"Outsourcing." The term might elicit negative responses in some circles, with connotations of lost jobs, overseas workers and deep linguistic and cultural divides. But in the right context, outsourcing is synonymous with partnership – and an effective way to help grow a business.

This is especially true in the realm of human resources. Over the last decade, more and more large companies have outsourced their human resources functions. But smaller firms can also benefit from HR outsourcing, thanks to professional employment organizations, or PEOs, which cater to businesses ranging in size from 10 to 250 employees.

Effective HR management takes time – time that many small and mid-sized businesses don't have. A PEO provides consultation and professional resources to help clients navigate the legal complexities that are part and parcel of being an employer.

Managing people requires strong communication skills, tact, discretion and a thorough understanding of a laundry list of rules and regulations governing everything from disability benefits and medical leave to discrimination and wrongful termination. Yet at many small firms, the HR functions are inappropriately delegated to an office manager, a financial officer or even the CEO – in short, people who lack human resources expertise. A PEO can bridge the divide, meeting a firm's HR needs and driving the initiatives that lead to happier employees and, ultimately, a stronger business.

Companies with Fortune 500-style benefits and documented HR policies and procedures are more likely to attract and retain talented employees, giving them a strong competitive edge. No employee, for example, would be happy to learn that he couldn't carry over vacation time – but that his colleague across the hall could. Companies must create replicable systems for their HR policies to ensure consistency, continuity and fairness.

By outsourcing the HR functions to a team of professionals, companies can reduce turnover, improve hiring procedures and positively impact their bottom lines. Did you know, for example, that it costs as much as 150% of an employee's annual pay to recruit, hire and train a new employee?

A PEO will develop individual programs for each client and administer primary HR functions. These tasks might include:

• Tools for effective talent acquisition
• Employee background checks and drug tests
• Employment and eligibility verifications
• New hire orientations
• Employment consultation and problem-solving
• Performance/bonus reviews and PTO policies
• Compensation planning strategies
• Training & development programs on sexual harassment, conflict resolution and team-building, among others
• Maintenance and administration of confidential personnel files