What other human resources services could I outsource along with payroll?
Most companies are not human resources experts. Payroll is a specialized business function, like advertising or finance, that everyone isn’t going to be good at. So, any company can potentially take advantage of a payroll processing service. Smaller companies in particular will likely lack the expertise to handle payroll inexpensively. Outsourcing payroll processing allows a firm to focus more on improving its own business.
But the same can be said for other human resources functions as well, like drug testing, counseling services, workplace training, and even hiring and firing to some extent. A whole set of these services falls under the umbrella of professional employer organizations, or PEOs. These companies essentially hire a client company’s employees, becoming their employer of record for insurance and tax purposes. The employer has a contract with the PEO for the services of the employees. It’s also called employee leasing. The idea is that the PEO will be really good at administering the 401(k), benefits and other HR issues for the employees, leaving the employer to concentrate on other business. The cost can range from 12 to 20 percent of payroll, depending on the industry.
Human resources organizations, or HROs, on the other hand, offer the same services, ala carte. An HRO may be able to administer payroll, and retirement benefits and training, or each service individually.
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