Human resources is an integral part of any business. Not only does HR manage the people side of the company, but they also manage business compliance. HR is as much a part of operations as it is employee relations. Since foregoing human resources is not a viable option, business owners are left with the question of whether they should hire an in-house HR department or outsource to an HR service provider—like a professional employer organization (PEO). Here’s everything you need to know about the two options to help you determine which is best for your business.

Option 1: In-house Human Resources

Let’s assume that an in-house HR department is currently non-existent and will need to be built from the ground up. An HR team is critical to the future growth and scalability of your company, so it’s important to lay the right groundwork for building this department. HR departments are responsible for a lot, including staffing needs, employee benefits, performance management, onboarding, recruitment and talent development, compliance, and much more. Your HR team increases efficiency and optimizes performance, ensuring the right talent is there and that team members have what they need to succeed and meet the organization’s needs.

When building your HR department, there are some steps you should follow: assess the current state of your company, establish your HR plan, develop and implement a record-keeping process, develop recruitment policies and processes, determine and document employee compensation and benefits, evaluate compliance protocols, create an employee handbook, and determine the logistics of creating an HR department.

Assess the current state of your HR and establish your plan.

In this phase, determine which of your current managers or employees are carrying out the functions of an HR department, that shouldn’t be. This includes compensation management, employee training and development, employee health and safety, and/or administrative duties like payroll processing. Once you’ve assessed where you currently stand with HR at your company and where you’d like to be, you’ll need to determine the number of additional staff you’ll need to bring on to take over these tasks. Also determine what you want this new department to achieve in the first five to six months.

Develop and implement a record-keeping process.

Part of the function of human resources is to keep records of the lifecycle of every employee. From hiring, to training, to performance reviews, HR keeps records of all personnel files. Most of this data is sensitive and should not be made available to everyone at the company. Some employees will have more documentation than others if they have been at the company longer. Using an HRIS system is a great way to store and process employee data. If you’re currently keeping these records in hard copy format in files, you’ll need to import the data into whichever HRIS platform you decide. Having all documentation in a centralized location, stored electronically, creates greater efficiency within your company and HR department.

Create Recruitment Policies and Processes.

Most of the time, your HR department will handle recruiting new employees. You’ll need to develop a recruitment process for how HR will manage sourcing, communicating with, and hiring employees. This includes determining who else will be involved in each step of the recruitment process, what information to collect from each candidate, and the onboarding process once a candidate is hired.

Determine and document employee compensation and benefits.

In this stage, you’ll determine your compensation and benefits structure. This includes salaries for positions, hourly rates, raises and bonuses, and employee benefits such as paid time off, retirement plans, or even stock options. You’ll determine the specifics of each level of compensation and develop eligibility for raises, bonuses, and other benefits.

Evaluate compliance protocols.

HR ensures the company’s objectives and operations are compliant with all laws and regulations. Companies must comply with local, state, and federal laws that are always changing, and keeping up with those changes is no small feat.

Create an employee handbook.

Your company’s employee handbook is where all your policies and procedures will be outlined for your staff. All the basic HR policies are included in the handbook such as attendance, work hours, performance management, terminations, leave protocols, non-discrimination policies, employee conduct, data privacy, workplace safety, and much more. Many of these policies may need to be developed by your new HR department if they don’t currently exist.

Determine the logistics of creating an HR department.

You’ll need to determine what skills and experience you want your HR personnel to have, what their compensation will be, and how many people are necessary to achieve all the above tasks and more to reach your company objectives.

Option 2: Professional Employer Organization (PEO)

Another option for business owners needing HR is to work with a PEO. Rather than hire staff for an entire department, a better way to scale HR for your business may be through a PEO (i.e. outsourcing your HR tasks). With a PEO, you gain access to a suite of HR professionals who work with your company on all the essential HR functions. From assessing your HR needs and goals to establishing policies and procedures to compliance, PEOs take on all these services for you. PEOs generally provide payroll processing and workplace safety services in addition to HR consulting. PEOs can save companies time and money by providing all the HR-related services you would otherwise have to bring in-house with your own team.

When determining which option is the best choice for your business, think about your goals, current resources, and budget.

If you need to establish human resources within your company and a PEO sounds like the right move for your business, VensureHR is here to assist you. Our team of HR leaders will work with you to assess your needs, determine objectives, and develop the right policies and procedures for your company. As your company grows, our services grow with you. Our HR professionals will continue to work with your in-house team to ensure compliance and support your growth objectives. Request a call to learn more about how we can support your business.

References

People Managing People- Building An HR Department: A Step-By-Step Guide