The department of human resources is an important part of any business, no matter its size. Those in charge of HR processes and business functions are the people responsible for the human element of a workforce. All businesses must have some form of HR to ensure their employees’ needs are met.

But what happens when a small business doesn’t have the resources to hire a full-time HR representative? Small and large businesses alike can turn to outsourcing their human resource management to cover these requirements.

If your small business is looking to outsource its human resource needs, then here's everything you need to know about the process.

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What is HR Outsourcing?

HR outsourcing happens when a business hires an external service provider to cover its internal human resource operations. Many small businesses will look to HR firms for outsourcing HR services as it can save them time, money, and effort overall.

HR outsourcing, also known as HRO, can be divided into three main categories of outsourcing responsibilities:

1. Business Process HR Outsourcing: When an external service manages part of the HR processes or the entire department as a whole
2. Shared Service HR Outsourcing: When only the administrative activities of HR are outsourced to an external third-party service provider
3. Application Service HR Outsourcing: When external services cover the technological or physical infrastructure of human resources

Much like, outsourcing IT services or customer service outsourcing, businesses will need to decide which aspects of the human resource management duties it would like to outsource.

What HR Tasks Can be Outsourced?

An array of processes and responsibilities fall under the human resources department, which means many different tasks can be outsourced to an HR firm. Such human resource responsibilities include:

• Employee relations
• Employee compliance
• Payroll processing
• Workers' comp
• Insurance services
• Performance management
• Employee benefits
• Recruiting and hiring
• Disciplinary and professional training
• Labour law compliance

Depending on your small business’ needs, an external HR service provider can cover one, multiple, or all internal human resource functions. The most popular outsourcing tasks for HR include payroll processing and hiring services, like recruitment and running a criminal background check.

Benefits of Outsourcing HR

The advantages of outsourcing human resources can help small businesses improve their services and processes overall. If your small business is considering outsourcing its HR responsibilities, then these are just some of the benefits waiting for you and your employees.

Frees up time and resources

Outsourcing your business’ HR department will free up both time and resources, human and financial, to be put to use in other parts of the company. Hiring an external service to cover your HR processes means gaining professional hands to take over these human resource responsibilities. With their expertise, they could get more done, covering those time-consuming administrative tasks like payroll.

Overall cost savings

On top of the time savings, there are also financial savings to be had with outsourcing. Hiring an HR firm offers a cost-effective way to cover your HR needs without the added wages to payroll. As HR firms solely focus on human resource tasks and responsibilities, they pool thousands of business operations together, lowering their services’ cost overall.

By outsourcing HR, your business won’t have to pay a full-time salary in payroll, which means your operational expenses could decrease overall. As a business owner, you can deduce to take those added profits out of the company, or redistribute them within the business for other pertinent operational expenses.

Easy risk management

Professional HR services keep their employees up-to-date with the latest in employee labour laws and government regulations. Outsourcing your HR can help protect your business and your employees as trained and experienced HR representatives work to mitigate risks and ensure all disputes are properly handled.

Your business can avoid noncompliance and discriminatory issues from the start or effectively manage them before they get out of hand with the use of external HR services.

Obtain professional services with the latest industry knowledge

One of the greatest advantages of outsourcing human resources management is gaining expert knowledge of the industry. On top of an understanding of government laws and regulations, they also have expertise surrounding current HR policies and processes. Outsourcing HR functions means gaining an expert and experienced professional working for your business.

Experienced HR representatives will have the skills and know-how to handle all kinds of employee situations and issues, from staff interactions to the administrative side of duties. HR firms already have the infrastructure and training in place to easily provide quality services to small businesses across the country.

Offers a source for quality employee training

Small business owners should always keep on top of employee training, but such a task is made easier when outsourcing the HR department. These organizations can provide professional and disciplinary training to your workforce for various situations.

From performance management and supervisory training to disciplinary actions and education, outsourced HR professionals have the tools and techniques to cover further education of your workforce, so you don’t have to.

Gain comprehensive benefit plans

Outsourcing firms work with thousands of businesses and employees, so they have the means to provide extensive health coverage and benefits plans to your workers. Human resource outsourcing can deliver high-quality benefits to small business owners and their employees that might otherwise only be available to large corporations.

Improves employee relations and communication

One function that outsourcing your HR department is the bridge between your employees and you. They can assist your business with employee relations, including keeping an open communication line between the whole workforce.

As these HR professionals work outside of your business, they play a neutral role in conflict management. Your employees might feel more comfortable looking to the outsourced HR firms for guidance compared to discussing issues with their manager and boss.

HR Outsourcing Services

When choosing your business’ HR outsourcing company, you will need to consider what internal tasks and operations you need them to cover. It is crucial to do your research on the services provided and the HR firms available to your business before deciding on one.

Before settling on an external HR team, look for service providers that can:

• Work with your processes and management style
• Flexible contract terms and lengths
• Industry-specific knowledge of your business’ functions
• Pricing transparency
• Standardization of processes that will work with your business
• On-site assistance
• Online support materials and live chat

Consider these top HR firms in Canada when weighing up your human resource department requirements.

Using Professional Help

Whether you choose to enlist the help of professional human resource services, you can always turn to professional accounting and management software to help you with your finances. Software like QuickBooks Online offers small businesses a comprehensive set of tools to help them keep their accounting and bookkeeping in check.

Take advantage of this professional tool when you sign up for a free trial today.

Back: What is Outsourcing?

Next: Benefits of Outsourcing Customer Service