If you are an owner-operator and you have drivers or other employees working under you, then one of your ongoing responsibilities is handling human resources (HR) for your transportation company.
You will quickly discover that HR is a lot of work. Whether you are trying to do it all yourself, or you have another employee handling it in-house, you may struggle to keep up.
Thankfully, there is a solution, which is to outsource some or all of your HR. In this post, we will go over the benefits of HR outsourcing for transportation companies, costs, pros and cons. That way, you can figure out which approach will work best for your trucking business.
What HR Challenges Do Transportation Companies Face?
Running a transportation company presents a number of HR challenges:
- It is notoriously hard to retain talent in the trucking industry. It is very much a revolving door with high burnout rates. So, you need to be able to recruit and retain your drivers.
- The quality of your benefits packages will make a huge difference in terms of recruiting and retention. But this can be tough to manage when working on tight margins.
- The culture of a transportation company has a massive impact on the quality of life of drivers. This cannot be overstated. Alas, way too many trucking companies struggle with toxic cultures that drive away workers. HR needs to be able to combat this toxicity and promote a positive environment.
- Since drivers often cycle in and out quickly, you may have a fairly constant need to quickly train new ones. So, you will require an efficient training program in place that onboards drivers effectively and safely.
- Compliance and safety are paramount at all times when operating a transportation company. To minimize fees and hassles, your HR company needs to stay on top of regulations.
- To top it all off, as the owner-operator, you are really, really busy! You may not have time to do all this yourself, and you might not want to hire a full-time HR person. At that rate, a full-time HR person is sometimes overkill for a small business.
What is HR Outsourcing?
With human resources outsourcing, you work with a company that provides HR service for small business. That company can perform a wide range of HR tasks so you don’t have to do them in-house.
Outsourcing HR Benefits for Transportation Companies
Here are some of the top advantages of working with an HR outsourcing service:
- Free up your time and energy. Perhaps the greatest advantage of outsourcing HR is that it reduces the amount of time and effort you are putting into it. When you are trying to balance HR with the rest of your work as an owner-operator, it may soon feel like you are trying to work two jobs. It can be a relief to get back to focusing on other aspects of running your business.
- Allow other in-house staff to focus on their primary duties. If someone else at your company is currently the one struggling to keep up with HR duties, they will be glad to finally be able to focus entirely on whatever it is they were primarily hired to do.
- Save on benefits. When you outsource HR, the service provider you are using may be able to negotiate for more competitive benefits packages for you. You will save money and be able to offer your workers better benefits.
- Stay compliant. It can be hard to stay compliant when you are squeezing in HR duties on top of other work, but a dedicated HR outsourcing service can put in the time necessary to keep up with regulatory changes and ensure you remain compliant.
- Attract better talent. When HR outsourcing improves your benefits, recruiting practices and company culture, you will find it easier to attract skilled drivers.
- Retain quality drivers. Outsourcing human resources will improve quality of life for the drivers you already have. They will benefit from better training as well as what we talked about above, which will make them want to stay.
- Operate more safely. Finally, with superior training and onboarding comes better safety, which is of the essence when you are operating a transportation company.
Types of HR Outsourcing for Trucking Businesses
It is helpful to know that there are multiple types of HR outsourcing partners.
- PEO: This abbreviation stands for “professional employer organization.” If you hire a PEO, they will behave as a co-employer. When you work with a PEO, accountability still rests on your shoulders.
- EOR: This stands for “employer of record.” As it says on the tin, this company becomes the employer in a legal sense.
- HRO: This abbreviation simply stands for “human resources outsourcing.” Another name for it is a BPO (“business process outsourcing”). An HRO does not act as a co-employer or legal employer. It is just a contractor. An HRO is often a better option if you want to pick and choose select services rather than getting a bundle of services.
- ASO: An ASO, or “administrative service offering,” is a third party that you can use to help you manage relationships with a variety of contractors (such as HROs).
There are pros and cons that go with any of these, so you will need to decide how you want to structure legal responsibility before you choose whom to work with.
If you are still not sure, you can tell the HR partners you contact about your business scenario, and they can advise you as to whether their type of HR solution is likely to be a fit.
What Services Do HR Outsourcing Companies Offer?
Human resources outsourcing partners offer a wide range of services. In fact, if you so choose, you can have them handle every single aspect of HR on your behalf. Here are some popular HR outsourcing services:
- Payroll: If there is one HR duty that a lot of owner-operators get fatigued of handling on their own, it is payroll. In fact, if you are going to pick just one service to contract for from outside your company, this should probably be it. Your HR partner will make sure that deductions are handled properly so you will be in great shape when tax season rolls around.
- Recruitment: An HR company can help you with every aspect of your recruitment process. That includes writing job descriptions, conducting background checks, calling references and onboarding new employees. Your HR partner may even be able to help you with some aspects of your training programs.
- Benefits: As we already mentioned, an HR outsourcing partner may be able to negotiate for superior benefits packages for your employees. They can also administer these benefits to keep everything simple.
- Compliance: HR partners can help with many compliance-related issues that involve employees and taxes. If you choose a partner that specializes in working with transportation companies, they may also be able to help you out with some aspects of transportation-related regulations compliance.
- Management of existing employees: On a routine basis, your company will need to check in with employees. This may involve performance reviews or negotiations over pay. You can outsource some aspects of this type of performance management to the HR company, but likely not all (with a performance review, employees are going to want to hear directly from their managers, not from a third party).
- Risk management: When it comes to working with employees, there is always an element of risk. Sometimes this risk may involve legal or financial matters. Other times it could be health and safety-related. Often, it is going to be a combination of the above. HR outsourcing partners can help you to assess and mitigate your risks to keep your organization running smoothly.
- Resolving employee issues: If an employee has a concern, they often will go to whomever is in charge of human resources to discuss it, rather than going straight to management. Likewise, management may prefer to have HR bring issues to the attention of employees. You can contract with a third party to handle these types of conversations.
- General admin: Finally, human resources tends to involve an intense amount of administrative work every day. Instead of doing all of that tedious work yourself or trying to get someone else on your in-house team to squeeze it all in, you can outsource it. You can bet that someone who specializes in HR is going to be way more efficient at processing paperwork of all kinds than you would be.
Some HR companies may offer other services in addition to the ones above.
Tiers of Outsourcing
Keep in mind that you do not have to fully outsource all of your HR duties if you do not want to. There are full and partial service options. So, if it works best for you, you can always choose to do some HR duties internally, and then outsource others.
How Much Does it Cost to Outsource Your HR?
While outsourcing HR has many benefits for your trucking business, they do come at a cost. How big is that cost?
The price range for HR outsourcing is roughly $300-$7,000 per employee per year.
Why is there such a big range?
A lot of it comes down to the tiers we mentioned above. If you are just outsourcing one or two things (like payroll), for example, and doing everything else in-house, that is going to cost you a lot less than if you are outsourcing your HR duties in full.
The complexity of the HR duties required for your individual business may also have an influence on your costs.
Sometimes, you can also save money on HR outsourcing by going with a small local business rather than a nationwide company.
Needless to say, you are going to want to call around for multiple quotes before you decide on a vendor. Doing so could end up saving you thousands of dollars per employee every year.
Do not forget that in some ways, you will save money when you work with HR outsourcing. Consider:
- You will be streamlining your operations and boosting productivity.
- You will be avoiding fees through improved compliance.
- You may prevent injuries and accidents through enhanced safety.
- Your benefits packages may cost less.
So, you will need to estimate how much money you could save through outsourcing human resources, and then add that back in. You may very well discover that HR outsourcing is more affordable than you realized thanks to its cost-saving advantages.
Does Outsourcing HR Have Any Drawbacks?
There are a few drawbacks that can go with outsourcing your HR. Thankfully, they are pretty minor—and arguably not really even issues if you pick a suitable partner for outsourcing.
- You do not know the people at the HR outsourcing service, and they do not know your people—at least to start out. With everyone once-removed like this, it may take some back-and-forth to establish a strong understanding about your expectations, and to make sure your needs are being met. Trust may also take a little time. But after you have been working with a great partner for a few years, you will probably forget sometimes they are not your employees!
- Delegating day-to-day decisions to a third party means trusting them to do what is best for you. You still retain full control over the big decisions, but you will not be able to micromanage the way you could with someone in-house. For some business owners, this may be difficult to deal with.
- The HR partner will not work on-site. So, you might worry about whether you will be able to get a quick response on an issue when you need it. But so long as you choose a company that offers excellent service, then yes, you will. With more working relationships being remote than in the past, this is really not a big deal these days.
Steps to Outsource Human Resources As An Owner-Operator
Below is a simplified version of the steps you need to take if you decide you want to outsource your HR for your transportation business.
1. Figure out what you need.
There is no way for you to pick the right HR partner until you determine exactly what you want to accomplish. Do you want to outsource all of your HR functions, or just some of them? What are your main goals? To save time and money? To improve employee experience? Something else altogether?
2. Determine your budget.
Now you will need to figure out what you can afford to pay per employee per year.
3. Contact partners for quotes.
Once you have your budget and you know what you are looking for in terms of services, you can check into HR partners that might fit your needs.
Contact them for quotes. When you do, ask them questions about how they will handle each aspect of HR. Find out if they are experienced working with transportation companies. While you are at it, make sure that they listen carefully to your needs. They should be asking you questions too.
4. Handle the transition with care.
After you decide on a partner for HR outsourcing, you can then start taking steps toward making the transition. This will not be an overnight process. In fact, the transition itself is going to involve a number of steps and a clear timeline and plan of action. Everyone who has been involved in HR duties at your company will need to be involved closely with each stage of the transition to ensure it goes smoothly.
5. Stay actively involved.
Once you have finished the transition, you will be able to set, but not forget. The HR service will take care of most of what needs to be handled on a day-to-day basis, but you are going to still need to keep track of what is going on so you can make adjustments as needed to your service plans.
Make sure that your employees are still satisfied. Over time, you might decide to take back over certain HR functions or transition other HR duties to your HR partner. You also might end up requesting that they go in a different direction with some aspects of your HR.
Get Started with HR Outsourcing for Your Transportation Company
Tired of juggling HR along with the rest of your responsibilities as an owner-operator? Make things easy on yourself by partnering with the HR outsourcing company that is right for you. Click any of the links below to request quotes now from our recommended HR partners for transportation companies.