Small and mid-market business owners have a lot on their plate. Between legal, HR, R&D, sales, marketing, and growth initiatives, finding time to take a quick break isn’t always easy. As you grow, you’ll inevitably run into a productivity brick wall. You can’t do it all. Something has to give. For most business owners, the first source of pain is HR. Not only is HR dense in complexity, but it’s the most important factor in employee hiring, retention, happiness, and productivity.
So how do you know when it’s time to outsource these pain points? Here are the 5 telltale signs that it’s time to hand over your HR reigns to dedicated professionals
Should your business be partnering with a PEO? Learn more!
1. You Deal with Frequent Payroll Errors
While it may seem like a simple process on the surface, payroll is notoriously challenging for small business owners. The average small business faces $845 each year in IRS penalties due to inaccurate and mismanaged payroll. In addition, nearly 82 million Americans experience regular payroll errors (e.g., late checks, incorrect payments, etc.) And 49 percent of them will start searching for a new job after just two of these errors. Sixty percent of workers live paycheck-to-paycheck. Simple payroll errors can significantly impact their lives, forcing them to pay bills late, take out loans to purchase food and basic needs, and experience significant stress.
Working with an outsourced HR solutions company like a PEO can immediately solve these issues. Not only will PEOs completely handle your payroll process, but they bring world-class technology and strategies to the table.
2. You Need to Contain Costs
HR isn’t cheap. Between payroll administration, HR admin, benefits, compliance, and workers’ compensation, small businesses spend a significant amount of money on their HR ecosystem. Hiring professional HR pros isn’t always an option. HR managers can cost over $100,000 annually on average, and each additional HR person costs around $54,000. When we factor in benefits, onboarding costs, training, and technology, the costs can spiral out of control. To compensate, 70 percent of small businesses force unqualified employees to handle HR administrative tasks. This costs them billions in productivity each year.
Outsourced HR solutions like PEOs break the trend. Not only do PEOs bring their own tech stack and experience, but they can completely handle your HR ecosystem, leaving you time and money to focus on business growth.
3. You Have Employee Retention or Hiring Issues
Believe it or not, HR is your single strongest weapon in the fight against retention and hiring issues. Supplying better benefits, more robust employee training and retention practices, and ensuring employees are safe and compliant are surefire ways to bolster your employee ecosystem. According to LinkedIn research, companies rated highly on benefits see 56 percent lower attrition rates. In fact, 72 percent of employees believe great benefits lead to increased job satisfaction. Better yet, 78 percent of workers remain with their company solely because of their benefits packages. In other words, benefits keep people around.
But it works both ways. Over 50 percent of employees have jumped ship to secure better benefits, and 55 percent of employees are willing to accept a job with better benefits that pays less money. To top it all off, 43 percent of employees believe benefits are the key to attracting top talent. And they’re right. Unfortunately, most small business owners overpay for subpar benefits. Insurance companies use a “pooled risk” algorithm to determine benefit package costs. The more employees you have, the lower the risk. So, enterprises pay significantly less for benefits than small and mid-market companies.
This is an area where a PEO can help. Since PEOs have the unique ability to pool employees from all the businesses they represent under one banner, they come to the benefits negotiating table with a wealth of employees and a stellar team of negotiators. In fact, PEOs can help small businesses secure enterprise-grade benefits, often at the same (or even lower) cost than massive enterprises.
4. You’re Struggling with Compliance
In 2019, over 8,820 bills and joint resolutions were introduced. Each year, businesses are required to stay up to date with thousands of new potential laws, bills, and regulatory changes. For small business owners, this is nightmare fuel. Navigating the increasingly complex regulatory landscape is challenging, and it requires a significant amount of time, knowledge, and experience. Of course, there’s a big stick. Failing to follow regulations can lead to fines, reputation damage, and even jail time in extreme cases.
The average small business deals with a variety of nationwide regulatory acts, such as:
- The Fair Labor Standards Act
- Family and Medical Leave Act (FMLA)
- Occupational Health and Safety Administration (OSHA)
- Affordable Care Act (ACA)
- Employee Retirement Income Security Act (ERISA)
- Consolidated Omnibus Budget Reconciliation Act (COBRA)
- and plenty more!
In addition, you must follow local and regional laws and regulations, which are often numerous and cumbersome. Your options are limited. You can hire a swarm of legal and HR professionals to help you, but you risk sacrificing growth.
Outsourced HR solutions like PEOs are a more cost-effective option. Not only do PEOs handle payroll, benefits administration, and HR administration, they help you navigate the compliance landscape with accuracy, vigor, and ease.
5. HR is Taking Up Too Much of Your Time
Nearly 50 percent of small business owners spend one day a week (or more) on HR administration. This is a big problem. Twenty-five percent of small and mid-market business owners already work 60+ hours a week, and due to this workload, they’re more likely to experience mental issues like stress and depression — which leads 40 percent of them to have ongoing nightmares about their business.
Of course, this stress doesn’t only impact business owners personally; it impacts their business. The average business owner spends 68 percent of their time working inside their business, not on their business. Of course, 75 percent actively want to work on their business instead. After all, your role is to grow, nurture, and drive your business — not spend hours on HR tasks.
PEOs can help. Since PEOs handle HR administration, they free you up to focus your extra time on something more growth-impacting. Or, even better, nothing at all. Everyone needs a break. It keeps you sharp.
Get Help with HR
Did you know that small businesses using PEOs see an average ROI of 27%? Partnering with a PEO alleviates payroll errors, contains costs, improves hiring and retention rates, minimizes compliance headaches, and gives you the time and freedom to focus on what really matters — growing an amazing business. Are you ready to take back control of your business? Contact us. Leta us focus on HR. You focus on your business.
