As your business grows, so does your risk. That’s partly because businesses generally increase in complexity. You’re now operating with more processes, more vendors, and more chances for things to go wrong. But you’ve also got more on the line. A growing business has more physical assets, employees, customers, and cash than ever before.
With no small irony, your employees may be your greatest asset, but they can also be your greatest liability. Human resources outsourcing (HRO) can minimize this risk by enhancing your HR processes. HRO provides a comprehensive solution that can help you manage risk and improve overall HR management. Here’s how.
Understanding Business Risk
Business risk comes in many forms and can result in a loss of productivity, revenue, and public reputation. Most notably, risk often comes from the words and actions of your employees, underscoring the essential need to mitigate employee-related risk in your business with sound HR process and practices.
Unfortunately, too many businesses rely on their internal staff to handle HR, in addition to their finances. As a result, workers dilute their impact, decrease efficiency and increase risk as they multitask. Worse yet, more than half of all small business owners (54%) try to handle HR needs on their own.
This may save money in the short term, but it only exposes you to costly risk. A single regulatory violation can result in losing a significant amount of revenue; this kind of cost-cutting measure just isn’t worth it. It may be time to consider an HRO solution.
How HRO Mitigates Risk
HRO is simply your greatest risk mitigation strategy. Here are just a few of the ways that HRO can help you manage risk.
Leveraging Expertise and Best Practices
An HR firm can connect you to a team that understands the latest practices and regulatory requirements. It can also provide up-to-date guidance based on current trends and evolving regulations. As a result, you gain access to industry-leading expertise and the confidence that comes from a professional team.
Leveraging Technology to Improve Efficiency
The latest technology can improve efficiency, which helps you get the best return on your investment. But the right digital tools can also improve your accuracy, minimizing the risk that arises from manual data entry or violations of industry standards.
Many HR firms offer a co-employment business model. This means they share the liability of your employees and, as such, have a high degree of “skin in the game” and ensure great efforts are taken to reduce employee-related liability. Business owners can witness greater peace of mind knowing someone “has their back” and is intently focused on preventing and minimizing the impact of employee risk.
Focusing on Safety
In 2021 alone, workplace accidents cost American businesses $167 billion — roughly $1,000 per employee. HRO services can reduce these risks by focusing on safety training and other programs that align with your business as well as OSHA standards. As a result, businesses can witness fewer workplace incidents and insurance claims.
Separating HR and Finances
Small businesses often ask their workers to perform double duty: handling both HR and accounting. But is “putting all your eggs in one basket” ever a good idea? HRO services can separate these roles, minimizing the unintended consequences that arise from having a single point of failure.
Automating Core Processes to Minimize Failure
Automation can improve workplace efficiency. It can also prevent errors that naturally occur from data entry and other manual types of processes, particularly those that are paper-based. HRO providers can help automate your core HR-related processes and assign your employees to new tasks that maximize their economic contribution to your company. Automating manual processes creates more simplicity at the same time.
Ensuring Compliance with Employment Laws
Employment laws are complex and change often. It’s challenging enough for professional HR firms to keep abreast of these changes, let alone a small business owner. An HRO provider dedicates extensive resources and time to ensuring they and their clients remain up-to-date with all applicable labor laws and other relevant local, state and federal regulations. This saves costs and time by reducing risk exposure and costly litigation or fines.
Avoiding Risk with Real-Time Guidance
Sometimes, employee-related issues can quickly escalate. These “sticky” situations pose a significant threat to the ongoing operations and reputation of your Company. Having a professional HR team on your side to provide responsive, real-time guidance can make all the difference in mitigating the cost and impact of that situation.
The Costs of Outsourcing
Despite numerous benefits, companies sometimes are reluctant to outsource HR due to perceived higher costs. Far too often, however, business owners fail to take into account employee-related liability in all its forms and the cost implication of such. Additionally, even if business owners determine they can save money by handling their own HR needs, it doesn’t mean they should. Significant opportunity costs may result, as owners and their employees focus on the apparent savings, but overlook the increased risk of taking on that liability themselves. Regulatory violations or mis-steps can be costly, as firms may face fines and experience business disruption as they work to correct the problem. Can you afford these sorts of losses?
As a business owner, everything you’ve built is on the line. From that perspective, HR outsourcing is a minor cost. What is peace of mind truly worth to you?
Need HR Advice?
Do you need HR advice for your small business? Turn to the team at Focus HR. Contact us today to request a consultation, and discover how our services can streamline your business.