The Real Cost Of Human Resource Management

The Real Cost Of Human Resource Management

AHEAD Human Resources The Real Cost Of Human Resource Management

Many small and medium-sized employers are finding themselves caught in a real “Catch 22” situation: The more their businesses grow and prosper, the less time they spend actually running the company. Why? Because as the number of employees in a business increases, employers must spend as many as 20 hours each week dealing with personnel issues.

Achieving business success requires a relentless focus on the basics: the core product or service, customers, distribution channels, competitors and the bottom line. Administrative functions such as hiring and firing workers, payroll, taxes, health benefits, workers’ compensation insurance and dealing with the ever-increasing number of state and federal compliance regulations, can easily distract a business owner’s focus. Many smaller companies do not have the internal resources to manage these human resource management responsibilities effectively and keep their core businesses on track. Ultimately, this can significantly hinder a company’s growth potential and hurt profitability.

AHEAD Human Resources Green Bay WI HR Value Pyramid

Contracting with a professional Employer Organization (PEO) to handle all of a company’s human resource functions is a viable solution. A growing trend in business today, PEOs are full-service human resource management organizations that manage the day-to-day administrative functions of small and medium-sized companies. PEOs establish a co-employer relationship with their clients and contractually assume certain employer responsibilities and employment-related liabilities.

As a co-employer, a PEO provides a fully accessible off-site human resources department. By partnering with its clients, a PEO can provide businesses with Fortune 500-style benefits and greater levels of human resource expertise than they could afford by themselves.

Human Resource Management Costs!

  • Recruiting Expenses – Paper, online, recruiter, staffing
  • Basic Salary – Varies per business DWD MLI will give you average salaries
  • Employment Taxes – FED, State, SUTA, FUTA, FICA, Medicare, Social Health Care 15%
  • Benefits – Health, Dental, STD, LTD, Retirement plans, days off, discounts
  • Space – Office area
  • Equipment – PC, desks, supplies, vehicles, phones, etc

The Power of Human Resource Management Volume

It is no secret that large corporations enjoy greater purchasing power than smaller companies. Small companies can be especially hard hit in the areas of employee health benefits and worker’ compensation insurance; by teaming with a PEO, small and medium-sized companies are able to benefit from the PEO’s negotiating power and volume discounts.

The use of PEOs is a growing trend in business today. PEOs are growing at a rate of more than 25 percent annually, and most analysts predict that this rate will continue for the next five to ten years.

There are several reasons for the increasing popularity of PEOs:

  • Employment litigation – It’s a fact of business life: Even the best-run companies are vulnerable to employment-related lawsuits and the damage awards that can result. Small employers recognize the need to take proactive steps to decrease the risk of litigation.
  • Regulatory Compliance – In the past decade, the United States has seen a significant increase in employment-related regulations and federal employment practices laws, including the Americans with Disabilities Act and Family and Medical Leave Act. Add these to the mix of state and local employment laws and the result is a minefield for the unprotected business owner.
  • Attracting and Retaining Quality Employees – As business owners know only too well, the days of employees remaining with one employer for many years are gone. Smaller corporations are at a distinct disadvantage in attracting the best-qualified worker, since they usually are unable to offer comprehensive benefits packages at an affordable cost.

By contracting with a PEO, these same companies are usually able to upgrade their policies, provide greater benefits and add new benefits which were previously unavailable to them because of their size. Comprehensive benefit packages, including 401(k) plans, extensive medical benefits and Employee Assistance Programs, are also a valuable tool in recruiting and retaining employees in periods of low unemployment.

AHEAD Human Resources Green Bay WI Value PyramidClearly, there are many benefits in hiring a PEO.

Human Resources (employees) impact every single part of a company’s P&L, with small HR improvements offering dramatically increased profits, and small HR mistakes capable of devastating the bottom line.

Identify your Business Objectives, and Ahead Human Resources will show you how HR will help you achieve them.

Using our sophisticated software program we can assist you in achieving greater profits!