Nobody ever started a company because they wanted to be 100% in compliance with the Fair Labor Standards Act. On the contrary, people start companies because they think they have a good idea for a product or service that will help people out and perhaps even change a small part of the world.
When a company first starts, everyone is involved in creating, developing, or marketing – and usually all three. People in startups wear multiple hats; it’s part of the appeal of working for a new company. Of course, no company can thrive with too many people wearing too many hats for too long. The more success a company has, the more it expands and the more people it hires. And along with more hires come more administrative tasks that must be completed. Making sure that payroll is completed on time is only one process on a list that seems to get longer every year.
Fortunately, we have Human Resources outsourcing companies to handle the necessary administrative tasks that come with starting a company. Here are five critical reasons for outsourcing HR functions.
Keeping up with Changing Law
We’re living and doing business during a time of great upheaval. Labor laws used to change at a snail’s pace, but now they are changing the business world in the blink of an eye. States, cities, and even counties are changing the minimum wage for employers operating within their jurisdictions. Since January of 2018, nearly 20 states have changed their minimum wage, and since 2012, 40 cities and counties have created a minimum wage.
There have been other changes beyond pay. States like Maine have made it illegal to base employment decisions on recreational use of marijuana. Massachusetts has made it illegal to ask about previous salary or rate of pay prior to extending an offer of employment. California has made it illegal to include questions about criminal history on employment applications. Illinois now requires accommodations for employees who are volunteering as emergency responders.
The speed and degree of change may be difficult to keep up with, but it’s still your company’s responsibility to follow the law. Outsourcing HR to an expert can make a lot of sense.
Improved Business Focus
When a company is first started, management often wears multiple hats. Frequently, that means they are doing things that aren’t necessarily the best use of their time or abilities. For instance, you may find that your best sales person is also the best at fixing the network when it slows down.
There comes a time in the development of every company when wearing multiple hats for normal business is simply more of a hindrance than a help. When you find that doing everything in house just takes your eye off the ball, it’s time to bring in an HR professional.
Anyone who has ever used a recruiter can tell you about how expensive it can be, especially now that there’s a talent crunch. You may not feel conflicted about paying high fees to find and hire the best people in key positions, but what about hiring for general employees? It’s one thing to spend a lot of money to hire a CFO. It’s another thing to spend a lot of money to hire a junior accountant.
However, bringing recruitment in-house may not be a workable solution to your staffing worries. Recruiting itself has its own costs – access to job boards as well as finding and adding dedicated headcount to find candidates. Outsourcing recruitment while your company is still building will not only bring expertise to your efforts, but you may very well get candidates who would otherwise remain inaccessible to you.
There are more reasons to take a job than salary. Job seekers consistently list the potential to learn and develop as just as important as any other form of compensation. And let’s face it: employee development is a much better way of improving your staff than external hiring. It’s less expensive and increases employee loyalty. Employee development is a win/win for both your company and your employees. You can’t outsource the development of your employees. However, by outsourcing your company’s HR services, you can free up the time, space, and resources to truly develop your team.
The most immediate, and tangible, benefit from outsourcing HR functions is cost savings. You don’t have the cost of additional employees or equipment. Additionally, by outsourcing, you get the benefit of experience and contacts from the firm you work with. They can help you secure a better rate on employee benefits, they can help you make sure that you’re not overpaying payroll taxes, and they can better organize your company’s structure to work more efficiently. All of this on top of giving you the time and energy to focus on building your company.
For more information on how Commonwealth Payroll & HR can work with you on your strategic human resources planning, call us today at 877-245-1159.