Tag Archives: benefits

The main purpose of hr outsourcing…saving money

Whether you are looking for hard or soft-dollar savings…both can be found by outsourcing some or all of your HR functions.

But first, you have to want to be an employer that wants happy employees.  Happy employees are productive employees.  In addition, happy employees do not leave you.  Thus, the huge cost of turnover, which is oftentimes, estimated as much as 50% of gross payroll due to lost management time, re-training and recruiting. 

Therefore, if you have in place a benefits package that rivals those of big companies…why would your employees leave?  The fact is, the will not.  The hard dollar costs of benefits for employees are more than saved in hard and soft dollar savings.

Whether you go with a PEO (professional employer organization) or ASO (administrative service organization) to help you manage your human resources, for small to mid-sized companies, the economies of scale realized by these models will make your hr outsourcing a cost-effective tool that actually prop up your bottom line.




HR outsourcing for non-profits

There are various HR outsourcing models to choose.  All have their benefits and detractors.  One of the most obvious detraction for PEO (professional employer organization) is the fact that under the “co-employment” arrangement that a client agrees, all tax reporting is done under the PEO’s tax identification number.  Thus, an entity, such as a not-for-profit, that enjoys certain tax deferrals, will be “taxed” by the PEO as the PEO is responsible for paying all taxes. 

Be sure that the benefits and cost savings are worth paying these taxes.  Sometimes the savings in workers compensation insurance and benefits cost outweigh the loss of these tax breaks, but sometimes not. 


Breaking the PEO “DaVinci Code”

Some PEO’s are astute at hiding their true admin costs to their clientele.  Basically, they often subsidize their health plans with admin charges, then show their clients a bundled rate, that is harder to decipher than the DaVinci Code.

If you receive a quote from a PEO and they refuse to break down your rates for taxes, workers compensation, admin and benefits, then they must be hiding something.  Your sales rep or a PEO broker should be able to help you break the code to see if you are getting shafted.