What Type of HR Outsourcing is Right for Your Company?

Regardless of your industry, company size, or business goals, a solid HR platform is critical to any successful organization. Study after study has shown that the key functions of your human resources team play a vital role in driving employee engagement, improving staff retention, and ensuring your company avoids potentially disastrous legal pitfalls and regulatory compliance oversights. However, these same key functions can demand a lot from your team; on average, most businesses spend at least 5 hours per week processing payroll alone, never mind maintaining compliance, staying up to date with changing tax laws, benefits management, recruiting, and all of the other tasks your HR team is responsible for. HR outsourcing can help your organization take back that time and help your team stay focused on your business goals!

When deciding whether or not to pursue outsourcing, it's essential to understand the different HR outsourcing services available and what they can do for you so you can choose the best one for your business needs. Read on to learn more, or contact our team at Horizon today for more information. 

Common Types of HR Outsourcing Services

When you’ve decided to work with an HR outsourcing company to cover your human resources needs, it’s important to understand the different types of primary HR services that most providers offer. Not only will this help you identify which services you do and don’t need for your organization, but it will also help you narrow down which provider will be the best fit for your team.   

Professional Employer Organizations (PEO)

PEOs are one of the most comprehensive types of HR outsourcing services on the market. Professional employer organizations are primarily targeted at small to mid-sized businesses and offer a wide range of services, including payroll processing, tax management and compliance assurance, benefits management, and more. The goal of Professional Employer Organizations is to offer a near-total replacement of your existing HR structure so you can focus on achieving your business goals by freeing up your team and saving money – the average ROI for a mid-sized organization that uses a PEO is 25-27%! 

Administrative Services Organizations (ASO)

Like PEOs, ASOs also offer a comprehensive list of services and solutions for your business needs, including payroll processing, tax and regulatory compliance, and benefits administration. The difference is in how these two types of services achieve their ends. While PEOs are direct-to-business offerings, ASOs utilize a variety of third-party vendors that the business owner is in charge of selecting. This puts more control in your hands at the cost of additional time and resources spent vetting, researching, and managing your chosen vendors. 

Human Resources Organizations (HRO)

An HRO can be thought of as a sort of à la carte style of HR outsourcing. While PEOs act through a co-employment model and assume particular responsibilities on your behalf as an employer, HROs offer an independent contractor type of service that allows you to pick and choose exactly which solutions you need, along with how and when you'd like to implement them. If your business needs to change down the line, adjusting your HR outsourcing plan is simple and straightforward.   

Human Resources Information System (HRIS)

An HRIS is a software-based HR solution that is intended to automate and streamline the more transactional tasks that typically involve an HR team. This can range from payroll processing to time tracking and more. As software, these systems cannot offer some of the more robust services that other solutions can, such as personalized benefits management for particular employees, in-person recruitment and termination, and other similar tasks, but an HRIS can have an immediate and positive impact on the overall amount of time spent on the more menial HR tasks. 

Which Outsourcing Type is Right for My Business?

Each business has different HR needs depending on its unique setup, business goals, and existing team. To determine which type of outsourcing service is the best fit for your organization, it's important to consider where your strengths and weaknesses are, then identify whether you can tackle those weaknesses on your own or if it would be more beneficial to involve a third party.    

Examine Your Different HR Needs and Choose Accordingly

As stated above, it’s vital to understand both your current HR needs, where your strong areas are, and how the two might change according to your future business goals. Whether you want to improve employee relations, automate time-draining tasks, or allow your HR managers to focus more on recruitment and less on maintaining tax compliance, take the time to examine your goals and identify a solution that meets them! 

Popular HR Functions That Can Be Outsourced

Business owners should be well aware of the different varieties of HR tasks that their teams are expected to carry out, along with how much time they take up each week. While each business has specific needs and goals that can be better accomplished by outsourcing these tasks to an external provider, it’s important to understand some of the most commonly outsourced functions across every type of industry. Not only can HR outsourcing relieve administrative burdens, but it can also improve your organization’s talent acquisition and retention, benefits management, and more!   

Payroll Processing

One of the most commonly outsourced HR services is payroll processing and administration. Small to mid-sized businesses spend hundreds of hours each year tracking time sheets, processing payroll, managing tax liabilities for employees, and handling all of the administrative tasks that go along with these functions! Automated software solutions can help eliminate this wasted time, all while improving accuracy and record keeping. 

Benefits Administration

Managing, tracking, and administrating employee benefits, from company-provided insurance to PTO and more, takes almost as much time as payroll processing. Efficient and effective benefits administration is vital to ensuring employee satisfaction and improving retention, but it can be an uphill battle. Outsourcing benefits management can help ensure your team is being well taken care of while freeing up your HR department to focus on the bigger picture.  

Compliance Management

Compliance and risk management are two of the most important functions of HR departments. Failure to adhere to employment laws and regulations can lead to vastly expensive fines and fees, so determining and implementing best practices to ensure compliance is a vital task. However, constantly changing labor laws and regulations can make staying on top of compliance difficult – which is where a third-party HR provider with specialized knowledge and a team dedicated to the task comes in.   

Recruiting and Talent Acquisition

In addition to payroll processing, recruiting efforts are one of the most time-consuming functions for your HR team. However, good talent management is essential at every step if you want the best of the best for your staff! Outsourcing recruiting and talent acquisition can help you get better people on your team faster, with less hassle and paperwork on your end.  

What are the Benefits of Outsourcing HR?

If you’ve done the research and are making an informed decision, outsourcing HR tasks can have an exponential benefit for almost every part of your business! From more effective and less time-consuming HR functions to improved employee retention and more, a third-party provider can help make a significant difference in your organization’s efficiency, business costs, and regulatory compliance. Let’s explore these benefits below. 

Cost Savings Over Time

An in-house HR team can be expensive, especially if their tasks are drawn out and burdensome. The vast majority of businesses that work with an HR outsourcing partner see significant cost savings and an ROI that ranges from 11 to 27%, depending on the tasks they outsource! These cost savings are both immediate (HR providers are often cheaper than doing the work yourself) and long-term (your team is free to focus on your organization's other needs, driving productivity and improving overall results).  

Improved Focus on Key Business Objectives

As we’ve covered in this guide, human resource outsourcing allows your staff to spend less time on administrative paperwork and more time pursuing your key business objectives. With less time spent on payroll processing and performance management and more time spent on core business activities, most companies see immediate and lasting improvement and gains in efficiency and productivity across the board when they outsource their HR functions.  

Streamline Your Company's Processes

When an internal team handles your HR processes, it can be easy to perform certain functions “because they’ve always been done this way,” even if there’s a more effective or efficient way to complete the task. Switching from an in-house HR department to a third-party provider with specialized knowledge can help eliminate these inefficiencies, improve employee satisfaction, and streamline every element of your organization's HR processes.   

Labor Law and Tax Compliance

Even for the best in-house HR teams, staying on top of labor law and tax regulations can be a full-time job all on its own! As one of the most vital human resource functions, it's critical to maintain awareness of your organization's compliance standings at all times, which is a task that can be just as easily handled by a third-party HR provider. With specialized industry knowledge and expertise, you can rest easy knowing that outsourcing these particular HR tasks will put your business in the hands of experts who will protect your company and help you avoid costly fines and fees that can result from failed compliance. 

Horizon is a Top-Rated Partner for Payroll and HR

For more than twenty years, our team at Horizon has been providing industry-leading HR management and outsourced HR services to companies of every size across a wide variety of industries and niches. As a trusted name in HR and payroll management, our range of solutions can be developed specifically to help your organization save time, reduce costs, and get back to focusing on what’s truly important.  

Solutions for Payroll, HR, Benefits Administration, and More

Our wide range of HR outsourcing services can have a positive impact on nearly every element of your business needs. From improving company culture and improving employee retention to automating payroll and maintaining compliance, our expert team is ready to meet you where you are and develop a plan to get you where you’re going! 

Over Two Decades of Trusted Expertise

Horizon has been helping small businesses across a variety of industries for more than twenty years. In all that time, our expert team of HR professionals has earned our reputation as the top-rated and trusted name when it comes to HR outsourcing providers. Our solutions are tailored to each of our clients, so you can get exactly what you need to take your business to the next level. 

Contact Our Team Today for More Information

To learn more about our comprehensive services, contact our team of HR experts for more information today.