By: Ber Leary on September 4th, 2023

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The Quick Guide to Outsourcing HR for Small Business

When your small business takes off, it’s an amazing feeling. You’ve got more customers, more revenue, and your dreams are one step closer.

But growth can also be a headache. You’ll need a team to help you grow, which means that you have to invest in recruitment, onboarding, and creating a superb employee experience. HR for small businesses is hard enough. It gets much harder when your company starts to take off. 

The transition from small business to mid-size enterprise is one of the most important moments in your success story. The right HR support can help you keep you on the path to growth. 

5 signs that your small business needs HR services

At some point in your growth journey, you will need dedicated HR services to look after your team. But how do you know when it’s time?

The size of your team is one indicator. Once you employ over 50 people, you become subject to certain employment laws like Family and Medical Leave Allowance. This can lead to additional HR-related overhead, for which you’ll require a qualified HR consultant.

There are also some other signs, such as:

  • You’re not involved in each hiring decision. Small business owners usually hand-pick each team member. As the team grows, you may have to delegate your hiring process to your trusted managers and your HR team. 
  • Your benefits packages require a lot of work. You will need to offer an expanding list Total Rewards to appeal to your growing team, such as healthcare and PTO. Eventually, you’ll need someone to manage administration and enrolment for these employee benefits.
  • You need to recruit for hard-to-fill positions. Need to bring in highly skilled employees or specialists? If so, you'll find the recruitment market is extremely competitive. You will need an expert who can optimize your hiring process and connect you with candidates. 
  • You have a multi-location business. If your business is split across multiple locations, you might find it hard to apply policies consistently. An HR expert can help maintain your culture throughout the whole organization.
  • Your team is unhappy (or leaving). If people are unhappy—or resigning—it could indicate that there's a problem in the employee experience. You'll need an HR expert to diagnose and fix any issues. 

If you notice any of these issues, then it’s probably time to upgrade your HR function. The question is, should you hire a full-time human resources team or outsource your HR for small business needs?

Download my guide to HR outsourcing

5 advantages of small business HR outsourcing  

Building an in-house human resources team is generally a good idea. But hiring full-time HR staff may not be the best option for companies in a growth phase, especially if you’re moving from a small company to a mid-size enterprise.

During growth, it might be better to look at an outsourcing option. HR for small business consultants can offer the following advantages:

1. Immediate start

Hiring HR professionals is a job in itself. You’ll need to hire qualified people, onboard and train them, and integrate them into your structure. When you need to scale up your HR team, that requires investment.

HR Outsourcing allows you to skip this hiring process. If you find a trusted HR partner, they will provide you with a skilled HR consultant who is ready to get to work on day one. This can be important if you need to tackle urgent human resources issues.

2. Expert knowledge of compliance

Compliance is one of the biggest problems for any business. As an employer, you have to follow a complex set of local, state, and federal labor laws. Breaking any of these rules—or failing to keep adequate records—can lead to fines and penalties.

Experienced HR consultants will have an in-depth knowledge of all applicable laws. They will help you understand the rules, document your processes, and keep the employee handbook updated. If your consultant is part of a larger HR outsourcing service provider, then they can call on their firm’s legal team for advice on tricky compliance questions.

3. Greater pool of candidates

The recruitment marketplace is highly competitive, especially for hard-to-fill positions. Your advert on a job site isn’t enough—you need an expert who can help you find your next new hire. Often, this means working with a recruitment agency.

An HR consultant can also help. They know the job market, so they can tell you exactly how to get your message out there to potential candidates. Plus, an HR consultant will do something that recruitment agents can’t—your HR consultant will help you optimize your recruitment process to secure your ideal hire better.

4. Choice of support level

You can choose from a range of HR solutions depending on your needs. These solutions include:

  • Foundational: Day-to-day HR tasks, including payroll processing, helping with employee self-service, managing HR compliance paperwork, and other administrative tasks.  
  • Operational: HR manager support for complex HR processes, including employee training, talent management, performance reviews, benefits administration, and other human resource management tasks.
  • Strategic: HR Director-level support, which can include designing your human capital processes and overseeing HR software projects, such as upgrading your time tracking, employee management, or applicant tracking systems.

HR outsourcing companies will be able to talk you through the options and pricing, and they'll help identify the solution that’s best for you.

5. Scale as you grow

Your HR needs might vary over time. For instance, say you decide you’re going to open a new branch. You’ll need a lot of HR support to help you hire the new team, onboard them, and get them all set up on payroll.

With HR outsourcing, you can bring in some experienced HR people to get you through this challenge. They’ll support you for the term of the contract, and then you can scale your HR team back down. This kind of flexibility is ideal for a growing company that's not quite ready for a permanent HR department.

Looking for the best HR outsourcing services?

When your small business starts to grow, HR becomes vital. You need someone who can help improve employee engagement and retention, a partner who will take care of payroll taxes and health insurance while you focus on your customers. 

HR outsourcing is a great solution, especially when you’re starting to become a mid-size enterprise. A comprehensive HR outsourcing partner will help you navigate through the growth phase and prepare for the next stage in your journey.

Want to talk about human resources outsourcing for your company? Book a no-obligation call with a Helios HR consultant today.

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