itself.  So essentially at the end of the day we would be paying you to do business with us.

When you utilize the services of an HR Outsourcing company you are assigned the following team of professionals:

• Certified HR Manager- this professional will help with Job descriptions, back ground checks, employee enrollments, new hire kits, employee handbooks, new hire reporting, maintain employee files, I-9 verification, state and federal compliance, labor posters, management training, termination assistance, unemployment management etc…
• Risk Manager- will assist with Safety inspections and recommendations, safety manuals, manage worker’s comp claims and investigate fraudulent claims.  In addition they will oversee your low cost pay-as-you go worker’s comp coverage.   Keep in mind no deposit and you pay-as you go after you use it increasing your company’s cash flow.  In addition no more end of the year audits!
• Benefits Manager- besides offering an entire array of low cost optional employee benefits including Health, Dental, Vision, Life, Disability, 401k, employee discounts etc… this HR Professional will also administer your Section 125, manage your 401k compliance and your COBRA compliance.  They will also handle employee benefit enrollments and provide a hotline for all employees to call for Benefit information.
• HRIS IT Specialist- you will be assigned a powerful HR software program and this HR professional will train and assist you anytime you need help.
• HR Attorney- Besides providing your company with an Employer’s Practices Liability Insurance (EPLI) plan, as part of the program the PEO’s legal department will provide you with an HR attorney to assist with any HR related legal issues and your team of professional will make sure you stay in compliance with all state and federal regulations
• Payroll Specialist- This individual will handle all your tax filings, track vacation & sick time, handle all deductions & Garnishments, set up direct deposits or Payroll credit cards etc..

The advantage of working with a team of national HR professionals is they are up to date and current with all state and federal compliance issues.  If you were hire one HR Manager; they will not be well versed in all areas of HR like the team of specialist an HR Outsourcing firm would assign to your account.  The indivdule you hire would either have very specific knowledge such as HR compliance only or very general in nature such as some knowledge about HR compliance, some about risk management and maybe some about benefits administration.  It would also be impossible for them to be up to date with all the different labor laws from state to state.

In conclusion; HR Outsourcing is designed to save you time and money while making your entire operation much more efficient.  Contact us to learn more!

Why?  Because a lot of companies are in the process of reviewing their core competencies and service providers and vendor relationships in the fourth quarter and like the idea of starting up a new relationship on January 1.  Nice and clean.  It is a reasonable request and makes sense, especially given some of the tax consequences with some hr outsourcing models. 

Executives across the country are asking themselves: “Where can I cut costs or improve our operations without bringing on more costs?”  One of the best ways for small to mid-sized businesses to improve their bottom line is to take a look at the one division within their company that brings in ZERO revenue.  Human Resources. 

Through an HR outsourcing solution, our clients have been able to save anywhere from $100 to $1,000 per employee per year in labor costs.  Sure, the services cost money, there is no free lunch.  However, the economies of scale that are gained by using shared services or an hr outsourcing company, save in the cost of benefits, workers compensation insurance and administrative time.

The old rule of thumb, as I was taught, was for every 50 employees, you need an HR pro on staff.  But, of course, that ratio becomes skewed as the company becomes larger.  In other words, a company with 2,000 employees certainly can do without 40 HR pro’s (imagine that labor costs…at an average salary of $50,000, plus taxes, benefits, etc…you are in the range of $2,500,000).  Jaw-dropping, I know.

More reasonable would be about 15 for a 2,000 employee group.  But how can a company get that number down further?  Outsourcing functions to a PEO (professional employer organization), ASO (administrative service organization) or BPO (business process outsourcing) can drastically reduce a company’s overhead in the HR department.  We have worked with companies that have anywhere from two to 5,000 employees and have been able to cut their HR department in half, or better, thus saving an average of $62,500 per employee, and set them up with a solution that costs substantially less.  Include in the savings an  industry leading HR software solution that integrates with critical core business software, and now we are talking about a savings in the millions of dollars. 

Sounds great, right?  You can save your 2,000 person company $1,000,000 annually with this type of solution.  Who’s against it?  Why HR pro’s, of course.  This means cutting down their little fifedom.  Any department within a company does not like to see its numbers erased.  But who better to be erased than a non-revenue generating unit like human resources. 

The answer to the question: How many HR professionals does it take to change a light bulb? 

1. One to write up a job description
2. One to hire the individual to change the bulb
3. One to explain the benefits the new employee is entitled
4. One to act as risk manager to be sure that all OSHA rules and regulations are followed and reported
5. One to write up the performance evaluation
6. One to lay off the employee
7. One to inform the employee of their ongoing benefits and access to COBRA, et cetera
8. One to manage the unemployment claims

Did I miss anything?

That’s eight (8), and that is only if everything goes right and the employee does not get injured in the process and you need to have another HR manager handle the workers comp claim and another to manage the “back-to-work” program.

Why not roll them up, get some economies of scale, tell Betty-Sue Badbenefits and Roy Shakeyriskmanagement to work in a department within the company that actually pulls in some revenue?

1. My company is self-funded for workers compensation
2. I handle all aspects of payroll internally, from collecting the hours to cutting the checks to quarterly and annual tax payments to w-2’s to setting up direct deposit for my employees
3. I do not offer any benefits to my employees

Not as easy as you think, is it?

Let’s start with number 1…workers compensation. The common misconception is that workers compensation insurance is a burdensome tax to business owners and that it is only in place to protect employees…quite the contrary. Workers compensation insurance is in place to protect owners’ businesses in the event of a work-related injury to an employee. A second misconception is that if all of the employees are 1099’ed, sub-contractors, then the business owner is held harmless. That is fine and well until a sub hires a sub and they end up with an injured employee. Who then is going to be the responsible party? Trust me, that stuff flows uphill. Bottom line…workers comp…gotta have it. If you don’t you’ll be paying off the lawyers and injured with the proceeds from the sale of your business.

Which takes us to number two, outsourcing your payroll. Everyone should be using this service. Your time is money and your money is money…don’t waste either by doing this function in-house. Plus, the related fines if you flog it up.

And then you have employee benefits. Who is managing that? Your office manager? That’s great, that’s a money saver, because they work for free, right? Again, you’re wasting their time, plus opening yourself up to labor law infractions as I’m sure your office manager/client service rep/admin assistant is up to speed on all federal and state regulatory labor laws. Here’s a quick test of that employee’s knowledge of human resources. Ask them what C.O.B.R.A. stands for…and how long an employee must be retained on your company’s healthcare plan once they leave your employ. (Answers: Consolidated Omnibus Budget Reconciliation Act…and 18 months.)

Here is how you can help us and collect a little coin…

http://www.hroplus.com/referral.php

Best,

Kristian and Jeff

I disagree with the “control” issue.  How is a business owner in “control” when they have 7 different vendors for 10 different HR functions?

Anyway, here is the article:

http://www.entrepreneur.com/humanresources/managingemployees/article205124.html

http://www.forbes.com/2010/01/14/firing-george-clooney-entrepreneurs-human-relations-goldfield.html