An organization's human resources department is responsible for a variety of functions. Human resource departments oversee employee payroll and tax filing as well as employee benefit and health administration. Human resources also manage legal compliance, maintain files and records, and oversee training and development. For many businesses, the various functions of the HR department are too comprehensive and complex to maintain in-house. Businesses that outsource HR functions receive several advantages that support the company's bottom line.
Risk Management
Human resources outsourcing firms help businesses minimize risk. Employment and labor laws change regularly, and it can be difficult for employers to remain up-to-date on regulations that affect the workplace. Outsourcing firms employ HR professionals whose purpose is to stay abreast on a variety of federal and state employment laws. HR staff helps businesses comply with these laws to avoid costly lawsuits brought on by employees. HR firms also maintain and audit company policies and practices to ensure the organization and its employee's best interests remain protected.
Cost Savings
Outsourcing helps reduce the cost of maintaining nonrevenue-generating back-office expenses. A fully functional human resources department requires additional office space and highly trained and experienced HR staff. Many small businesses find it more cost-effective to outsource HR functions rather than expand to a larger location to meet the space needs of another department. Furthermore, outsourcing costs are variable and can be reduced when business needs warrant.
Efficiency
Maintaining an efficient and productive workplace is critical. Outsourcing HR functions create greater efficiency within human resources systems. Advanced human resources technology utilized by outsourcing providers help streamline important HR functions, such as payroll, benefit administration and compliance management. Outsourcing helps employers and managers spend less time doing paperwork and more time dedicated to improving the efficiency and effectiveness of the workforce.
Employee Development
Outsourcing HR functions help businesses manage employee performance and development. Providers implement performance management plans to ensure employees comply with company policies and procedures and successfully meet business goals. Outsourcing firms periodically monitor employee performance and report findings to management. This reduces the workload of managers by minimizing the amount of administrative responsibilities they must focus on.
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