Outsourcing employee management
Mie-Yun Lee, Editorial Director, BuyerZone.com
June 22, 2003
Like it or not, managing your employees takes a lot more than issuing paychecks on time.
Outsourcing various human resource functions gives you access to a wealth of HR expertise
without the overhead.
Employee benefits and payroll administration remain the core tasks businesses tend
to offload. Both activities can consume significantly more time to administer than you
might expect, yet are fairly straightforward to process. Moreover, you may be able to
obtain a better benefits package by working with a third-party HR firm.
In addition, human resource companies have expanded their repertoire to include many
more intricate elements of HR administration. You can now find firms that can help in
recruiting, training, firing, overseeing compliance with government regulations, workers'
compensation, COBRA management, office policies and handbooks and, in some cases, even
dispute resolution.
Among the less well-known services, recruiting and training have become increasingly
popular offerings. Recruiting covers the whole range of activity associated with hiring
- starting from the development of effective job descriptions and compensation structures
to the actual interviews of job candidates. Similarly, training and development encompasses
activities ranging from assessing personnel training needs to identifying solutions to
help your staff perform their jobs more effectively.
Liability management is another vital function your business can assign to a HR outsourcing
provider. Because the laws, rules and regulations related to being an employer are constantly
changing, compliance has become a very time-consuming and potentially expensive consideration.
Workers' compensation, which includes claims filing, administration and tracking, and
COBRA management can also be outsourced. COBRA, in particular, can be quite expensive
to handle in-house because of the range of knowledge and administrative needs required
to handle it.
If your HR outsourcing needs require more than an a la carte solution, consider a Professional
Employer Organization (PEO). A PEO assumes full responsibility of your company's HR administration,
becoming a co-employer of your company's workers by taking full legal responsibility
of your employees. But take note - some HR outsourcing services like to use the recognized
term "PEO" when they handle the primary aspects of HR like payroll and benefits, yet
they do not take this legal partnership.
Pricing for HR outsourcing depends on whether a vendor offers services individually
or groups them together, as a PEO would. And while it is difficult to pinpoint pricing
for each need because they vary so much, factors like number of employees, the options
you choose to use, and even geography, will affect your overall cost.
For a PEO, which offers a comprehensive suite of services, the cost is about 4 percent
to
6 percent of your gross payroll. This roughly translates into $150 to $200 per employee
per month above the "hard costs" of payroll and benefits.
Whether for all or part of your company's staffing needs, HR outsourcing allows you
to focus on the core tasks of building your business. With less time buried in forms,
you can spend more time managing your personnel and winning new business.
