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Top 5 HR Outsourcing Best Practices

Top 5 HR Outsourcing Best Practices

As companies see the benefits of outsourcing HR tasks and responsibilities, the practice becomes more popular. HR outsourcing can save your company money and save your employees precious time, letting them focus on your core business needs.

But to get the most out of HR outsourcing, you need to follow certain best practices. Below is our list of the top best practices for you to follow when partnering with an HR outsourcing provider. 

What are the top HR outsourcing best practices? 

Once you have decided that partnering with an HR outsourcing provider is the right choice for your company, you can take steps to help ease the transition, including any employee concerns. Keeping these five best practices in mind will help you ensure that you get the best bang for your buck.

1. Communicate with Employees

Employees have concerns when things change. Your HR employees may wonder if their jobs are in jeopardy if you announce that you’re outsourcing HR tasks. If not addressed in a timely manner, employees may start to make assumptions about what’s happening, leading to a decrease in productivity and morale as well as increased turnover. 

Your HR team will be especially concerned about their job security. When they see HR duties outsourced, their natural reaction is to start looking for a new job. Speaking with your HR team in advance is a prudent way to keep them informed and remind them that their job is safe. 

The rest of your staff may worry that it will be harder to access HR services like requesting time off or getting help with benefits. They may think that you’re losing control of your business. In reality, comprehensive HR outsourcing will give them access to better benefits at more affordable prices. 

All of these issues can be resolved proactively by simple communication. Keep everyone in the loop at defined milestones, and you can ensure buy-in from your team.

2. Outsource Comprehensively

The more you outsource, the more you save. Many companies look to outsource payroll services. This task is time-consuming and ripe for mistakes, so they figure that outsourcing to a payroll expert is a good choice. It is, but businesses are missing out on incredible savings by limiting themselves to only payroll services. 

When you outsource more comprehensively, you can reach a point where you no longer have to hire additional in-house HR staff. This can significantly reduce your time spent hiring and the monetary output to pay for additional employees. You can get the same HR service for a fraction of the cost by outsourcing these duties. 

Besides the cost savings, you also get the chance to shift your internal HR team’s focus. The more time you save them, the more they can focus on employee issues and building a great workplace culture. Not only does this make HR staff more efficient, but it also helps your company attract and retain top talent.

3. Consolidate Software Vendors

Many small businesses face software challenges. You have one system for payroll, another for personnel files, and another for time-off requests. This creates confusion among employees and makes it extremely difficult to run accurate reporting and know what’s happening in your business. 

Best-in-class HR outsourcing partners will provide you with software that integrates benefits, payroll, time off, reporting, and more, all in one place. Consolidating your HR vendors makes it easier for you to manage effectively. It also helps your employees feel that their data is secure and that they can access their benefits and payroll information at any time. You don’t need a different vendor for each sector of HR, saving your HR team time and your company money.

4. Ensure Goal Alignment

To make sure that you get the most out of your partnership, you need to ensure that your HR outsourcing provider understands your goals. It’s a bad sign if your prospective HR outsourcing provider has a thoroughly planned strategy before you even talk to them. That means they have a one-size-fits-all approach and no customization for your specific needs. This could also result in you paying for services you don’t need or use. 

Just like communication with your team is vital, communication with your HR outsourcing provider is paramount to a successful relationship. When you discuss your goals with your HR partner, they can tailor their services to your needs.

5. Estimate the ROI

To calculate your ROI, you need to include soft costs like reducing turnover and improving employee productivity. Then, you can estimate the impact of different HR services provided by your chosen outsourcing company. 

A Professional Employer Organization (PEO) is the most comprehensive HR outsourcing solution. The best part is that a PEO has an average ROI of 27.2%, making it the most cost-effective solution for your organization. 

PEOs are the Way to Go 

PEOs are the only HR outsourcing solution that can give you access to Fortune 500 benefits at Fortune 500 costs. A PEO can also save you money on workers’ compensation insurance and unemployment insurance. 

Learn more about PEOs with our free eBook “What is a PEO?” 


What is a PEO?


Small Business, HR Outsourcing