Why would I hire a human resource outsourcing services consulting firm?
You may need help from HR services consulting firms if you do not have an HR department or would like someone to share the burden of the HR administrative staff. Depending on the size of your company, it may not be optimal to hire staff on your payroll to manage employee recruitment, benefits administration, payroll, developing policy manuals etc. Human Resource Outsourcing (HRO) services can also ensure that you continue to comply with all the labor laws of your state and country.

Professional Employer Organizations (PEO) also come under HR services but is not part of this guide. PEOs provide temporary employees to your company but they stay on the payroll of the PEO.

Reasons why you would hire HR consulting services.

• HR services consultants can provide instant expertise to your organizations. If you already have full time staff to manage all areas of HR, you may hire HR consulting services to complement existing HR capabilities or to fill any gaps.
• HR consultants are handy in times of crisis. For example if an employee is alleging sexual harassment or you are being sued for firing someone, it is important to hire a Human Resource consultant for advice since a small company is unlikely to have the right expertise to handle such crisis.
• HR services can provide technical expertise to streamline Human Resource administration by providing employee forms online rather than on paper. They can also implement performance management system.
• HR services can help develop internal policies, employee benefits, training programs and career development.
• Human Resource consulting services can save you money. Instead of hiring an HR director, you can hire HR services consultants on need basis only a few hours a week or month.
• If you are considering organizational change, it is always a good idea to hire the HRO consultants to get an outsiders perspective. Human Resource consultants have probably advised many clients on organizational change to reduce costs, maximize use of resources, improve customer service etc. They can draw on their diverse experience to implement change while minimizing disruptions in the functioning of the company.

There are a few disadvantages to hiring an HRO provider.

• If you are one of the many customers of an Human Resource Outsourcing consultant, you may not get personal attention and a lot of face time.  Many HR consultants will work from their office rather than visit your premises regularly.
• Human Resource Outsourcing consultant may not always be available at a short notice. If you think you need an HR skill very regularly and cannot entirely depend on the HR consultant then make sure your organization quickly learns from the consultants and develops the expertise in-house.
• It is important to assuage any fears that can arise from hiring of consultants. You may have to address employee concerns regarding hiring outside help for organizational change.

What kinds of services are provided by an HR Outsourcing Services company?
An HR Services consulting provider will usually offer multiple services but some firms may be specialists only in certain areas. For example some Human Resource consulting firms focus exclusively on payroll services

Payroll: Payroll services includes pay check processing, mailing checks or direct deposit, wage garnishments, tax filings for the company, processing and mailing yearend tax forms for employees.

Recruiting: HR outsourcing provides some or all of the recruiting functions including posting job opening, sourcing candidates, testing and tracking candidates, pre-screening for interviews and running background checks while ensuring compliance with all labor laws of your country. After the candidate is selected they develop compensation packages, make offers of employment and then handle hiring. Sometimes it is important to fire employees due to poor economy or poor performance. Human Resource consultants can help you manage retrenchment. They can also help you develop programs to retain employees.

Benefits administration: HRO providers can help you find competitive rates for employee benefits including health care insurance, dental insurance, life insurance, savings plans (for example 401(K) in the US),  short-term and long-term disability and unemployment insurance. If your company is in the US they can find COBRA at competitive rates for employees that voluntarily or involuntarily lose their employment and want health benefits to continue.

Human Resource consulting providers can usually get you great rates on benefits, especially if your company is in a high risk industry like mining, oil or construction.

Many companies that have self-funded health plans can benefit by outsourcing plan management to Administrative Services only (ASO) providers. They help you manage health benefits by processing claims on your behalf.

Regulatory compliance: For a small business it is tough to comply with all the labor laws, tax filings, corporate regulations (for example FMLA, HIPAA and Sarbanes-Oxley in the US) unless there is help from an Human Resource Consulting in understanding these regulations, running regular audits and taking regular action to ensure compliance.

Risk management: It is important for your business to follow all workplace safety regulations of your country. For example in the US your business will have to comply with OSHA regulations. Human Resource outsourcing providers can develop policies for workplace safety and run training programs to ensure compliance.

HR technology solution: HROs can provide technology solutions for HR to make Human Resource management more efficient. This includes online application solutions, payroll administration and benefits integration into one system.

HR management: As you grow, you will need to formalize the Human Resource efforts to manage your employees. You can ask an HRO to help you with setting up the processes. Human Resource Outsourcing can also create employee handbooks and manuals, internal compliance policies, new hire kits including training. HROs also run training sessions for your employees.

How to choose a Human Resource Outsourcing company?
The first step is to of course assess your needs carefully and only then search for HR consulting companies to get quotes. You can outsource entire Human Resource management of your company or hire an HRO for specific services like payroll or recruiting. Always compare quotes from HR consulting vendors before identifying the service provider that can best address your needs.

Next consider the level of HR expertise you need for your company. If you want someone to only supplement your staff by helping with paperwork and compliance, you can just hire an Human Resource administrator. If you want someone to create and execute HR strategy then an HR generalist is a good option. Human Resource generalist will handle normal HR functions like hiring and firing employees, developing benefits and compensations for employees, identifying training and development needs etc. If you only need strategic advice and high level planning then an HR executive consultant is the right choice. An executive consultant can develop organization growth plans, hiring strategies and help you align organization goals with overall goals of the company.

Before you hire the Human Resource consultant, conduct an interview to make sure he or she is the right choice. If you want the HR consultant to spend most of the time on site, make sure you bring that up during the interview. During the days the HR consultant is not on-site, you should have easy access to them, in case you need advice in an emergency situation.

As with any other hiring decision, check references. Speak with the previous clients and see if they were satisfied with the service. Ask if they noticed any gaps in what was promised and the final delivery.

How much does it cost to hire an HRO consulting service?
Cost of service varies based on the solution and the service location. Most Human Resource consulting services charge a fix amount per employee per month or a percentage (between 2%-10%) of their individual monthly salaries. Remember to ask for a volume discount on the per employee rate. For HR services like recruiting, pricing is based on specific services like advertisements, sourcing, screening, testing etc.

Typical contract is between six months to a year. HRO should agree to a 90 days “out clause”. You have the right to cancel the service within ninety days and the HRO can do the same if not happy with the engagement.