4 Signs You’re Ready to Outsource Your HR

Knowing when and how to delegate work is a critical part of running a business. According to a report by Onpay, 41% of small business owners choose to handle HR themselves. Human resources is perhaps one of the smartest delegation choices an employer can make. If you’re still unsure, here are four warning signs that outsourcing human resources may be your best strategy.

1. You’re spending too much time managing HR problems

If you’re the person in charge of HR, you have to spend significant time on HR tasks which means you have less time to focus on other high-value strategies and initiatives. Similarly, if another employee is handling HR, they have to split their time as well. But no matter who is managing HR in-house, all employee-related matters are solely the responsibility of your business.

According to the Ad Hoc Human Resource Management study, 70% of small businesses add HR to the workload of employees who manage it on an ad-hoc basis in addition to their primary job.

The more time you spend trying to learn about employment law, the less you spend doing what your business does. When you outsource human resources, you pay someone else to deal with employment-related tasks, freeing up your team to focus on actual revenue-generating work.

As the business owner, you know what it’s like to wear many hats, especially when you were first starting out. But if you’re continuing to manage HR alone, this leaves you with far less capacity to focus on the strategies, initiatives, and goals that will help your business succeed and be more competitive.

2. You’re worried about your exposure to risk

You or your human resources manager must be aware of business liabilities that exist when it comes to hiring or terminating workers or overseeing employee pay. By outsourcing, businesses can hand off responsibility to someone who is specifically trained in the practical and legal aspects of human resources. The cost of just one tax reporting violation could pay for a year of outsourced human resources.

Handling HR yourself may seem like a good idea…until it isn’t. If you run into a problem, suddenly you have to devote more time than you can realistically spare to take care of it. And that’s assuming that you have the right knowledge (or access to it) to solve the problem appropriately.

3. You need to save money

Ideally, you have a dedicated HR professional on staff— and possibly even a whole team—to manage HR. Ideally, you’d have someone for each function of HR, from payroll to hiring to policies and other areas. But this isn’t always the case, especially in a smaller operation with limited resources. Having a fully staffed HR team is costly. Human resource experts can be expensive and just one on staff typically isn’t enough to hire, manage, and retain your staff and company culture.

When you have an expert third-party partner handling your company’s human resources responsibilities, you spend money, but you also gain time to devote to your core business functions. Plus, as mentioned above, you reduce your exposure to legal risks. The overall effect is a healthier bottom line.

4. You can’t respond to changes as quickly as you need

We learned in the era of COVID-19, businesses must act fast. Survival depends on speed. Even if you have an HR team, there could still be portions of the work that are particularly challenging and require more time or expertise than the team has available, which means other high-value tasks could end up on the back burner.

When you outsource your HR, you have far more resources at your disposal for finding and hiring the individuals you need quickly. Read our guide on the benefits of outsourcing HR to learn more.