Outsourcing HR job can free in-house resources

by Paul Schreiber

SBJ Contributing Writer

Businesses are increasingly seeking outside help in handling what were formerly in-house human-resource (HR) functions. By outsourcing some or all of these tasks, companies free themselves to concentrate on what they were initially conceived to do, according to local HR consultants.

Through a co-employer contract with a professional employer organization (PEO), a company hires the PEO to become its human resource department.

It is the objective of a PEO to accurately assess and then perform the various human resource details that a company must address, according to local HR services. Managing issues like workplace safety; employee benefits, payroll and tax administration; complaint resolution; and worker's compensation allows the business owner to focus on his or her special area of expertise and productivity.

These human resource items are the "non-productive functions" a business must tend to, according to Alice Wingo, marketing consultant for The Employer Advantage. "By him outsourcing the non-productive, it frees him up to focus more of his time and attention on the productive, the things that actually bring money into his company," she added.

In addition to helping enhance productivity, outsourcing human resources tasks ensures the company will maintain current compliance with the mounting state and federal regulations concerning employer-employee relations.

According to Robert Sells, owner of Express Human Resources, the latest entry into the Springfield HR service market, "The two most aggressive suits in the marketplace" right now have to do with equal employment opportunities and the Americans with Disabilities Act (ADA).

Companies frequently can offer expanded financial opportunities to their employees through a PEO that otherwise would be cost-prohibitive, Wingo said. This is possible due to the "economies of scale we can bring to their business," she added.

By virtue of the co-employer relationship, the large work force of the PEO is combined with the small work force of the individual business. This results in "employee benefit packages such as major medical, a 401(k) and the full cafeteria plan" becoming accessible to smaller businesses and at more competitive rates, she said.

"It costs (the insurer) more to provide insurance to a small group than it does a large group," Wingo said. "We're able to contain costs on the renewal side from year to year."

It gives employees the chance to work for a smaller company and still get the benefit package a large company would offer, Sells said.

PEOs bring both experience and expertise to assist their clients in meeting human resource needs. Express Human Resources requires its employees to participate in "ongoing training through the national service center and cross-training with Express Personnel Services," the HR agency's parent company, Sells said.

"We enter into a co-employer contract relationship, renewable annually," Sells said. Initially, a proposal indicating costs and the services offered is presented to the prospect. Fees are charged per service rendered "normally on a per-employee basis," he added.

The Employer Advantage provides each of its clients with a "risk management professional, employee benefits professional, human resource professional, and a payroll specialist," Wingo said.

Costs for such services are typically based on a percentage of the client's payroll and vary according to features selected, Wingo said. Fees often range from 2 percent to 5 percent of payroll and are based on a month-to-month contract, she added.

Both Express Human Resources and The Employer Advantage concentrate primarily on small- to medium-sized businesses. "Eighty-five percent of the companies in the Springfield area have 25 employees or less," Sells said. These companies "really don't have the depth or the pleasure of having a dedicated human resources department," he added.

PEOs are designed to enhance business operations. "We are there to assist the employer. We are no way there to take over the functions of his business," Wingo said.

INSET CAPTION:

Companies frequently can offer expanded financial opportunities through a PEO that otherwise would be cost-prohibitive.

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Express Human Resources recently opened its new offices in the Woodruff Building downtown. In existence for 12 years, primarily in the South, owners Robert and Nikki Sells debuted Express HR in Springfield Jan. 19. Pictured are Sales Executive Sara Metheny and owner Robert Sells.[[In-content Ad]]