Benefits within Reach: How an HRO Can Cost-Effectively Offer You Sophisticated Services

Updated: April 30, 2009

When it's time to slash HR costs, many businesses begin thinking about using an HRO (human resources outsourcer), a third-party provider of common HR services such as payroll automation and benefits administration. Yet an HRO can also offer high-end services, such as employee support desks and self-service systems, that large companies typically use to enhance efficiency and productivity as well as lower costs. Here's a look at how HROs can cost-effectively provide your business with sophisticated services that you thought were unaffordable:

Recruitment: Any business can find and hire new employees , but a major HRO with its wide-ranging expertise and geographic scope can handle sourcing, screening, testing, interviewing, background checking and drug testing far more professionally and efficiently than most in-house staffs. An HRO can also draw new hires from a wider and deeper applicant pool, giving its client company better quality workers in a shorter amount of time — a major intangible benefit.

Employee Training: A full-time in-house training department is a luxury few SMBs (small- to medium-sized businesses) can afford. On the other hand, ad hoc training has its drawbacks, too. Removing skilled employees from their regular work assignments to provide instruction can damage both productivity and morale . The answer is to use an HRO that can provide training on a continuing or as-needed basis using professional instructors and high-quality coursework.

Succession Planning: Most businesses could benefit from a succession planning program that identifies, assesses and develops talent to ensure leadership continuity for key positions. Yet creating such a program demands an intense development and management commitment that few firms possess or care to cultivate. HROs can use their succession planning expertise to help clients groom future leaders at a cost in time, money and manpower that's usually far lower than for a comparable in-house effort.

Relocation: With the residential real estate market in crisis, many businesses are struggling to keep their employees' moving expenses under control. Trying to strike a balance between offering competitive relocation benefits and not busting their budget, a growing number of employers now believe that they need the skills of an experienced third-party provider to cope with rapidly deteriorating market conditions.

Support Desk: Large businesses have support desks that expeditiously handle employee HR inquiries, often on a 24/7 basis. HROs can help smaller companies provide a similar service to their employees — at an affordable price — by directing calls to a pooled call center shared by several clients.

Employee Self-Service: Few HR managers would argue that employee self-service is a bad idea. Web-driven self-service technology can slash costs by giving employees the ability to view and make changes to routine personal, payroll and benefits information online. Self-service's big drawback lies in its development and management costs. An HRO can lower upfront and ongoing self-service outlays by giving employees access to a predesigned system that's hosted and managed on a shared IT infrastructure.

Employee Surveys: What are workers thinking? Knowing the answer to this question can help a company create a more productive and efficient workplace. But few businesses have the resources on hand to create surveys , query employees and then tabulate and analyze results. An HRO can manage all this work without pulling in-house employees away from important tasks.

Government Compliance : With federal, state and local officials paying ever closer attention to business hiring practices, an HRO can help a company make sure it's staying on the right side of the law — and usually at a much lower cost than having an on-site compliance manager.

Legal Services: HR bumps up against all sorts of legal issues, ranging from worker-compensation claims to discrimination lawsuits. That's why it's a good idea to look for an HRO that can provide access to attorneys who specialize in various aspects of employment law. It's the best approach to take, short of having a competent law staff in-house or on retainer.

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