What size companies should outsource HR?

by Mie-Yun Lee as seen in Entreprenuer Magazine

...If you have fewer than 100 employees, the answer is yes. At this size, you often don't have the resources for an in-house HR staff, so outsourcing is just right for you. You don't have to worry about managing all the details that are so critical to HR in your business, and most small-business owners just don't have the skills and experience to do so. Remember, HR functions must be handled correctly as close to 100 percent of the time as possible; slip-ups can cause your business major problems.

What can you get?

When you outsource HR functions, some services go with the "all-or-nothing" approach, requiring that they handle all your HR functions or none at all. Others offer their services "a la carte," meaning you can pick and choose from the services they offer.

Typical services include:

• Payroll administration: Produce checks, handle taxes, and deal with sick time and vacation time.
• Employee benefits: Health, Medical, Life, 401(k) plans, cafeteria plans, etc.
• HR management: Recruiting, hiring, and firing. Also background interviews, exit interviews, and wage reviews.
• Risk management: Workers' compensation, dispute resolution, safety inspection, office policies and handbooks.

Some services are full-service and will provide these as well as additional services like on-call consultants, who will come in to train or even settle a dispute.