Many small businesses run on tight budgets. Saving money in any way can mean the difference between thriving and permanently closing. HR outsourcing is one way that small businesses can reduce costs while also helping the company grow.
When you’re ready to get your next PEO partner, turn to the experts at NetPEO. Our PEO brokers will work alongside you to understand your HR outsourcing needs. To start your initial needs analysis for free, complete the form on this page or call (678) 376-1212.
HR Outsourcing Reducing Costs Directly
As your company grows, you are likely going to need help handling your changing HR challenges. If you were considering hiring in-house staff, you should know that the average salary for an HR manger according to Glassdoor is more than $78,000 per year. Couple in a few additional employees to help manage payroll and benefits, and your business can be looking at spending more than $100,000 in increased payroll costs alone.
When you outsource your HR needs with a PEO, you end up paying a fraction of the cost that would come from hiring a traditional HR team. This results in a savings of $450 per employee according to the National Association of Professional Employer Organizations (NAPEO).
PEOs work with you on a fee basis. The structure of the fees can come in one of two forms:
- A percentage of your gross payroll
- Flat rate fee for each employee
Each month, you pay one of the two fees based on your contract with the PEO. When you work with the PEO brokers at NetPEO, we’ll help you determine what fee schedule will end up saving your company money.
Less Direct Ways HR Outsourcing Reduces Costs
While the direct savings of HR outsourcing with a PEO can be substantial, it isn’t the only way that the partnership benefits small businesses. There are a number of other areas where you’ll end up seeing a savings.
Hiring and Retention
It costs more than $4,000 on average to hire a new employee with an average hiring period of 42 days, according to the Society for Human Resource Management (SHRM). For small business owners without expertise in recruiting, you may find these numbers to be higher. With the HR professionals at your PEO partner, you can help reduce these costs through improved job recruitment strategies.
Not only that, but NAPEO reports that PEO users report a lower rate of employee turnover. Regardless of how your business is growing, this is a key method of reducing the costs associated with having to hire new employees.
Benefit Cost Reductions
Thanks to the co-employment agreement you sign with your PEO partner, your employees can be considered co-employed by the PEO. The more businesses that have partnered with your PEO, the more employees can be considered as working for the same entity.
Insurance companies offer reduced rates for employers with more employers. Small businesses with few employees often have higher premiums and less robust coverage. PEO users can have access to lower premiums and higher tier benefits packages.
Fewer Penalties for Regulation Violations
Is your business following the rules set out in the Affordable Care Act and other major laws? Violations can add up quickly, costing your business thousands of dollars for each violation. Failure to follow these regulations can mean that your business won’t be able to afford to stay open.
When you partner with a PEO, you rely on their HR professionals to keep your business compliant with local and federal regulations. If there are any upcoming bills that might impact your business, your PEO partner can give you advanced warning and will work to ensure your continued compliance.
Save Costs by Finding the Right PEO
If you want to reduce costs by HR outsourcing, it is critical that you find the right PEO. A PEO that doesn’t offer the services you need or doesn’t have experience working with businesses in your field can result in less money saved. Finding the right PEO, however, can be stressful and could require many hours of research.
Rather than trying to find a PEO partner on your own, call NetPEO. Our brokers have experience navigating the PEO industry and will work with you to find a PEO offering the services your company needs at a rate that will save you money.
Our PEO brokers work with you at no cost to your business. If you want to see what NetPEO can do for you, call us today at (678) 376-1212.