Imagine you’re a business owner that matches aspiring homeowners with all the various services they’ll need to buy a house—from mortgage brokers to lawyers to inspectors. You even find contractors for various home improvement projects once your clients move in.
When you first opened for business, the housing market was just recovering from the great recession. Your company had only a few employees and, like most small businesses, you wore many hats. You managed all the HR functions like recruiting, onboarding, payroll and benefits administration.
Fast forward to the present day. The housing market is booming. Interest rates are low, buyers are flocking to open houses, and people who weren’t even thinking about selling their house five years ago are eager to cash in on a seller’s market. Your business has doubled and you’ve had to hire more employees to manage the increased volume of clients. The downside is, even as your employee population has grown significantly, as the business owner, you’re still wearing the HR hat. You’re working late nights and weekends just to keep up with basic HR responsibilities. As a bigger company, you’re also starting to worry about regulations and compliance. What is the increased administrative burden keeping you from doing?
These are just some examples of the kinds of HR questions your company needs to be able to answer to remain compliant, and it’s by no means a complete list:
- Do I have a comprehensive employee policy handbook? “Even businesses with as few as two individuals may benefit from some actual concrete documentation,” writes blogger Chad Halvorsen of WhenIWork.
- Am I classifying my employees correctly? Andre Lavoie writes on Entrepreneur, “The Internal Revenue Service (IRS) has been known to target small businesses in an effort to find employers who misclassify employees as ‘contractors.’”
- Am I properly documenting performance issues? Even if you only have a handful of employees, you have a responsibility to keep a written record of any employee performance or behavior problems that may arise. It only takes one bad hire for this to become a reality.
Is it time to reconsider your HR strategy?
Business owners aspire to grow, but when they find success they don’t always consider how they will scale their HR services when they need to increase their staff. A small start-up is naturally lean in operations, but once you grow your needs change. As the owner, you could keep up with HR functions like hiring and onboarding when that consisted of hiring one or two new people a year. But now you’re looking at dozens of new hires in the next six months…and likely more down the road if the housing market remains hot.
If your company decides to downsize in the future, that’s a whole other set of challenges that require the right expertise to handle. Either way, whether you’re growing or scaling back your HR administrative needs remain.
The benefits of outsourcing your HR administration
Administrative work is the top candidate for outsourcing; it takes up a very large portion of the HR professional’s time and has little value added. (SHRM)
So how do you handle the myriad tasks required in HR operations now that you’re a growing business? You could start by hiring a payroll service to lessen the burden on accounting. But that doesn’t address all the rules and regulations that you need to stay on top of, like the ACA or COBRA. You could hire more staff dedicated for HR. But that’s expensive and it means you can’t hire another salesperson.
Let’s say you do hire more staff to handle HR. The faster your company grows, the more overwhelmed those HR professionals become. More employees means more potential performance issues and turnover, which means more hiring. If you want to be more strategic in your recruiting of the right talent or making sure you have a diverse workplace, you need to remove the administrative burdens your HR professionals face every day.
Outsourcing your HR administrative functions will allow you to focus on strategic HR efforts as well as your core business functions. You need an HR partner who has the expertise and the flexibility to fit your company’s unique needs. As you expand or contract your staff, your HR partner should be able to adjust your service model accordingly, adding new offerings or eliminating others.
Your concerns as a business owner should not be tactical administration, rather strategic initiatives to grow your business.