Human Resources (HR) outsourcing services are defined as a service or group of HR services utilized by a company that wishes to assign the management of HR functions relative to the needs of their business to a third party provider who specializes in the professional and efficient management of human resources.
What Can Be Outsourced?
The internal business functions that are often taken care of by third party HR outsourcing services include:
- Recruiting
- Training
- Tax reporting and payroll
- Employee benefits
- Retirement services
- Employment separations, outplacements and HR infrastructure
- Employee agreements and handbooks, and handbook audits.
Preparing Employees for Outsourcing
Once a company decides to use HR outsourcing services, it’s critical to the success of the transition for the company to not only effectively communicate how outsourcing such tasks as payroll, recruiting, tax reporting and employee relations management may enhance the efficiency of the company, promote best practices and minimize potential liability, but it is even more important that the company clearly communicates how this transition will be advantageous for each individual employee.
A major advantage might be that an employee can now enjoy “the best of both worlds.” While employees continue to work in the same familiar intimate environment with an established management team where each individual contribution is often more visible and may be considered to be an integral part of the overall operation, they will now also be a part of an organization where they have access to a more elaborate and cost-efficient selection of benefits and services that are typically only available to much larger, established companies and corporations.
A company anticipating the move to HR outsourcing should have in place a marketing and communication strategy that addresses the following:
- Management “buy in” for HR outsourcing, which enables the company to offer a better benefit package and training opportunities, thus allowing the hiring managers to be more competitive in recruiting, employee retention and employee engagement.
- Utilization of various forms of communication are recommended such as onsite employee meetings, company events, e-mails, bulletin boards and mail-outs to touch everyone impacted by the new benefits of outsourcing, including the employees’ families.
- Proactive scheduling of hands-on training for employees to access any of the online service centers, Web sites, intranets, the contact center—anything that’s offered by the outsourced provider or professional employer organization (PEO) to engage employees and that allows them to become familiar and more comfortable with the change to outsourcing.
- Making benefit information available, getting enrollment forms into the system and placing insurance cards in the hands of every employee as quickly as possible contributes to minimizing any disruption in services, thereby providing a more positive experience for the employees and their families. Be ready to address questions about pre-existing conditions, credit for current annual deductibles already paid, co-pays, prescription drug coverage, existing FSA accounts and 401(k) plans.
As part of working with companies ranging from 5 to 100 (or more) employees, it has been my personal experience that senior management often measures the success of a decision such as HR outsourcing by the overall reaction and even the individual, random comments heard from their employees during the transition process. When the reaction from employees is positive to the transition process, the job development opportunities and to the improved benefit package that employees are now able to provide for themselves and their families, then it can be a win-win for everyone. Getting the employees involved and keeping them informed throughout the process can make the difference!
Legal Disclaimer
The information contained in this document is for general, informational purposes only and is not intended to be legal advice. This information is not a substitute for the guidance of a professional and should not be relied upon in reference to any specific situation without first seeking the advice of a qualified HR professional and/or legal counsel regarding applicable federal, state or local laws. HRTools, Insperity and their respective employees make no warranties, express or implied, and make no judgments regarding the accuracy of this content and/or its applicability to a specific situation. A reference or link to another website is not an endorsement of that site or service.