Why It Can Pay to Outsource Your HR Person

Small and medium-size businesses are showing a growing interest in turning over their hiring, firing and benefits administrations to outsiders, human resource industry experts say. They hope it will help them rein in costs and give them access to a level of HR expertise they couldn’t afford on a full-time basis.

According to a poll conducted by the Society of Human Resource Management, 26 percent of companies cite saving money as the primary reason for realigning their human resources department with a professional human resources management firm. Such firms have expertise in traditional HR functions such as managing payroll, 401(k) plans, recruiting, workers' compensation, insurance benefits and other administrative tasks.

"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 Utah-based 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."

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Having a group of human resources specialists working alongside an organization can greatly reduce liabilities by implementing expertise with hiring, employee benefits, risk management and ensuring the business complies with industry and government regulations, she said.

Managers today must comply with a staggering number of laws and regulations. A specialized firm, experts say, can help ensure that businesses stay up to date with 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. "ProHR works hard to protect workers' rights and create positive employee relations. This in turn increases productivity and reduces turnover, saving the company from future hiring and training costs."