Benefits Of Human Resources Outsourcing

Human Resource Outsourcing Vs. Professional Employer Organization: Which One Is Right For You?

Struggling with how to best operate your internal human resources department? The solution may actually reside outside of your company walls. Many executives, grappling with the same challenge, find themselves faced with two unique HR outsourcing options: a human resource outsourcing company or a professional employer organization. Each solution has components specifically designed to minimize an employer's HR burden as well as empower employees to manage several key tasks independently. Most importantly, each system can free up invaluable time for other critical tasks.
While there are some significant similarities, there are also a few key differences between a human resource outsourcing firm and a professional employer organizer. Knowing some of the biggest differences can help you determine which models makes the most sense for your organization.
Professional Employer Organizer (PEO)
A PEO firm offers a comprehensive bundle of HR services such as benefits, workers' compensation, payroll and recruiting. Clients work with the provider to determine which functions are relevant to their organization, then select a preexisting, comprehensive service bundle and create a co-employment situation. Under the professional employer organizer model, the PEO directly hires employees – anyone hired to work at the client's site actually goes on record as an employee at the PEO for tax purposes.
Human Resource Outsourcing (HRO)
An HRO organization is also a separate entity that offers wide range of human resource services. Clients can partner with an HRO for a completely personalized service solution. When sourcing different providers, it's important to find a firm that offers the types of capabilities most needed in your organization. Your chosen vendor will provide various models to ensure a solid fit with your existing requirements. Some will provide bundled offerings; however, others will allow clients an opportunity to select services that create a fee scale based only on what's needed.
Human Resource Outsourcing: Unparalleled Flexibility
Many business owners opt for an HRO model, for several reasons. Perhaps the biggest contributing factor is sheer flexibility. A PEO can often feel restrictive; clients often only get to choose from preselected bundles, which means finding a good fit can be difficult. Even if an organization does find a bundle that aligns well with their company's needs now, it doesn't mean it will always work well. As a business grows and evolves, its HR needs often change as well. This can often result in a forced PEO fit. Additionally, many business owners feel restricted when it comes to making fast decision with employees, such as termination. Because employees fall under the PEO, it can be a prolonged process to let someone go.
An HRO model offers optimal flexibility and versatility. Not only will you get the opportunity to select the services you need know, a qualified HRO will allowed you to change offerings at any point. As your organization grows and expands, you will be able to alter the HR package you receive to ensure coverage and compliance at all times. Most importantly, with an HRO you retain employees directly; this allows you to make decisions quickly when it comes to your staff.
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