Todd Foust has been using a human resources consultant since he bought his company.
But when the Foust Group, a Gonzales-based industrial specialty contractor, grew beyond 100 or so workers, he wanted more than a consultant; he wanted a partner. So he turned to HR Solutions, a Baton Rouge human resource management provider, Business Report details in a feature from its current issue.
Foust keeps HR Solutions on retainer, so he knows how much to budget for the firm’s services even while the amount of work they do for him varies. He says using an outside firm is cheaper than duplicating their expertise in-house.
Leslie Austin, director of human resources for HR Solutions, says the demand for outsourced human resources grows as the scope of labor and employment law expands and becomes more complicated. The Fair Labor Standards Act has seen “sweeping changes” recently, she notes, while the Affordable Care Act affects every business, and particularly those with 50 or more employees.
“People who previously didn’t need any technical expertise to be in compliance,” she says, “now need technical expertise to be in compliance.”
According to an International Foundation of Employee Benefit Plans report, released in December, U.S. companies outsource 40% of their benefits functions, most commonly for employee assistance programs, flexible spending accounts, COBRA, retirement benefits payments and pharmacy benefits administration.
The report, based on a survey of 343 HR and benefits professionals at U.S. companies across 20 industries, also says more than one-third of companies have increased HR benefits outsourcing over the past two years.
The cost of outsourcing HR varies widely depending on the business and the services requested. A hypothetical 50-employee company that just needs an expert to answer HR-related questions might only pay “a few hundred dollars” a month, Austin says. Outsourcing payroll, HR and benefits administration might cost a few hundred dollars per employee per month.
Many employers outsource their HR for the same reason they outsource their information technology or anything else: They prefer to focus on their core mission. Austin cites the “80/20 rule.”
“If you have compliance challenges or IT needs, you need to have someone with a lot of technical expertise, but that can come with a really big price tag,” she says. “Why spend the money [on a permanent hire] if this person is only going to be doing high-value work for you 20 percent of the time?”
Read the full story. Send your comments to editors@businessreport.com.
