“Most entrepreneurs have great talents but many times they think they can do it all. That can really stall the growth of the business. By outsourcing the day to day back-office tasks, the business owner has more time to focus on generating income.”—Business owner Laura Lee Sparks, as told to Entrepreneur
There are many ways that new businesses can hinder their growth and one significant way is failing to focus on their core strengths. Business owners may start off wearing many hats — handling their own HR administration along with their other daily responsibilities. But HR is messy. Anytime you are dealing with people, there are going to be complications, and not every business owner or staff is equipped to handle the myriad personal, legal and compliance issues that will inevitably arise when managing people. Taking time to learn and administer employee benefits, keep on top of hiring and onboarding and maintain payroll constitutes a full-time job in itself. If you have other people on your team helping with HR tasks, you end up with disparate processes and multiple versions of the truth — which can lead to compliance issues, missed filing deadlines, and other headaches. When the company starts to take off and headcount increases, do-it-yourself HR administration becomes like the Hydra in Greek mythology, its multiple heads representing the disparate systems the business has created to keep track of its HR tasks.
When a company reaches this point, it’s time to slay the Hydra.
Are you holding back your own growth?
“Businesses of the 21st century have to be nimble and responsive to change. That means when a great opportunity comes along, you may have to find and hire employees quickly to meet your obligations and fuel business growth.”—Business.com
There are opportunity costs that accompany handling your HR in-house. It can impact…
- Your hiring decisions. You may have to hire more people who specialize in HR, rather than strategically hiring employees who can help you build your core business. The larger your company gets, the more HR help you’ll need to add to handle the increased transactions. When you outsource your HR administration, you can scale up without the burden.
- Your bandwidth for strategic planning. Can you really afford to split your time between strategizing and running HR administration and all the tactical work that entails?
- Your HR strategy. Administrative tasks like payroll and benefits administration are a necessary part of running a business. While they’re crucial to keeping your company going, they can also be tedious and time-consuming. Worse, they can keep you and your HR manager from building a winning team that is engaged, learning and growing with you.
- Your change management. Perhaps the time comes when you merge with or acquire another business. You’ll need to consider how that will impact your organization. You’ll be bringing on new employees and introducing a new company culture into the mix. You’ll probably have overlap and redundancies, but how will you determine who you keep and who you let go? And those employees that are let go are going to need some sort of severance or compensation plan. Are you prepared to handle the intricacies of change management?
In addition to the opportunity costs, there are also real costs: in tax audits, in failing to comply with changing HR laws and regulations, and/or in legal fees. If you or your staff members handling HR or payroll are not specialists in those areas, and you don’t have the expertise to make decisions and be proactive, you’re vulnerable.
Consider the myth of the Hydra. Those intrepid men who would try to cut off one of the serpent’s heads would be dismayed when two more heads appeared in their place. HR issues are like that. As your business grows, the responsibilities you thought you mastered only increase and get bigger and bigger — and along with it, your liability. By the time you discover an inconsistency, an error or omission, the damage will likely be done.
Why lie awake at night when you could outsource HR?
Business owners like to feel in control, but how can you feel in control when you have disparate HR systems, multiple spreadsheets, misfiled paperwork, manual processes and/or multiple technological “solutions?”
But don’t I give up control when I decide to outsource my HR administration? It depends on the provider you choose. When you partner with the right service, all you’re giving up is the tedious paperwork and time-consuming HR administration — as well as the stress and sleepless nights. If you pick a team with the right disciplinary expertise, you also gain insights on trends and changing laws that you don’t have the time to learn on your own…with the added bonus of knowing you’re staying compliant.
Business owners like to save money. But how cost-efficient is it to take time away from strategy and developing employees and finding new clients to spend it on HR administration? Not to mention the other tangible and intangible costs discussed earlier. When you hire the right HR outsourcing partner, you get one cost-efficient process. Suddenly the burden is lifted. Your nine-headed HR Hydra disappears.
Eliminate HR Distractions with HR&P
Consider outsourcing your day-to-day HR, payroll and benefits administration. It’s a smart move that allows you and your team to focus on other, more strategic work that keeps your business competitive. HR&P provides experienced, customized services, including PEO, flexible ASO, payroll services and ACA support.
Have questions about outsourcing HR administrative tasks or want assistance with other HR compliance and benefits issues? HR&P can help. Please contact us.