Outsourcing HR to Combat High Inflation


Inflation is a real and growing threat, so it is important for you to understand why it’s happening and what a business can do to protect against it.

Inflation in the US

The annual inflation rate in the US accelerated to 9.1% in June of 2022, the highest it’s been in 40 years. The causes of inflation are many and varied, but the current situation is primarily driven by strong consumer demand coupled with supply shortages (i.e. computer chip shortages, food, and energy shortages).

Two Inflation Mitigation Strategies

Your operational budget has likely felt the pressure of this inflation, because it has resulted in increasing labor costs, rising interest rates, increasing rents, and rising energy costs. As we head into 2023, it’s important for business owners to focus on ways to reduce supply chain risks and lower labor market risks.

To reduce supply chain risks, establish backup supply chains to avoid over-reliance on a single supplier, identify domestic alternatives to overseas suppliers to reduce transit times, and increase inventories of core supplies if you are able to reliably store the supplies with minimal storage costs.

To lower labor market risks, develop an HR strategy to attract and retain talent, including frequent reviews of average compensation in your geography, robust benefits offerings, performance management, employee recognition events, and employee training/development.

Why Outsource HR?

Instead of adding additional staff to address labor market risks, many business owners are choosing to partner with Professional Employment Organizations (PEOs) to attract and retain top talent.

Professional Employment Organizations (PEOs) provide the following benefits:

Subject Matter Expertise – PEO’s provide businesses a dedicated HR team to support with administrative obligations and help the business comply with employment laws. The business gets more reliable results because payroll processing, retirement plan administration, and benefits administration are part of a PEO’s core competencies. This support structure helps a business avoid costly mistakes.

Economies of Scale – Outsourcing HR helps a business access economies of scale by pooling together hundreds of businesses. PEOs give businesses cost-effective access to talent retention tools, like group health plans, training/development opportunities, 401k plans, and turn-key employee recognition events. This frees up capital which can be invested back into the business!

There is no time like the present to incorporate these inflation-mitigation strategies. If we can help your business address your labor market risks, please call us at 786-272-5305.

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