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Who's taking care of human resources for your business? If you're like most small business owners, you don't have the resources to hire a full-time staff member to oversee hiring, firing, payroll, benefits administration and employee training. But HR is a very important aspect of any company, and it's one that shouldn't be viewed as another item on your endless to-do list.
"As a small business, you're very limited in the investment you can make in human resources," said Mark Perlberg, CEO of professional employer organization Oasis Outsourcing. "A lot of smaller companies might have somebody like the CFO taking responsibility for HR. But it's a highly specialized area, and it's a very hard thing to do if you don't have that expertise."
Small businesses are increasingly turning over their human resources operations to outsiders, industry experts say. According to a poll conducted by the Society of Human Resource Management, 26 percent of companies cite cost savings as the primary reason for realigning their human resources department with a professional HR management firm. Such firms have expertise in managing traditional HR functions such as payroll, 401(k) plans, recruiting, insurance benefits, training and development, workers' compensation and other administrative tasks.
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"We have seen a rise in small and medium-sized companies asking how we can streamline their human resource expenses," said Kristen Harisay, president of ProHR, a human resources management service firm. "What interests them is getting the expertise of an entire firm of HR professionals for the cost of one internal manager."
Outsourcing your human resources to a specialized firm can greatly reduce liabilities by adding expertise in hiring, employee benefits and risk management, as well as ensuring the business complies with industry and government regulations, Harisay said. A firm can also help ensure that businesses stay up-to-date on the most recent occupational guidelines.
"Part of what we do with our HR outsourcing is employ preventative measures to protect personnel and find solutions before problems arise," Harisay said. "This, in turn, increases productivity and reduces turnover, saving the company from future hiring and training costs."
If you're considering hiring a company to handle your HR, Perlberg recommended asking potential organizations about their specific areas of expertise, personnel certifications and pricing model.
"Understand what you're paying for, what you're getting and who is delivering the service," he told Business News Daily. "The advice and service you get is only as good as the people providing it."
Originally published on Business News Daily on April 20, 2012. Updated March 25, 2014.