Your Guide to Outsourcing HR

July 26, 2022

Outsourcing HR might be the right move for your shop. Here’s what to look for in a consultant.

Chuck Simikian grew up working in a car dealership. His father was a mechanic, so Simikian—the lead consultant and president of Alliance HR Partners—has familiarity with the automotive industry and what shops need in human resources services. 

Simikian, who’s worked as a freelance HR consultant for the last couple of years, knows that not every shop or business needs a full-time HR professional in-house, however, every business does still have HR needs. 

For many shops, outsourcing HR is often a better fit. But when does a shop know it’s time to bring someone in, and what do they need to look for in an HR consultant or company? 

Here’s your guide to outsourcing HR. 

When You Know

While there are employee thresholds that can certainly help a shop owner decide when they need that extra help, there ultimately isn’t an exact science to bringing in an HR consultant. 

Simikian says it comes down to the owner. 

“If [a] shop owner finds themselves spending more than maybe a couple hours a week on that type of stuff, more than what their core business is, then they will know when it’s time,” Simikian says. 

“There’s not science with it as much as there’s art … The art is going to be a little less in your face until they realize, ‘Oh my gosh, I’m spending so much time, I don’t have time to be in business anymore,’” Simikian adds. 

Despite it not being an exact science, certain employee thresholds may end up tipping a shop owner’s hand, and they’re a beneficial indicator for when it’s time to consider bringing in some help. 

It starts at the 11- and 15-employee thresholds. Simikian explains that once a business hits 11 employees, Occupation Safety and Health Administration (OSHA) requirements for hazard prevention, fire prevention and emergency action plans kick in. 

At 15 employees, Equal Employment Opportunity Commission (EEOC) laws kick in. By the time a company reaches 15 employees, Simikian says it’s probably time to keep an HR consultant on retainer. 

“At 15 employees, you need to have your employee handbook. You need to have your policies and procedures,” Simikian says. 

Before that 15-employee threshold, Simikian says a shop owner can probably handle it, but it’s not an exact science because a shop owner could still be overwhelmed by HR dealings prior to that point. It could be helpful to have a consultant at the 11-employee threshold. 

“Don’t forget, you know, what is the shop owner best at? They’re best at running the shop,” Simikian says. “They’re best at customer service. They want to focus on sales, they want to focus that they’re doing a great job, so they get a great reputation in the community.” 

At 20 employees, an owner would have to deal with laws concerning age discrimination. By 50 employees, Simikian says, you’d need to have a full-time HR professional in-house. 

The Right Services

The great thing about outsourcing is that you can cater the services to your business’ needs. You can keep costs pretty low if you’re only in need of the basics.

So, if you’ve hit that 11- or 15-employee threshold and are looking for an HR consultant to help navigate OSHA and EEOC regulations, you can put someone on retainer for when you need them. But if you’re looking for more services, you can always outsource those, too. 

While it’s not particularly common, payroll is something that can be outsourced to an HR company. Most shop owners will handle payroll in-house, but if a shop is growing or if an owner is feeling overwhelmed with other duties, the option to outsource payroll is there. 

Recruiting can be a bear, and consulting with an HR company can ease that burden. They can post ads on job boards like Indeed or LinkedIn, send messages to potential interviewees and even handle the interview process itself. 

Simikian also notes that when an employer reaches 15 employees, they’re required to write job descriptions—something that can be handled by an HR consult. 

An HR company can guide you through the entire hiring process, even handling all the paperwork associated with the onboarding process. And once hired, if an employee has questions about benefits, the HR consultant can answer those as well. 

In addition to compliance, payroll, and hiring, outsourced HR services can provide training, such as safety, sexual harassment, and risk management classes. 

Simikian notes that many states require sexual harassment training—something businesses might not be aware of. 

Getting Started

Maybe you’ve hit that 11- or 15- employee threshold and are considering bringing in some outside human resources help. But what do you need to look for in an HR consultant? 

It’s completely dependent on the services your business needs. If it’s just the basics your shop needs, you should be in pretty good shape to handle the responsibilities. But, if your shop is looking to outsource payroll or hiring, you’ll likely need more than just one person on retainer and costs will increase. 

Once you’ve just hit the 15-employee threshold where Simikian recommends keeping someone on retainer, you may just need help navigating OSHA and EEOC regulations and help establishing your company’s handbook—its policies and procedures. 

Simikian says this is relatively low cost, perhaps a couple hundred dollars each month, and there are numerous HR companies that can provide that service. 

Outside Benefits

One of the main benefits of outscoring HR is cost. It’s significantly cheaper than having someone in-house, and it makes a lot more sense for shops that wouldn’t need that many services. 

As Simikian notes, that might be a couple hundred dollars each month to keep an HR consultant on retainer, as opposed to a full-time employee in-house, which would include you providing an annual salary and benefits.

“If you’re going to look at the benefit of just having an outsourced person—you’re only using them for when you need them for that specific task,” Simikian says. “They’re not sitting around twiddling their thumbs.” 

And working with an outsourced HR consultant can be so easy and simple. All you need to do is hop on a phone or Zoom call. Simikian is based in Orlando, Florida, but has clients in Chicago, Illinois, who keep him on a virtual retainer. As needs arise, Simikian can help hop online and help them. When he works with local establishments, Simikian stops by the business. 

Ultimately, the best benefit of all for a shop owner is no longer having to worry about all that HR paperwork, compliance, and training. 

“It’s one thing to be a manager—you’re a shop owner, but you’re also a manager—it’s another thing to be a shop owner, manager, and now you’re the human resources personnel,” Simikian says. 

It’s time to get back to what you’re best at—running the shop, driving sales, and building a great reputation in the community. 

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