Have you ever considered partnering with an HR outsourcing company but have many questions about where you should start? Whether you have a full-time HR team within your business or run a one-person show, there are many processes and regulations that have costly consequences if they are unmastered. There are several outsourcing options that your business can utilize, which include a professional employer organization (PEO), administrative services organization (ASO), human resources organization (HRO), and a human resources information system (HRIS) - amongst many others. Continue reading to better understand the value and capabilities of the different HR outsourcing options available.
Professional Employer Organization (PEO)
A professional employer organization (PEO) is an all-inclusive outsourcing option for your most time-consuming HR tasks and employer liabilities - including payroll, benefits, human resources, and workers’ compensation. There are currently more than 700 PEOs in the country, as it’s been around for over 30 years.
If you choose to partner with a PEO, you gain access to more cost-effective options regarding healthcare, ancillary benefits, and workers’ compensation. PEOs work diligently with small business owners to provide them with the same buying power as a larger business through a co-employment relationship. This means your business and the PEO divides your employer’s responsibilities. Your company’s employees are employed by your company and the PEO. You may think this means that you’re going to lose control of your company. However, the reality is that you will never lose control of your business when you hire a PEO. A PEO will assist with more informed HR decisions that will make your business stronger.
Administrative Services Organization (ASO)
Administrative services organizations (ASO) are similar to a PEO in that they offer services including payroll, human resources, tax compliance, workers’ compensation, and benefits. The main differentiator is that an ASO doesn’t fall under a co-employment agreement. As a business owner, this means that you retain the employer of record status. All payroll taxes are reported and filed using your client’s FEIN. These types of companies ultimately assist in selecting and securing benefits for their client’s employees which allows you to carve out your own benefits plan. An ASO is designed to minimize your risks and liabilities through outsourcing essential employment-related tasks and responsibilities, allowing for easier management. However, clients don’t have access to the competitive pricing that a PEO offers.
Human Resources Organization (HRO)
Human resources organizations (HRO) are typically favored by larger companies that have already developed internal staff and technology that are able to manage the HR tasks. HROs provide a selection of services for business owners to choose from instead of managing all your HR functions. Companies interested in outsourcing to an HRO may have a need that’s outside of their internal expertise. There is no co-employment relationship, and the client organization remains the employer of record. As a business owner, there are a handful of laws and regulations that you face. However, managing them on a day-to-day basis is complicated. The main difference between an HRO and an ASO is that an HRO only handles the “human” aspects of human resources. Typically, HROs manage benefits, tax, or payroll-related issues.
Recruitment Process Outsourcing (RPO)
Recruitment process outsourcing is when you outsource your internal recruitment function to a specialist that assumes the responsibility of owning and managing the entire recruiting process. They work with your internal team to transform how you approach obtaining talent when you need it. An RPO differs from staffing agencies as they assume ownership of the design and management of the recruitment process along with the responsibility for results. Finding quality talent and retaining them is quite the challenge in a complex recruiting environment. If you’re looking specifically for external recruiting help, partnering with an RPO is the right fit.
Human Resources Information System (HRIS)
When your business utilizes a human resources information system (HRIS), it will help your business use technology to enhance your people processes and improve HR functions. HRIS software provides personalized HR tools and solutions to tackle business challenges. Ultimately, HRIS software helps companies organize and manage people-related data in one location. The data that is organized and managed include:
- Demographic information of employees (date of birth, gender, contact information)
- Job information (position, department, pay rates, etc.)
- Benefits provided
- Time-off balances
The list of benefits of an HRIS is extensive. When utilizing an HRIS system, you have capabilities of the organization, compliance, time savings, HR strategy, employee experience, and convenience.
Which Is The Right Fit For Your Company?
While the above HR outsourcing companies offer valuable resources, you need to determine what level of service your business needs. Whether you are looking for external guidance for one specific HR function, like recruiting, to every aspect of your business, a PEO can help. Growing small to mid-sized businesses with little HR experience may benefit from a PEO like GMS. Partnering with a PEO will reduce the cost of doing business and free your management team from administrative work that slows productivity within your business. You will no longer have to be an expert at everything. Get in touch with our experts today to learn how we can help you.