How to Develop an Essential Relationship with an HR Outsourcing Partner

November 7, 2016 Andrew Larsen

No business is an island.

Perhaps fifty years ago, businesses could get by using their own teams and processes, but new legislation and technology has changed the playing field. In the modern world, the business ecosystem demands that companies depend on one another. Whether that be outsourcing IT or finance, having attorneys on retainer, or using a PR firm, businesses can no longer survive by operating on their own.

This ecosystem creates an anxiety in businesses and employees. After all, how can you know that the outsourced service you and your employees depend on won’t let you fall? When it comes to HR, payroll, and benefits, three areas that are vital for a business to grow, choosing the right outsourcing partner becomes especially important. Without trusted, competent HR partners, companies may flounder in the quicksand of lawsuits, fines, and poor employee retention.

Why the Need to Outsource HR, Payroll, and Benefits?
Ken Osborne, a vice president of manufacturing, took over HR responsibilities when the company’s human resources director retired. He relates the struggles he had to Traverse City Business News, “As I got further involved in human resources, I found it wasn’t an area of expertise for me.” Osborne also noticed that as the company grew, handling HR became more time consuming then he originally expected.

Osborne’s situation is not unique. Thousands of other businesses are managing some of the same challenges he faced. For example:

  • Each year hundreds of new updates to current or additional labor laws take effect. An HR department that is not researching constantly may not be aware of changes, and so the company falls out of compliance, potentially resulting in fines and legal action.
  • If a company doesn’t take the time to adjust premiums for changes like new hires or terminations, then businesses can either not have proper coverage for an employee or be losing 1%-5% of their bottom line, all due to errors on carrier bills.
  • Hours spent on payroll, could prevent finance professionals from effectively closing books, and finding new ways to contain costs and save company resources.

These time-consuming responsibilities are driving companies to outsource HR, payroll, and benefits. According to a study done by Global Industry Analyst Source, the HR BPaaS model for outsourcing has grown from 5.7% in 2012 to 18.1% in 2014. Based on these numbers, that is more than a 200% growth over a two-year period. As businesses continue to see the necessity of outsourcing at least some of their HR functions, this number will continue to grow.

Who can You Trust?
If an HR solution ends up causing more headaches and complications for a company, those minor setbacks could prove fatal. All it takes is one government audit to effectively ruin years of growth. Ask the president of a Minnesota sheetrock company who faced two years of jail time and a potential $3.3 million fine for intentionally avoiding labor laws related to overtime pay and employee benefits. 

Before choosing a solution, you need to learn all you can about your potential partner. Research the company’s model; find out if they can meet your unique business goals and strategies. Ask questions like: 

  • Will this company become an effective extension of my team? 
  • Can their model scale to meet my growing company’s needs? 
  • What technology and processes do they use? 
  • Are their HR professionals qualified?

 What can an Effective Solution Do?
An effective solution that utilizes cloud-based technology, efficient processes, and a team of professionals can dramatically improve a company’s potential for growth. The solution will be able to detect problems before they become an issue. Everything from minor errors in carrier bills to ensuring compliance with labor laws such as FLSA and ACA.

You’ll want a partner that offers visibility into operations, giving you insight into all HR related costs. This will make it easy for finance to close books and provide future predictions of company growth.

Your employee data will be easy to manage, access, and update in a single solution.

Through outsourcing HR, you can streamline resources, automate processes and efficiently manage and scale your business while ensuring compliance.

All of this and much more can be provided by a modern HR solution. As the business ecosystem continues to change, it will be vital that companies build essential relationships to survive. Taking the time to understand an HR solution can make all the difference in determining the growth or downfall of your company.


About the Author

Andrew Larsen

Andrew is the Marketing Communications Specialist for Zuman, the one solution for HR, payroll, and benefits administration that supports growing small to midsize businesses.

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