In-House HR & Payroll vs. Outsourcing: The Key Decision

Every business owner will have to decide at a certain stage of organizational growth whether to create and maintain an in-house HR and payroll department, or to delegate these services to an outsource provider.

Why is this question even important in the first place?

An effective HR department ensures the hiring of employees that are best suited to carry a company’s brand and fulfill its goals and objectives. They handle the application of their benefits and, through payroll, their salaries, paid time offs, and the like.

Conversely, they handle the firing of those who are not in line with company rules and regulations.

Human Resource tasks may seem administrative in nature, but its aims are carefully designed hand in hand with an organization’s vision. How?

HR makes sure that value is added in a company through its functions. They are highly trained to implement only the best practices; the managers and staffs are trained and developed in a way that is curtailed to achieving long-term goals, reflective of company values.

They design applicable trainings and host team building activities to make sure employees do not remain stagnant, and that the growth they experience are constructed not only to achieve unity and work efficiency in an organization, but also towards a company’s specific direction.

If Human Resource succeeds in making the employees of a company happy, this is reflected to its stakeholders and eventually to business investors. Therefore, value is successfully created.

Having Established Hereon the Vital Role of HR and Payroll, What Are the Factors to Consider Before Deciding to Go In-House or to Outsource?

Business owners who decide to outsource HR and payroll services effectually buy back their time.

This means that instead of expending so much energy in hiring and firing people, doing background checking, computing salaries and deductions, studying labor laws, and applying the appropriate taxes, they get to step back and focus on their core competencies instead.

With an outsource provider handling all these back office operations, business owners get to hone their energies on strategizing and growing their business so that they outperform their competition.

Clear instructions and communication is vital though between a client business and an outsource provider, so both are able to work alongside to achieve objectives in unison.

Save Money from Hiring In-House HR Specialists, Maintaining Expensive Network

We can’t always expect entrepreneurs to be experts at handling HR and payroll.

Depending on the size of your company, an IT network is necessary to make the job easier. This means an initial investment is necessary to purchase and install the technology, in hiring an IT specialist, and the continual upgrading of the software.

Hiring an outsource company to handle matters regarding your employees relieves you of this expense. Not only will you be freed up of the hassle of technical maintenance and spending, but it would no longer be necessary to hire a number of HR specialists too.

Otherwise, in an in-house setting, an HR specialist would have to be responsible for knowing every bit of information regarding labor laws and ordinances. This is important especially when handling employee disputes, and since these laws change from time to time, it is important to keep abreast of it to avoid being penalized.

Without an HR specialist, in case a business owner decides to have a hands-on approach, these matters can be too exhausting, complex, and time consuming to handle.

Penalties can range from wage delays, wrong salary computations, miscalculation or wrong application of taxes, or erroneous submission of tax returns and similar governmental documents. Last year alone, approximately forty percent of penalties given to companies in the US were mainly from HR-related mistakes.

As long as a client company itself is not delayed in funding their account, penalties arising from the aforementioned HR and payroll related concerns are assumed by the outsource provider, which should lift a lot of burden from an entrepreneur’s shoulders.

Regardless of company size, hiring an experienced HR and payroll services company will give you the advantages normally available only to established organizations such as…

Improved Data Security, Protection Against Fraudulent Activities

Owners of new businesses have a strong tendency to handle things on their own and micro-manage. In some ways this may be beneficial to them. Perhaps some companies have a complex payroll structure that should only be handled directly through in-house HR and payroll only. Some may be too dynamic and requires constant updating that it would be difficult to assign the task to a third party organization.

Otherwise, an outsource HR and payroll services company will easily organize matters and clear away the clutter of employee handling. It should save company owners time, money, and ensure data protection.

How many times have we heard of identity theft, or the need to keep secret employee salaries? Sometimes this classified information is unknowingly given due to lack of awareness or expertise. We also hear about disgruntled or fraudulent employees who try to embezzle their employers.

Hiring an outsourcing company will be able to protect business owners in this regard through sophisticated software, by carefully monitoring account access, and employing expert staffs. Aside from this, privacy protection is strengthened between companies and outsourcing organizations through contracts.

Overall, a trusted and experienced outsource HR and payroll company gives business owners more space for productivity and peace of mind, which is priceless.