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How to Choose the Right HR Outsourcing Service


Selecting the best outsourced HR solution for your business can be a daunting task. At first glance, all providers offer similar services and claim to deliver a superior customer experience. This article will help you uncover essential differentiators to ensure your HR outsourcing partner can provide the appropriate services and attention to your organization.

What kind of business are you in?

Your first step should be to narrow your search to outsourced HR and payroll providers who have experience serving businesses of your size and operational structure in your industry and region. Industries like financial services, healthcare, and manufacturing have specialized HR needs. HR providers with expertise in your industry will be able to meet your operational requirements, and their understanding of industry-specific regulations will help you mitigate risk.

The size and structure of your company will also inform your decision.

Small- and medium-sized, white-collar businesses with 10-150 worksite employees are ideal fits for a Professional Employer Organization (PEO) solution. PEOs manage your company’s full scope of HR, payroll, compliance, and benefits on your behalf. You gain the advantage of their expertise as well as group insurance bargaining power.

White-collar companies with 100-2,500 worksite employees and grey- and blue-collar companies with 50-2,500 worksite employees are better suited for a Human Resource Outsourcing (HRO) solution. These companies generally have small existing HR departments who desire access to HR and payroll expertise and services in a cost-effective, configurable HR solution.

What level of personalized service do you prefer?

Today’s outsourced HR and payroll providers generally use one of two customer service models: tech-based models and personalized service models. Tech-based models reduce most requests to online “self-serve” ticket requests, which they claim empower employers. In reality, these models relegate most requests to a digital queue. If your needs do not fit neatly into a checkbox, getting the answers you need can become time-consuming.

At Extensis, we employ a personalized service model focused on person-to-person engagement between our clients and their dedicated HR and service managers. Though clients utilize our sophisticated HRIS platform for day-to-day administration, our team of HR experts checks in regularly and maintains a close personal relationship with every client. This level of interaction lets clients know we are here to augment their teams, provide strategic guidance, and apply our expertise to strengthen their HR processes moving forward.

What are you looking for?

Approach the process of seeking an HR outsourcing partner like you would any other significant relationship by knowing what the ideal partner looks like. “HR management” looks very different to someone who sees it as a proactive way to retain top talent to foster company growth versus someone who believes HR management is a “necessary evil.”

Outline your budget, your list of “must-haves,” “would-be-nice-to-haves,” and the level of involvement you want from your outsourced HR solution. Defining this information from the outset will enable you to accurately compare providers and assess whether they can meet your expectations.

Are the candidates accredited?

Look for outsourced HR partners with Employer Services Assurance Corporation (ESAC) accreditation, which demonstrates verification and financial assurance of all key areas of the organization’s reliability.

ESAC accredited HR providers, like Extensis, must comply with over forty industry best practices. Each receives quarterly verification of employer payments, including federal and state employment taxes, premiums for health and worker’s compensation insurance, and retirement contributions.

Another crucial accreditation to look for is whether or not the HR outsourcing provider is a Certified Professional Employer Organization (CPEO) with the Internal Revenue Service (IRS). These elite outsourced HR providers must demonstrate alignment with high regulatory standards established by the U.S. government and the PEO industry’s financial assurance program.

Extensis is among only 1% of PEOs accredited by ESAC, Workers Comp Risk Management (CI)-certified, and classified as a Certified Professional Employer Organization (CPEO) by the IRS.

Additional tips for success

Here are some final suggestions to keep in mind as you narrow down your scope of outsourced HR solution providers:

Don’t compare solely on price. Look beyond pricing to determine the overall value (HR expertise, risk mitigation, strategic guidance, day-to-day services) you will receive for your investment. An outsourced HR partner with a drastically lower price will mean some level of significant compromise.

Publicly traded providers are driven by shareholder demands. “Big-box” PEOs make decisions based on what is best for their shareholders, not necessarily what is best for their clients. Privately owned PEOs have the flexibility to tailor their solutions to achieve the best outcomes for the businesses they serve.

Ask plenty of questions. The service level you will receive from an HR partner begins the moment you connect. How knowledgeable is the salesperson? Are they responsive to (or dismissive of) your questions? When they aren’t sure of the answer, how long until they get back to you? If you feel deprioritized during the sales process, it’s likely a sign of things to come.

The proof you made the correct decision will ultimately become apparent during your ongoing engagement with our HR outsourcing partner. However, by using the guidelines above, you can ensure the partners you are seriously considering will have the best chances of achieving long-term success for your company.

Discover all the ways partnering with an attentive outsourced HR provider like Extensis supports your business.  Contact our team of HR experts today.

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