As a small business, outsourcing HR can be in your company's best interest. It can provide your employees with better benefits and streamlined HR processes while providing your company cost savings.
This change can create uncertainty with your team, especially if all HR duties have typically lived in-house. By being proactive, you can address your employee's concerns and help them feel comfortable about the transition. Taking their feelings into account will go a long way to making a smoother transition for everyone involved. When you take the time to show your team the value of adding outsourced HR, you create a cohesive and trusting workplace.
Below are some common questions employees might have when you announce you are outsourcing HR.
Are You Replacing Them?
HR employees specifically worry they will be replaced when they hear their company has outsourced some of its HR functions.
With substantial changes in your organization, effective and transparent communication is key. Of course, not every employee needs to know the inner workings of every decision you, as the business owner, make. However, transparency is increasingly valued in the workplace. Giving employees some insight into your decision-making process can help gain their trust and get them on board with your changes.
When having this conversation, come prepared with notes about the benefits of outsourcing HR. Explain that using a Professional Employer Organization (PEO) is not intended to replace any employees you currently have but instead should complement those employees and relieve some of the challenges in their role.
For example, a payroll specialist may fear their job is being outsourced to the PEO. Remind them that the PEO will simply manage the payroll process, but their job is still necessary to help ensure the accuracy of data and to focus on driving key business results. Taking the actual payroll processing off their plate will allow them to focus on providing detailed reporting using data to help guide the direction of the business.
Will Your Employees Feel Disconnected from Your Company?
When HR tasks are outsourced to a PEO, some employees can feel disconnected from the company. Many team members see HR as the connection between the company and the individuals. That’s why PEOs encourage clients to retain their existing HR staff to assist employees with direct communications, new-hire orientation, complaint handling, and other employee-related issues.
PEOs supplement HR departments in their duties and offers a broader panel of expertise. This enables HR to delivery a more robust set of HR skills related to compliance initiatives and problem solving abilities.
The biggest benefit of a PEO from an HR perspective is that it allows your company's in-house HR to focus more time on employee engagement. The PEO takes over many of the redundant and time-consuming tasks that would otherwise fall on your HR team. By using a PEO, you can actually increase employee engagement by redirecting your HR team's focus to better manage internal relationships.
Will Outsourcing Limit Their Choices?
Employees resist change. It creates uncertainty for them. If you currently offer benefits, either on your own or through a broker, many of your employees probably take advantage of those benefits and don’t want to see them disappear.
Using a PEO can open up doors to more benefits, and you should encourage your employees to be open-minded to what else is available. They may find the new PEO actually has better benefits at lower costs. Explain to your team that moving to a PEO does not mean you have to lose the existing benefits. If you truly believe those benefits are the best value for your company and your employees, you can keep those benefits.
By outsourcing strategic HR duties to a PEO, your company can create more efficient and productive employees. When your team sees the results of their hard work, they become more engaged with the work they do. When your company saves money by outsourcing HR, you can redirect resources to employee-focused programs that provide for your team's well being.
Will Their Personal Information be Secure?
Employees may worry about the security of their personal information when it is revealed that someone outside of the office will be handling it. After all, HR usually manages employee's bank account information, salary information, and retains confidential personal information. Many companies with in-house HR teams tend to store secure information in an on-site filing cabinet or on their work computers with minimal security.
In contrast, when you partner with a PEO they use cutting edge technology that securely stores HR documentation and other personal employee information behind password protected online portals. These portals also allow for differing levels of access. For example, your HR team may have access to employee personnel records and bank account information that the employee’s direct supervisor wouldn’t be privy to— only the information relevant to managing the employee would be accessible in this case.
The ability to differentiate between levels of access not only helps to keep employee information secure, but it also keeps your company compliant with federal and state regulations. Violations in this area can become extremely costly for businesses and avoiding them is yet another cost-saving advantage of partnering with a PEO.
Outsourcing HR Gives Better Focus
Your team wants to know you are looking out for their best interests. Being transparent with them during a time of transition will help them reach this conclusion.
By including them in the process and explaining why it is in everyone’s best interest to partner with a PEO, you will assure them that their jobs are secure and give them peace of mind.
Not only does partnering with a PEO provide your company with cost savings, but it also gives you the opportunity to develop your employees. With the savings of both time and money, you can reinvest in your company and your employees, creating a more efficient and productive environment.
