If you work in an operations or process role, it’s your job to make the business run better, smarter and more profitably. You know the ways to improved profitability are either higher revenue, lower expenses or a combination of the two. The one element you can best control is probably that of expenses.
However, you may feel that you’ve pretty much exhausted the possibilities and cut expenses down to the bone. Well, there may be a few additional cost saving opportunities for you to consider.
Surprisingly, these center on outsourcing—specifically, HR outsourcing. You may not have considered that as a cost saving possibility, so let’s discuss how HR outsourcing to a professional employer organization (PEO) can work for your business while saving you money.
A PEO allows you to reduce your administrative workload, improve HR services and options and lower your costs in a number of ways—while working with one partner, with all services under one roof. Let’s take a closer look.
Lower HR administrative costs
In-house HR administration typically costs a small- to midsize business 8.5 percent of gross payroll, according to the U.S. Small Business Administration. Using the right PEO can reduce this by up to 50 percent by expanding your team to include experts in workers’ comp, payroll, benefits and HR who will do the work for you. It doesn’t mean you need to eliminate staff positions, but it does mean that you and your staff will be freed up to focus on running your business rather than getting bogged down in administrative minutiae.
Lower workers’ compensation costs
Many businesses think they have no control over the cost of their workers’ compensation rates, but in fact they can reduce these costs in a number of ways. First, although state rates are established, they are based on factors that include your loss history, ability to qualify for an experience modifier, size of the business and discounts that are available based on a documented safety program or drug-free workplace.
In addition, you need to consider the cost of the premiums you pay as well as the state rates. Generally, a PEO can make larger group rates available, whatever the size of your business. The FrankCrum PEO, with its own workers’ compensation insurance provider Frank Winston Crum Insurance, offers low rates and a pay-as-you-go option that allows you to spread your payments over the calendar year. And you won’t need to submit to annual audits.
Other ways to save on premiums are based on safety training, creation of a safe work environment and enforcement of safety rules. Depending on your industry, an investment in proactive workplace safety processes can yield a return on investment of $6.15 for every $1 spent.
Reduction or elimination of accountant, attorney and non-compliance fees
Payroll, payroll reporting, workers’ comp claims management, anti-discrimination and termination advisory services are all part of the bundled PEO services. And with the PEO handling your payroll reporting, you’ll never have to worry about late filing fees again.
And as added bonuses… There’s more to a PEO like FrankCrum than just cost savings. Having access to full-scale professional HR services will allow you to have an employee handbook, job descriptions, a safety manual, rich benefits offerings and all the elements that help you attract and retain the best employees and compete on a level playing field in your industry. And for you personally, there’s the peace of mind that comes from knowing that you’ve kept the business compliant and focused on profitability—while saving it money. That’s a job well done!