I have found another, third-party, website that talks about the true cost of labor. This link below will take you there. It delves a little deeper into the issue of unproductive work time, but you’ll get the drift.
With a PEO or other HR outsourcing model, you can expect your labor costs to be drastically lower than the 44% that this site highlights.
Totally different concept. What we (HROplus) is talking about is lowering your overall labor costs by more efficiently handling non-revenue generating operations within a small business (payroll, workers compensation, risk management, benefits administration, labor law compliance) and saving client companies thousands in administrative and hard-dollar costs thanks to immediate economies of scale.
Just got off the phone with a small business owner that is facing a $2,000 fine for non-compliance for some labor law paperwork they had no idea that they were responsible for. Pretty hefty stuff for a 5 man company, right?
Just another reason that small businesses should consider HR outsourcing models like PEO. Imagine having a staff of 50 employees, but no employer liability. Not to mention the savings in a major medical health plan, workers comp and other benefits.
We have seen it both ways. Company’s cutting jobs and/or limiting hours of employees, however, more companies are now looking at PEO as a way to save a big amount of money on labor costs. PEO allow businesses of all sizes to cut down in their labor costs by downsizing a department, human resources, that is a non-revenue generating cost center within the business.
Not too mention that PEO allows also for companies to save thousands annually in health insurance premiums and workers comp premiums.
I speak to owners of small companies all day long…the question they most want to ask, but have a hard time getting the gumption to ask is…”How much is this going to cost…and how will this save me money?” When considering HR outsourcing, it is prudent to know what your current HR costs are so you can make a rational comparison versus “doing it yourself.” The quick and easy answer, from an HR professionals’ prospective, is an average of 20% on top of gross pay. If you want to add a medical plan and pay 100% of the premium of the employee…adds another 3 – 5%.