Outsourcing is a multibillion dollar industry these days. That’s partly because businesses can outsource almost any process, from IT to accounting.
One of the most talked about types of outsourcing has to be the outsourcing of employees. As the business environment continues to become more competitive, business owners like you look to find advantages, often through better control of your workforce. Outsourcing employees can help you achieve several different business goals.
If you’ve been wondering about this option for your own business, this guide will help you understand the benefits and the process.
What Is the Outsourcing of Employees?
You might wonder how you can outsource employees. After all, by strict definition, employees are hired by you and on your payroll. If you don’t hire them, they’re not your employees. They might be contractors or the employees of another company.
The outsourcing of employees is a little bit different. In this case, you’ll team up with a professional employer organization, or PEO. This provider works with you to jointly employ workers for your business.
As co-employers, you and the PEO have joint responsibility for employees. While you maintain control over who is hired and let go from the company, the PEO will take over many of the other tasks associated with employing people.
What Does a PEO Do?
As mentioned, you and the PEO act as joint employers. This gives you control over hiring decisions, as well as who stays on payroll. In most situations, the PEO will assume much of the day-to-day work of employing people.
That means the PEO looks after paperwork, benefits administration, and yes, even payroll. The PEO may also administer training and development programs. They might look after your workers’ compensation insurance and claims. They’ll also keep an eye on your compliance to make sure you’re treating your employees in line with the law.
Lifting the Administrative Burden
So, the PEO takes over many of the day-to-day tasks associated with employing people. This means that the paperwork is shuffled from your desk onto theirs.
This can save you time and effort, especially if you’re employing people in an international market, such as Canada. Your team may not be familiar with the laws, or they may not have time to conduct payroll for additional employees.
The PEO could help you save both time and money for this reason.
You might wonder, though, if the PEO isn’t just a staffing agency. Some staffing agencies hire employees, then “lease” them to other businesses. The agency is responsible for all HR tasks related to these workers.
The PEO is very similar, but not quite the same. When you work with a staffing agency, you have less say over the agency’s employee policies and protocols. You also have less involvement in hiring decisions. With the PEO, you maintain more control over these aspects of your workforce. In short, the PEO works with you to find and retain the absolute best people for your team.
Essentially, a PEO is an employee management system for your business. The organization can work with your internal HR department or its team can become your HR experts.
Is Outsourcing Employees Right for You?
It’s easy to see why the outsourcing of employees could be a good idea for some businesses. Many international employers already outsource some or all of the tasks a PEO can handle for them. Instead of sending payroll to this firm and assigning hiring responsibilities to another, you can consolidate your HR functions with one company.
If you have several firms providing different, yet related, services, you’re likely going to run into issues. Perhaps the payroll company keeps records differently than the recruitment firm you’re working with, leading to trouble reconciling the books about compensation.
The outsourcing of employees helps you streamline your operations, reducing time and saving money. It’s just good business sense!