What is an Employer of Record | Comprehensive Guide

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Expanding a business requires strategy and foresight, especially when balancing hiring volume with managing your newly acquired workforce. Companies in the U.S. and across the world are facing significant shortages of talent and retention challenges, with 65% of companies having high-volume hiring needs. If you wish to strengthen your workforce while reducing your time to hire and overhead costs, engage Employer of Record services (EOR) to revamp your hiring process.

Employer of Record Meaning

Commonly known as EOR, an Employer of Record is a legal entity that serves as your legal employer for your employee population. They are responsible for handling your hiring needs, recruiting suitable candidates, interviewing and screening, onboarding, and training the new hires. Going one step further, the Employer of Record handles HR functions for your company, such as payroll, compensation and benefits, taxes, and compliance management. You can fuel business growth by handling day-to-day operations and project management while your Employer of Record handles the legal employer obligations.

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Why is Employer of Record Services Beneficial

Did you know that only 15% of project managers handle any single project simultaneously? Meanwhile, a whopping 81% of them juggle two or more simultaneously at any given time. Why is that important to point out? Project managers, team leaders, and executives guide the team to achieve goals efficiently and effectively. However, when they spend significant time managing menial tasks, handling employee grievances, and dividing their attention between HR, compliance, and business objectives, their leadership suffers, and so does their team. Bringing an Employer of Record on board is an effective recruiting strategy; it frees them from the daily challenges and regains focus on their business goals.

If you want to find out what an Employer of Record is suitable for in your business, look at some of their offerings to decide how they can help you optimize your operations.

1. Recruiting Passive Talent

You would think job portals would be brimming with skilled candidates eager to join a reputable company, right? Think again. Surprisingly, 70% of the global workforce comprises passive talent, meaning they don’t actively look for jobs. Recruiters must work twice as hard to comb hundreds of profiles to find the right person to hire for their company, and usually, the most suitable candidates are off the market in 10 days.

So, how do you find the perfect employee for your company without going through the lengthy headhunting process? Hire Employer of Record services to take on your recruiting burden and access their extensive talent pool of passive candidates. You can beat out your competition by finding ideal candidates and quitting bidding on the limited professionals in your local talent pool.

2. Operational Efficiency

As discussed before, when you engage an Employer of Record, you free yourself from the daily grind of workforce management and focus on project development instead. According to a Work Insights Report, business leaders spend 40% of their time engaged in mundane tasks, while 70% of their workforce wastes time similarly.

EORs, help you maintain day-to-day efficiency by supervising HR functions, including payroll, benefits, taxes, and employee relations. They also take over your compliance processes, data security procedures, in-house infrastructure management, and employee engagement to maximize team productivity toward achieving their targets.

3. Integrated Resourcing

What is the natural next step in recruitment and hiring? Onboarding. How well your new hire is assimilated into your company determines how engaged they will be with your processes. Unsurprisingly, new hires who experience poor onboarding are more likely to look for a new job and churn as soon as possible.

The best way to counter onboarding challenges is to separate HR functions from basic business operations and delegate onboarding and extended employee management to your Employer of Record. This will allow you to create a work-based rapport with your new hires while your EOR handles the seamless integration of your new hire with your existing workforce.

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4. Diversity and Inclusion

In recent years, businesses have started recognizing the importance of hiring diverse candidates and expanding their search beyond the local talent pool to access skilled specialists with more experience. However, diversity is not just a recruitment need but is also essential to candidate experience. Employees now prefer to work in companies with diversity and inclusion policies to harbor a more productive, dynamic work environment. Despite many companies adopting these policies, 38% of recruiters struggle to find diverse candidates to interview.

Engaging an Employer of Record enables you to enhance your diversity policies by recruiting and hiring diverse candidates with specialized skills and extensive experience to enrich your workforce. Not only can you access diverse talent, but Employer of Record agencies can help you navigate local labor laws and cultural nuances to keep the hiring process fair and inclusive. They can implement non-discrimination laws and facilitate flexible work schedules to accommodate all kinds of workers within an organization.

5. Cost Effectiveness

Any growing business’s primary goal is minimizing costs while raking in the most profits. Reducing overhead costs on hiring, HR infrastructure, and compliance certifications is necessary to expand your operations in new markets. If your business requires more talent to manage fluctuating workloads, seasonal spikes, and flexible work schedules, taking the pressure of rapid hiring can put a dent in your resources.

Cost-effective hiring is easier with an Employer of Record handling the legalities of employment for you. They effectively manage your workforce and ensure compliance with laws to mitigate legal and financial risks. They provide seamless expansion of operations by sourcing talent in new locations without the need to set up local subsidiaries, reducing your operational costs and risk.

Remote Scouts – Your Ideal Employer of Record

Choosing the ideal staffing model to facilitate your growth is essential if your business demands more significant investment in diverse talent and expansion into new markets. Find cost-effective solutions to source and manage your workforce with Remote Scouts. We have distilled 13 years of employment staffing experience into developing our Employer of Record services for businesses facing skills shortages, limited talent pools, and affordability issues in employing top candidates. Here is how we help you grow:

Our expertise spans onshore, offshore, and nearshore staffing, so we can hire experts who align with your company culture and reduce your hiring and replacement costs by 40%.
We will place your chosen candidate in a secure offshore but on-site facility to boost productivity and reduce overhead costs such as office placement, equipment, IT support, and onboarding.
When hiring for top talent, we tap inaccessible talent pools with innovative, critically sound professionals to address your skills shortage.
As your Employer of Record, we go beyond hiring to provide HR functions, payroll, and compliance services to integrate and manage your chosen candidate within your company.
We help you secure passive but high-performing talent that your competitors don’t know about so you can boost your productivity and achieve business goals faster.