HR Outsourcing: 6 Tips for Selecting an HRO Company
The HR outsourcing industry continues to grow as one of the fastest developing outsourcing sectors, just behind IT outsourcing. After two of the most challenging economic years in recent memory, companies are looking for ways to reduce overhead and improve efficiencies. HR outsourcing can help reduce operating costs, improve HR efficiency, motivate staff, and increase productivity. However, not all HR outsourcing companies were created equal. If you are interested in outsourcing human resources for your company, there are several important factors to consider.
Flexibility in the offer of services
Many HRO firms take the “one size fits all” approach by requiring clients to agree to all services offered, from payroll and insurance to benefits and training. It’s important to look for a provider who is flexible in their offering and who can customize an HR solution to match your company’s individual needs.
High-touch service model
Many HRO firms follow a high-tech, low-touch approach with services delivered primarily through online self-service platforms. While this is attractive to many employers, look for a company that is also available for on-site appearances. It is crucial for the HRO firm to have a qualified team available to meet live with their staff, whether it is for benefits open enrollments, claims investigations, employee relations or manager training seminars.
Financial stability
HR Outsourcing companies are responsible for submitting payroll, payroll taxes and insurance premiums. Make sure the firm you select has a minimum of 10 years of experience and strong financial and client references. They must also have audited financial statements from a reputable accounting firm and long-term banking relationships.
Proven service history
Stable finances and longevity do not necessarily equate to good HR or customer service practices. The HRO firm must have a strong team of licensed HR professionals with a proven track record of supporting clients in all areas of regulatory compliance, security and benefits.
Size and diversity of the customer base
The ideal HRO firm will have a large and diverse client base, serving a wide range of industries. Diversification insulates the company from fluctuations within a particular market and spreads risk across many industries. Diversification can take the form of industry, size of the employee base, and geographic location. A large and diversified client base also adds to the firm’s depth of experience and its ability to serve your unique business.
Presence in the local market
Many employment and tax laws vary from state to state. Look for a company that has work experience in the state in which you do business and has strong relationships with local providers and insurance companies. In California, for example, many state laws and regulations differ greatly from federal guidelines. Additionally, a local corporate office will ensure faster response time and on-site presence.
When considering options for outsourcing human resources for your business, keep these six important factors in mind. Determine if your potential HR outsourcing provider qualifies, and if not, move on to find the most qualified provider for your business.