6 big soft cost savings associated with HR outsourcing

Employers always want to improve business efficiencies, of course, and today they are doing so by prioritizing opportunities to improve recruiting strategies, strengthen employee engagement and better navigate the increasingly complex compliance issues that they’re often faced with. These opportunities are examples of soft cost savings that often come with HR outsourcing , and they often help employers more adeptly run their business.



Employers may tend to focus mainly on hard costs when evaluating business efficiencies and savings. Everyone wants less expensive benefits and insurance (and without having to scale back on coverage). As you consider whether to outsource your company’s human resources (HR) function s, some of the big questions you’re likely focused on are:



How will this decision bring value to my business ?



How much money will I save?



Will I realize certain advantages that are just as good as saving money ?



First: What are hard cost HR outsourcing savings?



Some HR outsourcing savings are pretty straightforward. Major hard cost savings can be linked directly to utilizing an outsourced HR provider, such as a professional employer organization (PEO) . For example, hard cost savings linked to outsourcing HR functions may include:




Providing competitive benefits



Avoiding the hefty – and perhaps unaffordable – costs of maintaining a team of multiple in-house HR specialists capable of handling a number of diverse functions



Sidestepping payroll errors



Confirming the competitiveness and viability of your compensation strategy



Implementing HR technology to automate processes and streamline systems and vendors




But what about the softer cost savings – the more indirect and less tangible benefits your business can gain by outsourcing HR services ? Just because soft costs aren’t line items on a financial statement doesn’t mean that they aren’t equally important HR outsourcing savings to your business and to you, as a leader.



Major soft cost savings of HR outsourcing



1. Time



Time is one of our most precious and most limited commodities. Where we focus our time can determine how fulfilled and satisfied we are with our current reality, and how successful our business can be.



Chances are, you became an entrepreneur or got involved with your company because of something you were passionate about. When oversight of all business functions, including HR, takes your time away from working ON your business to working IN your business, that’s when you’re at risk of losing your passion.



You can also let goal setting and achievement fall to lower priority as you juggle multiple tasks.



Additionally, you can miss out on opportunities for innovation , strategic partnerships, growth and greater business success.



As a business leader, it’s best to keep yourself at the macro level versus micro level of the administrative side of your organization. Because what’s more valuable for you and your business – that you spend lots of time getting mired in HR issues or that you focus on your core competencies and the big-picture things that:




Attract customers



Increase market share



Drive revenue



Are more personally fulfilling to you




That’s not to say that HR issues aren’t important. On the contrary, they’re critical to your business. But do you have to be the one to handle them personally?



And the fact is, there just aren’t enough hours in the day for you to play the role of visionary, successful leader and HR expert – and perform both tasks well.



2. Effort



Beyond having the time, do you have the energy and desire to engage in the day-to-day work of overseeing HR? The list laid out in front of you might be longer than you realize. Including:




Writing job postings



Recruiting and training new employees



Dealing with various employee issues, from disagreements to disciplinary problems



Administering payroll and benefits



Developing employee handbooks



Documenting policies



Crafting employee communications



Tracking employee PTO



Researching and comparing benefits plans, insurance and technology options



Keeping up with employment laws




Most business leaders, if they’re honest, would say no.



Saving your effort and relying on the knowledge and expertise of others to handle these responsibilities can be a huge weight off your shoulders. Again, this frees you to focus on the things that you enjoy more and that drive value for your business.



3. Sound recruiting and onboarding practices



Your recruiting and onboarding practices should be well established and consistent.



However, sometimes employers can hire reactively to external events, such as a tight, competitive labor market or The Great Resignation . In these circumstances, maybe employers get a little desperate and don’t take the appropriate amount of time to find the right person for the job over the long term – someone who can grow and build a career at the company. Or, they may lack the resources to identify a large enough pool of talent and settle for whoever they find first.



Then, once they hire a candidate, employers may not always have the time and resources to ensure that the new employee:




Establishes a strong connection and loyalty to the company from the outset



Is set up for success in their role




All of this can impact the employee’s performance, as well as their engagement and retention.



An HR outsourcing partner can offer professional recruiting services to give your company solid, sound practices that you can stay true to no matter what’s going on around you. Your HR outsourcing partner can also facilitate effective orientation and onboarding sessions .



This can help to:




Find the right people



Start employees on the right foot



Mitigate the turnover cycle




Surely this will save you many headaches and can help avoid the substantial hidden costs of turnover .



4. Management of employee relations



Even with an HR outsourcing partner on your side, you’ll never relinquish your identity as the leader or the special connection that exists between you and employees.



No matter what, you must commit to open communication , transparency and active listening with employees. You should guide and coach employees on their performance, and offer rewards and recognition to keep them motivated.



However, you can rely on the expertise and assistance of HR professionals to help you:




Keep a pulse on what employees are thinking



Make good, beneficial decisions for your employees and business as a whole



Deploy strategies to boost morale and engagement



Navigate challenging employee interactions without making mistakes that can invite legal trouble




HR outsourcing services often include:




Deciding on and promoting a specific workplace culture



Administering employee surveys about the work environment, including crafting custom questions, analyzing results, and recommending next steps based on outcomes



Counseling on best practices in employee relations



Benchmarking your organizations against peers



Facilitating training and development



Providing performance management expertise



Implementing technology platforms to facilitate connection



Assisting with sticky situations, such as discipline and terminations




All of these things foster higher morale among your employees and stability throughout your organization. A positive work environment and engaged, satisfied employees who stay for the long term – with minimal stress on your part – are invaluable, right?



5. HR compliance



If you have offices in more than location , you know how complicated adherence to the patchwork of employment laws can be.



Not only do different state and municipal governments pass their own laws independently of each other, but employment laws at the federal, state and local level are continually evolving . It’s challenging for any leader to focus on their core business while maintaining knowledge of applicable laws and their latest updates while avoiding the common errors that can result in:




Lengthy investigations that consume time and resources



Litigation



Costly fines



Incursion of other penalties




Furthermore, lately there’s a heightened awareness among leaders about the true risks and liabilities associated with employees. What’s contributing to this?



For example:




The recent prominence of certain sociopolitical issues have led to a greater focus on: Diversity, equity and inclusion Discrimination and harassment

Potential expansion of controversial benefits in the workplace





COVID has impacted how workplaces: Handle sick leave Manage workplace safety Accommodate long-term medical conditions and employees who serve as caregivers Allow remote and hybrid work

Approach flexibility and work-life balance






Having easy access to an HR resource that can assist you in these complex HR issues and help prevent problems proactively can give you peace of mind – and can also result in a hard cost saving of avoiding or minimizing legal fees.



6. Wellbeing



Added together, all these soft cost savings can have a huge impact on your mental health and peace of mind.



The decision of whether to hire an HR outsourcing service really boils down to the quality of life you wish to have as a business leader.




Achieve greater simplicity and efficiency in how your business operates – without having to micromanage



Relieve stress associated with being pulled in 20 different directions by delegating HR responsibilities to those who specialize in those functions



Avoid the constant state of worry about the negative things that could happen



Gain more free time to pursue passions and be with loved one




Your wellbeing as a leader can truly flow downwards, improving the wellbeing of your leadership team and to all employees.



Summing it all up



Think about how precious your time is and how you best bring value to your business as a leader. Is it better for you to add HR to your ever-growing list of responsibilities, or should you focus on your own core competencies? How much faster could your business grow if you focused on your own strengths and passions?



To learn more about how the HR outsourcing savings that can benefit your business, download our free magazine: The Insperity guide to HR outsourcing .