Most people don’t realize how many HR functions are going on behind the scenes of an organization; that is, until they go to work for a company without a dedicated HR department. In a nutshell, a good HR team is devoted to providing effective policies, procedures, and people-friendly guidelines to the organization. HR objectives run the gamut—from payroll administration to sexual harassment training; from recruitment support to workplace safety.
Small businesses that can’t afford or can’t justify a full-time team of HR employees often turn to professional employer organizations (PEOs), otherwise known as outsourced HR firms. In fact, over the past few years outsourced HR has grown into a $165 billion industry, with nearly 85 percent of companies now outsourcing at least some HR functions, according to Inc. magazine. If you’re considering a partnership with a PEO, here are some of the HR functions a PEO can handle on your company’s behalf.
Recruitment and Hiring Services
A lot of work goes into attracting and retaining the right talent for a particular organization. If your hiring manager represents a one-man recruiting department (or is nonexistent), a PEO is a great source for the HR functions needed to find and vet quality employees. Related services might include assisting in the development of accurate/engaging job descriptions, consulting on the overall recruitment strategy (placement of job ads and interviewing schedules), pre-screening requirements and background checks.
Once a decision to hire has been made, a PEO can own the work of designing and issuing standard forms: orientation packets, employee handbooks, and eventually performance appraisals. Many small businesses also rely on a professional employment organization for new hire administration—all the paperwork involved in setting up payroll, benefits, etc.
Ongoing Payroll and Benefits Services
Even in small companies, questions and action items related to payroll/benefits crop up every day. Employees experience “qualifying life events,” and need to make changes to their benefits outside of the annual open enrollment period. Bank accounts change. A mortgage lender needs to confirm employment and reported salary. Part-time or hourly employees need help understanding overtime policies. When you work with a PEO, you always have a person on hand who can answer these questions (even if the person isn’t physically stationed in your building).
Further, a PEO has the tools and knowledge to oversee payroll record management and compliance. This might mean making online paystubs and W-2s available to employees, maintaining paid time off (PTO) accruals, tracking wage garnishment and deduction data, or generating payroll reports for company leaders.
Termination, Leave of Absence, and Workers’ Compensation Services
Accidents happen, and sometimes they happen in the workplace. In order to prevent injuries and protect your company from liability claims, workers’ compensation services are among the core HR functions that PEOs provide. Your PEO can issue workers’ compensation certificates, and ensure you have the necessary posters and safety programs in place. In the event of a claim, your PEO can handle claims resolution.
Likewise, the many laws and procedures associated with terminating or suspending employment are virtually impossible for small business leaders to manage on their own. A PEO can own the tasks associated with unemployment compensation, hearings, and appeals. PEOs can also monitor leaves of absence, in compliance with the Family and Medical Leave Act (FMLA), and administer extended health benefits under COBRA continuation coverage.
Employee Relations Services
Despite your best efforts to create a safe, supportive work environment, some level of conflict is bound to arise. From small distractions like questionable attire or personal hygiene to serious offenses such as sexual harassment, employee relations should be left to the experts. PEOs often act as human resources consultants, advising on disciplinary matters, day-to-day policies, and general HR principles. A dedicated PEO can also shoulder investigations into harassment claims, discrimination claims, or EEOC charges.
Ready to take a closer look at how PEO services benefit companies like yours? Read The Best Kept Secret for Small Business Success. This free guide outlines how PEOs assist with businesses’ most important HR functions.