How to Avoid the Pitfalls of Staff Leasing

Many of today’s companies are taking advantage of staff leasing services and the perks they bring. However, staff leasing comes with the possibility of several pitfalls. After all, no business strategy can claim to be completely fail-safe, right? The good thing here though is the possible pitfalls of this staffing arrangement can be easily avoided by the clients.

Here now are some of the pitfalls that skeptics have often cited to counter the perks touted by long-time

clients of employee leasing companies. They are followed by tips on how they can be avoided.

1.       The quality of the service matches the cheap rates of the service providers.

This is a very condescending statement which suggests that staff leasing companies cannot be expected to give high-quality services because their prices are very little to begin with. What detractors fail to consider is that many of these companies are from developing countries in Asia and Latin America. Once currencies and conversions are applied, that “little” amount becomes a significant sum for the service provider. Hence, it cannot be said that they are operating on very cheap costs.

TIP: It’s actually right to question if a leasing company charges too little. “Too good to be true” rates aren’t really good sometimes. So when you are screening companies to hire, don’t immediately choose the one that offers the lowest rates.

2.       Since employee management is in the hands of the staff leasing company, clients will have less control over the leased personnel and the work they are doing.

This is an erroneous assumption. In fact, clients will always have the highest authority when it comes to SOPs and delegating tasks to specific employees. The leasing company is always free to give their recommendations; but if the client is adamant about a specific preference, the service provider will comply to keep him satisfied.

TIP: As the client, you need to give clear instructions and make your preferences be known to your service provider because the latter will do what it can to please you.

3.       It will be difficult to train leased personnel, especially if the service provider is overseas. Hence, the arrangement will not benefit the client because the staff won’t know what to do.

On the contrary, staff leasing companies boast highly trained and skilled employees. Clients who pay for their services will in fact benefit more because they won’t have to spend for training the employees. The staff they lease can immediately go to work with minimal instructions and monitoring.

Remember that service providers will offer only the services they specialize in. That’s why we have different kinds of staff leasing companies. Some offer HR services, bookkeeping, computer programming, website optimization, virtual assistance, and so many more. What clients simply need to do is find a company whose staff can fill in the vacant positions in their business.  

TIP: Ask your service providers for ideas and recommendations. If they have been in business for years now, they will have plenty of excellent suggestions that you might be able to use to improve your business operations.

Employee Leasing Services – Debunking the Myths

You may have heard of employee leasing services a few times already, but like many people, you may not really have a clear understanding of it. Worse, you may even have fallen into the trap of holding some common myths about this kind of service as truth. Here we will debunk those myths and try to explain the service to you in the simplest way possible.

Myths about Employee Leasing Services

1. Leasing employees entails more cost.

The opposite is, in fact, true. When you lease employees, you no longer have to worry about setting up these employees in your payroll system, providing them with benefits, and establishing a retirement program for them. That’s because the company you lease employees from will be responsible for handling these financial matters.

2. Leasing employees takes control out of your hands.

Again, the opposite of this is true. The only thing you’re basically doing when you lease staff is outsourcing non-core functions that are necessary for the smooth operation of your business. You’re still in control of the operations per se. You’re just letting someone else handle the mundane tasks that would otherwise distract you from focusing on the core aspects of your business.

3. Using a PEO broker entails more cost.

There are those who recommend using a broker when you decide to lease staff. Some, however, hesitate to do so, believing it will be more expensive. What you may not realize is that a PEO broker causes PEOs to compete, thus driving down their rates considerably. Brokers are also very familiar with the strengths and weaknesses of each PEO they represent, which puts them in the best position to recommend a PEO that best meets your requirements.

What Employee Leasing Services Can Do for Your Business

Just by having the above myths debunked, you already know that when you lease employees, you save on

cost while staying in control of your business. Other than that, though, this service also offers you more flexibility. With leased staff, you can expand or reduce your workforce as needed without having to go through a lot of red tape. Furthermore, the service frees up your time that will otherwise be used for administrative functions. This leaves you free to focus on doing what you do best and will potentially increase your productivity and consequently, your ROI.

Seeing how much you can benefit when you lease employees, there may really be no reason for you to disregard this business solution. You especially need to consider this option if you’re just starting out and can’t afford to hire all the employees you need for day-to-day tasks or if you’re currently going through hard times and need to cut costs. When businesses suffer financial difficulties, they’re usually forced to let go of a few of their employees. By leasing staff from a third-party company, the tasks handled by the employees you let go don’t have to be left unattended.

Why Hire a Staff Leasing Company

For small businesses, it may not be very practical to hire in-house employees for every single process necessary for running the business. For example, a business with only a handful of employees may not really need an entire HR department to handle such things as payroll, income tax, and workers’ compensation claims. In this case, it may be a lot more practical to hire the services of a professional employer organization (PEO), also known as a staff leasing company.

What is a Staff Leasing Company?

A PEO or a company that leases staff to client businesses is basically an umbrella company that handles practically any business process you may choose to assign. Some of these companies specialize in human resource process like payroll, benefits, income taxes, and claims. There are also those that specialize in accounting processes as well as those that specialize in marketing and promotions. When you hire a PEO, they essentially become a co-employer of the team that works directly for your business. You pay them to get a team together and ensure the delivery of your expected results on the agreed schedule.

Benefits of Hiring a Staff Leasing Company

Savings is one of the benefits business owners appreciate most in employee leasing. You are saved from providing office space, equipment, and materials and you only need to pay a fixed amount according to the agreed payment schedule. You also get the assurance that the team handling your business processes is composed of professionals who know exactly what they’re doing. This makes the solution not only affordable, but cost-effective as well. Since an external team is now handling the non-core processes for you, you have more time to focus on the core of your business, thus increasing the likelihood of achieving success.

Another possible benefit you can get from hiring a PEO has to do with insurance and workers’ compensation. For a small business, having one employee falling ill can be a huge problem, particularly since you probably only have limited funds to cover health insurance costs. A PEO can pool your insurance with those of their other clients, thus keeping the premiums to a minimum across the board. There are also PEOs that provide workers’ compensation as well as safety training, thus removing another burden from your shoulders. The training can reduce the number of work-related injuries, thus saving you from having to pay out expensive claims.

There are a lot of regulations you need to comply with when you go into business; it can be very time-consuming and perhaps even a bit frustrating trying to keep up with these regulations. What’s worse is that a failure to comply with just one or two of these regulations can possibly lead to fines or lawsuits, which can be even more frustrating. With the help of a PEO, you can make sure these regulations are duly complied with and that you won’t run into any legal problems at any time.

There are plenty of reasons for you to consider hiring a staff leasing company to handle the non-core processes of your business.