Human Resource Outsourcing: Everything You Need to Know
Nunzio Presta
Senior Sales and Marketing Executive
What is Human Resource Outsourcing? (HRO)
Human Resource Outsourcing describes the process of seeking HR support from a third-party provider—a company that handles various HR tasks remotely and with the help of an off-site team.
Businesses can embrace HRO in one of two ways:
- An HRO service provider can work in tandem with a company’s on-site HR team.
- A company can completely outsource its HR activities to an HRO team.
To that end, some businesses opt for the first option while they transition to a completely outsourced HR team. HRO teams provide a number of services, including:
- Hiring
- Payroll and benefits administration
- Employee onboarding and training
- Workplace safety policies
- HR standard operating procedures (SOPs)
- HR-related data and analytics
When businesses integrate HRO into their business model, they can save time, reduce bias in the workplace, put compliance worries to rest, and so much more.
Which Services Can HRO Providers Offer?
We briefly touched upon common HRO services in the previous section, but let’s explore each item in more detail. Businesses can take advantage of all— or just a few—of the following HRO offerings:
Hiring and Talent Search Support
Welcoming new talent to your business or organization can bolster your workforce and expand your team’s capacity. But onboarding is typically a heavy lift.
Instead of hiring in-house—a process that can require substantial time commitments and even cut into your bottom line—an HRO provider can supplement your search, identify the right candidates, and even take the entire process off your plate.
An HRO provider can fulfill all of your typical hiring tasks, including:
- Writing a job description and posting an ad
- Liaising with candidates
- Scheduling and conducting interviews
- Setting up proficiency tests or other competency measures
- Providing job offers
- Negotiating wages and benefits
- Collecting identifying documents from new hires
In addition, they can relieve you from termination duties when it’s time to let someone go. An HRO team can:
- Monitor complaints against employees
- Document formal reprimands
- Inform employees of their termination
- Negotiate severance packages
- Complete offboarding procedures
Payroll and Benefits Administration Services
Your in-house HR department or bookkeeping team likely handles your current payroll processing and benefits administration. Or, if you’re a small business owner, these might be two of the many hats you wear to keep your company running smoothly.
If you partner with an HRO company, you can say goodbye to calculating payroll taxes and sitting on hold with your employees’ insurance provider.
Using an HRO for payroll and benefits tasks can benefit companies in a number of ways:
- Extra help with “packaging” – Shopping for an optimal benefit package can be a massive time drain. An HRO team can streamline the process with higher expertise.
- Staying competitive – Employee retention is more important than ever—and about 60% of employees claim benefits packages are a significant factor when they’re considering a job offer. HRO teams handle numerous benefits packages, so they’re highly qualified to build competitive offers that attract and retain quality talent.
- Access to better prices – HRO teams have the resources, bandwidth, and time to secure the best possible prices for your employees’ benefits packages, bolstering your bottom line.
Employee Onboarding and Training
When it’s time to introduce new hires to your company, you’re likely excited to see your new teammates flourish in their positions. But bringing your new employees up to speed and acclimating them to your company’s policies and procedures can take you away from other important responsibilities.
An HRO team can help you complete two of the most important tasks for welcoming new employees—onboarding and training.
Onboarding describes every task your HR department must complete to integrate a new employee into your company structure. Some of these tasks include:
- Collecting identifying documents and tax forms
- Creating email addresses, usernames, and passwords
- Adding a new employee to your payroll system and benefits plans
- Issuing uniforms
In addition to onboarding tasks, an HRO can help facilitate new employee training. Every company’s training procedure varies, but an HRO can help business owners or in-house HR departments schedule training sessions, facilitate shadowing days, and complete reviews or tests on training materials.
Workplace Safety Policies
While your business’s workplace safety policies will vary significantly based on your industry, an HRO provider can help you create, enforce, and regularly review safety measures to ensure compliance and reduce liabilities.
HRO teams work with one or both of the following workplace safety policies:
- Legal minimum safety requirements – Depending on your field, your company may need to comply with various government-mandated safety requirements. HRO can help you integrate, publish, and maintain these policies (and monitor changing regulations).
- In-house safety measures – While they may not be required by law, your business may implement a variety of in-house safety policies to prevent injuries, protect heavy equipment, ensure productivity, and more. HRO can help you determine which in-house policies are needed and audit your business’s safety standards regularly.
HR Standard Operating Procedures (SOPs)
Your company’s standard operating procedures (SOPs) documents describe each procedure your workplace utilizes. SOPs help you streamline procedures, improve productivity, and provide a consistent resource for employee questions.
As your business grows, establishing HR-related SOPs encourages compliance with relevant laws, eliminates bias from your HR proceedings, and standardizes routine procedures. An HRO provider can create SOPs for numerous HR tasks, such as:
- Posting job ads
- Interviewing and hiring candidates
- Employee onboarding
- Salary and benefits negotiations
- Resolving workplace conflicts
- Documenting internal complaints and formal employee reprimands
- Terminating employees and negotiating severance
While they’re incredibly helpful tools, SOPs can be time-consuming to write, test, and audit. An HRO provider can relieve you of some of the time required while you reap the benefits of high-quality SOPs.
HR-Related Data and Analytics
How capable is your current HR department of collecting and analyzing employee performance data? HRO teams use standardized systems to help you collect critical data, which you can use to make adjustments to company procedures and your employee roster.
HRO providers can help you collect data concerning:
- Employee productivity
- Average retention rate
- Employee satisfaction
- Workplace conflicts
For instance, if you want to improve company-wide productivity, accurate and thorough data can help you identify any weaknesses in your workflow.
Why Use HRO?
We’ve explored what HRO teams actually do, but let’s examine why these services could be right for your company.
#1 Save Time
Arguably the most significant benefit of using HRO, an off-site HR team can help you save time (arguably your most important resource when scaling a business). Once you incorporate HRO services within your company, you can take a more hands-off approach to numerous HR tasks, including everything outlined above.
Why is saving time on HR procedures so important?
- Reduced overhead – Since HR activities only contribute to your business’s revenue indirectly, they constitute overhead—the money your company must spend to operate that doesn’t relate to the products or services you sell. With an HRO reducing the time and workload of your HR team, you decrease your overhead costs.
- An unencumbered leadership team – Business owners—small business owners in particular—take on many vital tasks to keep their companies running smoothly. But company leadership’s time is valuable. The less time your business’s leaders spend on HR tasks, the more they can spend on business development, marketing, R&D, and other critical processes.
#2 Reduce Bias
Reducing workplace bias should be a priority in any forward-thinking company. While strong HR departments may have systems in place to prevent prejudice or mistreatment, HR staff can show bias in numerous areas without realizing it, simply because of their proximity to employees.
This bias can affect various processes, including:
- Interviewing candidates
- Hiring new employees
- Employee pay negotiations
- Approving time off
- Terminating employees
An HRO provider can help a company reduce implicit biases in their HR processes in two key ways:
- Since HRO teams typically operate off-site, they have reduced access to employees’ everyday personalities, appearance, and other individual behaviors. Thus, they’re more likely to make decisions based on “hard data” than qualitative perceptions.
- HRO teams can help business owners design and facilitate employee training, including workshops on implicit bias and equity promotion in the workplace.
#3 Simplify Compliance
Whether you’re a first-time business owner or a seasoned executive, compliance worries can keep company leadership up at night. As your company grows, so do your liabilities and compliance demands.
An HRO team can research, document, and implement regulatory activities within your company structure, reducing your workload and ensuring consistent compliance. They can help workplaces stay compliant with regard to:
- Lawful hiring and termination practices
- Mandatory reporting procedures
- Minimum required employee benefits
- Wage regulations
- Posted workplace literature and policies
Instead of fretting about HR rules and regulations, business owners can turn to an HRO team’s regulatory professionals. They’ll keep up with changing laws and help your company stay compliant, allowing you to dedicate more energy to other critical components of your business.
Grow Your Business
Human resource outsourcing can be an electrifying initiative for growing businesses (especially those on the cusp of major transitions or changes). They can complete some—or all of—your company’s HR procedures by reducing your HR workload, ameliorating workplace bias, and ensuring constant compliance with all relevant laws.
When your business is positioned to scale, top-tier HRO services can help you meet your goals and alleviate much-needed bandwidth. For the most versatile HRO team in the market, your search ends here. At [Insert Client Name], our adept team of HR experts can help you navigate employee hiring, onboarding, conflict resolution, and so much more.
Reach out today to meet your new favorite HRO partner.
