Fortune Business Consulting

Tag: HR Outsourcing

  • PEO vs. Traditional HR Outsourcing 

    PEO vs. Traditional HR Outsourcing 

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    How do you ensure that your business’s HR functions are streamlined and cost-effective? One critical decision business face today is which HR model to choose: PEO (Professional Employer Organization) or HRO (Traditional HR Outsourcing). 

    Your business, whether small or medium, requires HR outsourcing. Both PEO and HRO options provide HR outsourcing. However, PEO acts as a co-employer, while traditional HR outsourcing providers are third-party providers of HR services. Read ahead to learn more about the differences between PEO and HRO and what could be the possible solution for your business. 

    What are the Key Differences Between PEO and HRO?

     

    In the following segment, we have discussed the comparison between PEO and traditional outsourcing, outlining the key features.

    Set-Up

    If you are considering PEO as your HR outsourcing model, they are involved in all your business risks. For instance, during tax audits, PEO takes full charge and they are equally liable. On the contrary, when you hire HRO as your outsourcing partner, you need to solely handle tax audits. 

    HRO companies can give you advice being your consultant but they are not responsible for any organizational strategy. However, the PEO contract focuses on shared responsibility and risk management.

    HR Services

    PEOs provide comprehensive services, which include payroll processing, employee benefits, tax affairs, compliance, and guidance in all areas of HR. On the other hand, HROs are the third-party providers dealing with the HR functions of your business. With the HRO model, you can choose which services you can obtain for your business.

    Costs

    PEOs are often costly as compared to HRO companies. PEO set-up requires more money and it can cost 3-12% of your monthly payroll. However, HRO companies cost less but they can charge higher insurance premiums. Thus, it may seem that PEO takes thousands of dollars but it is conducive to your business if you consider the overall costs.

    Benefits of the Services

    PEO services can be exclusive for your business but it has its restricted set of insurance plans. Such insurance plans cannot be customized. However, with HRO companies, you can choose the insurance premium because it has a flexible approach. However, HRO companies do not guarantee the substantial premium savings that are available with PEO. 

    Potential Advantages and Drawbacks of PEO and HRO

     

    PEOs and HROs have their own set of advantages and drawbacks. Here, we have highlighted how advantageous these options can be and what drawbacks these could hold. 

    • Comprehensive HR Management and Flexibility: PEOs solely deal with every aspect of HR that is extremely beneficial for the in-house team. However, with HRO functions, you can only take the desired HR functions from the companies, leaving you more empowered to deal with other aspects. 
    • Cost-Effectiveness and Premium Benefits: PEOs can offer premium benefits by negotiating better rates for health insurance, retirement plans, and other benefits. However, HROs can be more effective for smaller operations. Here, you can choose one or two individual HR functions. 
    • Compliance Support and Retention of Control: PEOs are there to handle risk management and reduce compliance issues. But, when you hire HRO companies, you keep your control for employment decision-making to yourself without making any HR functioning company your co-employer. 

    Final Words 

    Considering which type of HR outsourcing model would be beneficial for your business depends on your business size and growth. If your business size is small or medium, it will be better for you to choose a professional employer organization. In case you are looking for HR function-related solutions, you can contact us. We provide simplified HR solutions at an affordable price. To know more about us, you can read our previous blogs. 

    Reference Link 

    https://www.businessnewsdaily.com/16514-peo-vs-hro-differences.html 

    https://www.talentnetgroup.com/sg/featured-insights/hro-vs-peo-hr-outsourcing-model 

    https://www.helioshr.com/blog/2015/01/pros-vs-cons-of-professional-employer-organizations-peos 

    https://www.trinet.com/insights/peo-vs-hro 

      

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    Contact Us

    Find out if a PEO is the right solution for your business.
    Fill out the form below and we will contact you to schedule a chat.

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  • Ways to Improve Your Bottom Line: In-house Vs. Outsources HR/Payroll Solutions

    Ways to Improve Your Bottom Line: In-house Vs. Outsources HR/Payroll Solutions

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    The key to business success is keeping their employees happy by providing paychecks on time. It helps keep them motivated to work and grow with the business. However, taking care of recruitment, HR, payroll, talent management, and others at once can be overwhelming. So, one looks at setting up an in-house payroll management system or outsourcing one.

    If this is a question running on your mind, keep reading this piece until the end! Here, you can find which one is the better option in terms of cost, complexity, time, and control?

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    In-depth Comparison of In-house Payroll Solution and Outsourcing

    There are two options available to an entrepreneur when it comes to managing payroll. He or she can either assign the task to an in-house management system or outsource. Both the options have their pros and cons, which are compared down below in respect of different factors:

    Time:

    The department has to gather employee information, maintain records, calculate wages, consider overtime, and other factors to process payroll. Hands down, this is a very complex process that requires a large chunk of management’s time. 

    For some organizations, it isn’t feasible to dedicate so much time as time is money. So, in this case, outsourcing is a better option as it clears administrative time, which employees can use on revenue-generating functions.

    Control:

    When it comes to controlling outsourcing payroll system falls back as companies lose control over how much an employee should be paid and the accuracy. The salary and benefits allotted to an employee are confidential information that must be kept private. 

    Here, establishing an in-house payroll serves as a better option. It provides the company with full control over sensitive data. Moreover, besides preventing third-party breaches, one also gets the independence to carry out last-minute changes and resolve issues.

    Cost:

    Another essential factor to consider is which option will be affordable to the company? For example, if the company is small with a limited number of employees, hiring an in-house payroll manager is possible to save costs. However, if the business is spread on a large scale, there are many things to handle, and if there’s a mistake in it, it will directly affect the service level of employees. 

    So, in this case, it is better to hand over the task to an outside company to take care of the payroll correctly. Moreover, since the outsourcing system uses a standard system that complies with the state law, the chances of accuracy and on-time credit of paychecks are high.

    Complexity:

    In the HR and payroll system, complexity refers to the fact that there are several things to consider, and the different department of a company needs a specialized backup system. This is most importantly applicable for companies with numerous business numbers, diverse payroll needs, and a collective bargaining system. 

    Thus, it is better to let experienced payroll managers streamline the process. Not only this, but with outsourcing service, one also gets a support system so if anything goes wrong, they can resolve it with skillful, speedy, and accurate resolution. 

    Now that you have the pros and cons of in-house and outsourced payroll solutions mentioned for you on a pointwise basis, you can decide which ones work best for you. However, if you decide to outsource the HR/Payroll system to improve your bottom line, then contact us. We can help manage key areas with precision. 

    To know more about the services and benefits of hiring a third-party PEO, you can also check out our blog section. There you will surely find some interesting facts you didn’t know about. 

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    Reference Links:

    https://www.avanti.ca/post/in-house-vs-outsourced-hris

    https://www.completepayrollsolutions.com/blog/inhouse-vs-outsourcing-payroll

    https://quickbooks.intuit.com/r/payroll/in-house-vs-outsourcing-payroll/

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    Contact Us

    Find out if a PEO is the right solution for your business.
    Fill out the form below and we will contact you to schedule a chat.

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