7 Things to Look for in an HR Services Company

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In today’s business world, talent is what sets companies apart. That’s why a strong HR function is such a strategic differentiator. It ensures that the organization is investing wisely in one of its biggest expenses to attract, retain, and develop talent that will drive business growth.

However, a high-impact human resources function is difficult to develop internally, as the demands of day-to-day operations can keep the team in the weeds. That’s where HR services companies come in. These external partners can help your organization streamline processes, reduce compliance risk, and boost employee engagement and performance.

How to Choose an HR Services Company

From handling payroll to developing succession strategies, HR services companies provide an outside perspective, expertise, and additional resources that allow organizations to make a step change in their people operations. By outsourcing certain HR functions and initiatives, businesses can focus on their core competencies without losing sight of what makes them great—their people.

However, not all HR services companies are created equal. Each has its strengths, specialties, and unique offerings. Choosing the right one requires careful consideration of your organization’s needs, the services offered, and the long-term value the partnership can provide.

1. Identify Your Needs

Before starting your search for the right HR services company, it’s a good idea to conduct an internal assessment to understand your HR needs. Where do you excel and where are your biggest functional gaps? You’ll want to think about your current needs, as well, as future needs based on your growth goals. Do you need assistance with payroll processing, benefits administration, recruitment, or employee relations? Or maybe you need support with compliance management or manager training?

By identifying which HR services are best suited for outsourcing and best kept in-house, you’ll be better equipped to choose a service provider that meets your needs.

For example:

Payroll and benefits administration: Making sure your employees are paid on time and that benefits are administered correctly is essential. If your business lacks in-house expertise in this area or is currently keeping someone from their best and highest use (like your finance leader), outsourcing can be a huge time-saver.
Recruitment and onboarding: Finding and hiring the right talent is one of the most time-consuming and high-risk tasks for businesses. A poor hire can cost an organization significantly. HR services company with a strong recruitment arm can help you streamline this process and improve the talent you attract.
Compliance and legal support: Labor laws and regulations are constantly changing. If you’re not up to date, your business may face fines or legal issues. Outsourcing compliance work to HR experts can reduce risk and help your company stay compliant while saving on costly attorney consultations.

2. Evaluate Their Expertise

Not every HR services company will be the right fit for your industry and business goals. That’s why it’s important to evaluate a provider’s expertise and industry experience before committing. Ask questions like:

How long have you been in business?
What industries do you specialize in?
Do you have experience with companies of our size?
Do you have experience in the direction our organization is headed?

An HR services company with experience in your industry is often better equipped to understand your unique challenges. Whether you’re in retail, manufacturing, or healthcare, working with a provider familiar with industry-specific labor regulations and expectations will not only help keep your people operations running smoother, it will improve your ability to keep and grow your workforce.

Also, it’s valuable to ask for case studies, testimonials, impact data, and client references to get a better understanding of how they’ve helped similar businesses.

3. Assess Their Tools and Technology

Today’s HR landscape is increasingly driven by technology. Many HR services companies often offer software solutions that can help you manage everything from payroll and benefits to employee performance and compliance. When you’re choosing a provider, be sure to evaluate their technology stack to make sure it matches what you’re looking for, and be mindful of services that push you to use a specific software simply because that’s what they use.

Some great questions to ask include:

What HR management systems do you have expertise in?
Do you have experience in the HR systems we currently use?
Do you get any kickbacks for the HR systems you recommend?

By choosing a company that is experienced in HR technology that fits your business needs, you can streamline day-to-day HR tasks and begin to take a more strategic approach to your talent development.

4. Consider Compliance and Legal Experience

Staying compliant with changing labor laws and regulations can be daunting. From OSHA standards to wage and hour laws, there is a web of federal, state, and local regulations that continue to become more complicated. An HR services company with strong compliance expertise, knowledge of your geographic regions and industry-specific regulations, and a strategic approach to risk mitigation can help you deftly navigate the murky waters.

Look for a provider that offers ongoing compliance monitoring, labor law updates, and support with audits and investigations. You will still need to retain legal counsel, but an HR services provider can help you use that counsel only when needed, saving you costly attorney fees. Be wary of HR service providers that say they’ll eliminate your compliance risk. Look for a provider that works with your leadership team to understand your appetite for risk and take a targeted approach to mitigation efforts.

5. Get a Sense of Their Customer Service

When outsourcing a critical business function like HR, strong customer support is non-negotiable. You’ll want to work with a company that is responsive, transparent, and provides timely support when needed.

Be sure to read their online reviews and client testimonials to get a sense of their reputation and learn how they handle customer concerns. You should also ask for references from current or past clients to better understand the service that you can expect. If possible, find out their response times to see how fast they will respond to your inquiries.

6. Determine Their Flexibility and Scalability

Your business is constantly evolving, and your HR needs will change over time. Whether you’re experiencing rapid growth or transitioning into a new market, your HR services company should offer flexible and scalable solutions that grow with you. You don’t want to be locked into a rigid contract or a one-size-fits-all service that isn’t going to match your future needs.

Ask about their ability to scale their services and offer custom packages as your needs change. Check to see if they offer short-term or project-based support for temporary needs such as seasonal hiring and policy overhauls.

7. Check Pricing and Value

While cost is always a consideration, it’s important not to focus solely on price. Instead, look at the overall value the HR services company provides. The cheapest option might not offer the right services for your organization, while a higher-priced provider could save you money in the long run by delivering better support, technology, training, and strategic guidance.

Make sure you understand the full cost of the service and that there are no hidden fees or charges. Take time to compare the service packages (including any details or fine print) to feel confident in your decision, and look for value-added services such as employee training and wellness programs.

Talk to the HR Experts

Choosing the right HR services company can make all the difference for your business, from reducing administrative burdens to creating a long-term talent strategy. At HR Collaborative, we offer reliable, experienced HR services for a wide range of needs.

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