Now that we know what HR is, how do you outsource it? And why would you? Part 4
Not all HR Outsourcing is created equal. If you do decide to outsource some of your HR functions, the question becomes, who do you outsource them to? Different types of organizations exist where you can outsource your HR functions:
PAYROLL SERVICE PROVIDERS
Most payroll service companies provide administrative HR services, such as processing payroll, filing payroll taxes, and tracking time off. Many payroll services also offer Human Resource Information Systems (HRIS) that, depending upon what services have been purchased, can provide recruiting and applicant tracking and performance management. These are all largely technology based and provide much needed administrative services, but typically will not have a resource for strategic HR or individualized employee relations.
PROFESSIONAL EMPLOYER ORGANIZATIONS (PEOS)
Like a Payroll Service Provider, a PEO is largely technology based. When a company joins a PEO, they will enter into a co-employment relationship. The PEO will become the employer of record, making them responsible for taxes, garnishments, payroll, and other duties, while the company will be the on-site employer. PEOs may provide other HR functions in the form of customer service arrangements, including compliance, policies, handbooks, and performance management. PEOs also provide access to benefits and 401(k) – however, employers are not typically given a choice or providers or programs. This program can be beneficial for an organization that wants a “one stop shop” for administrative payroll and benefits but it is usually not customizable and does not include high level strategic HR partnership.
STAFFING & RECRUITING AGENCIES
These agencies will only focus on the staffing and recruiting function of HR. Since recruiting can be very frustrating and time consuming, they are an excellent resource. A particular benefit is that they may already have a large pool of qualified candidates that can fill your positions, reducing the time your role is open.
FULL-SERVICE HR OUTSOURCING (HRO)
Full-Service HR Outsourcing is provided by firms specifically tailored to providing businesses with all HR functions. If a company outsources its HR functions to an HRO, then that HRO will take full responsibility for their HR management, acting as the internal HR representative for the organization. If a company chooses to only outsource some HR functions, then the HRO and the company will develop a shared HR relationship, outlining who holds which responsibilities. Smaller companies tend to outsource all functions, while larger companies tend to either outsource strategic HR and keep administrative in house or maintain the strategic in house and outsource all administrative functions.
The best benefit of HR Outsourcing is that it provides all the services of the payroll provider, PEO, and recruiting firms. While the HRO may not have a specific insurance or 401(k) to join in co-employment, it can access and manage these resources separately (which is advantageous.)
Most HRO companies offer a wide range of services and are highly scalable to a company’s needs, allowing the company to develop a partnership with services that can adjust according to their business need. This great advantage allows a company to stay lean while still having access to all that HR has to offer.
OUTSOURCING AT HR AFFILIATES
At HR Affiliates, we believe there are several key considerations when choosing an HR Outsourcing provider:
- Cultural fit to your organization
- HR competence
- Operational / Business understanding
- Access to partners, resources, and tools
We believe that we are the HR partners to our clients, and we feel personally invested in the success of their businesses. When we say We want to change the way you think about HR, it’s because we don’t want you to have a limited vision of what this partnership can be. Whether its strategic planning, recruiting, or benefits administration, we are here to make sure that our client’s vision is carried out through all employee engagements. We are your HR.
For companies with an HR professional, there are still several functions that can be outsourced simply because extra hands are needed, or a third-party impartiality is required. That could be special projects, training, investigations, or employee coaching. We meet each client where they are and develop a customized plan to meet those needs, as well as one that’s flexible as those needs change.
If you missed it, please click here for Part 1, Part 2, and Part 3 of our 4-part series.