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!

1. Employee Benefits-  Lets face it, every year the cost of employee benefits get more and more expensive.  Due to economies of scale; HR Outsourcing firms are able to get much better pricing then you would typically be able to get on your own.  In addition; since the HR Outsourcing provider has highly trained experts to administer these benefits they typically only see single digit increases as opposed to the normal double digit increases you may see in the open market.  In addition; the HR provider is always looking for better options for their clients.
2. Worker’s Compensation-  Another reason many companies turn to HR Outsourcing services is for a lower cost, pay-as-you-go worker comp alernative with no up front deposits and no end of the year audits.  Yes you heard me right!  When you work with an HR Outsourcing firm you will no long have to pay up front Deposits in the tune of 20% down and you are not subjected to those awful year end audits where you are typically hit with a large premium adjustment for the previous year.  The reason for this is that you are paying for exactly what you use as you use it.  Actually you would pay for it after you use it, creating a shift of roughly 3 months in cash flow.  Also because you are paying for your comp on a weekly basis your worker’s comp bills are much smaller and more manageable.
3. State & Federal Compliance- with well over 85 state and federal compliance issues (depending on the state you live in), it is surprising any company is able to function without getting a fine or penalty.  By having certified HR professionals working with you, they will help you to stay out of trouble with both the state and the federal government.  In addition they will have their legal team address any HR related issues that may arise and protect you with EPLI (Employment Practices Liability Insurance).
4. Reduce labor cost- There are many hard costs associated with HR including Health, dental, vision, life, disbility, retirement, FICA, FUTA, SUTA, Payroll etc…  In addition there are many soft costs that many business owners do not consider but can not be ignored such as the time it takes the owner of the company or an employee of the company to handle HR related issues, premium increases due to poor benefit administration or poor risk management, fines and penalties caused due to noncompliance, increases in unemployment rates due to poor administration etc…  HR Outsourcing companies are able to reduces costs in both Hard and Soft costs- let us show you how!
5. Improved HR Technology-  Many companies realize that the cost associated with a powerful HRIS (Human Resource Information Software) are far to expensive to purchase on their own; especially after you consider annual maintenance fees and upgrade costs.  However the HR Outsourcing firms provide you with this technology at no extra cost!  It is actually part of their program for you to use.  No upfront costs to use the software, no annual maintenance fees and no upgrade costs.  In addition you will be assigned an IT Manager to train you and to answer any questions that you may have as you go.

1. Increases Productivity- By reducing the time that you and your employees have to spend on the administrative headaches associated with Human Resources; your staff is able to focus their attention on the more important Profit Centers which increase productivity and increase company net worth
2. Decrease Liability- By utilizing the services of professional  HR experts, your company will always be in compliance with all state and federal regulations.  In addition; your company will be covered  with EPLI (employment practices liability insurance) and the Outsourcing firms legal staff will be there to assist as well.
3. Attract & Retain Key Personnel- By gaining access to Fortune 500 level benefits such as Health, Dental, Vision, Life, Disability, 401k etc… at greatly discounted rates; your company will have the leg up on your competition by being able to not only attract key employees but to retain them for the long term.
4. Simplify-  Through the use of the HR providers powerful HRIS (Human Resource Information Software), your management team will have immediate access to important employee information (such as payroll information, vacation & sick time, employee files, employee reviews, benefit reports etc…) at their finger tips.  In addition; your employees will be able to log into print check stubs and W-2. review employee handbooks and safety manuals, review employee benefits and more.
5. Grow Your Business- focus on what you do best and forget the rest

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.

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.)

http://www.aon.com/attachments/2010_PEO_Survey_Final.pdf

HR outsourcing solution providers (PEO, ASO, HRIS, payroll) are no different from other business entities.  Acquisitions happen.  So what are you to do when this happens? 

First question is…who is buying who?  I would be more leery of your provider being bought, then the other way around. 

If your provider is the smaller fish…then maybe it is time to re-assess your HR outsourcing needs and solicit quotes from other providers.  Your current provider may say all the right things about how their current portfolio is going to be unaffected…and a “smooth transition” is expected.  But after having lived through various b2b acquisitions, there is never a clean transition. 

So, re-assess…the door has been opened for you to see what is out there.  Maybe an upgrade to a PEO or ASO solution is right for you.  Change is inevitable, and often makes your business that much more efficient in the long run.